2025 in Review | Episode 5: India’s Strategic Tightrope in a Fragmenting World

In this concluding episode of 2025 in Review, our special year-end podcast series where we revisit the forecasts made during The World in 2025 Masterclass in January, we turn to India with Ambassador Shyam Saran, former Foreign Secretary of India and later Prime Minister's Special Envoy for Indo-US Civil Nuclear Issues, and Special envoy and chief negotiator on climate change. 

In conversation with Dinesh Narayanan, senior journalist and anchor for this series, Ambassador Saran steps back from the year’s shocks—from Trump’s return and “Liberation Day tariffs” to a brutal Middle East war, Operation Sindoor, and Putin’s India visit—to map the deeper reset underway in the global order. He argues that Western dominance is structurally eroding, the US is no longer invested in the very multilateral system it built, and an increasingly diffused landscape of middle powers is redefining who “gets to be in the room” on big geopolitical decisions. Against this backdrop, he lays out what this means for India’s strategic choices: how to use US withdrawal and US-China rivalry to expand India’s room for manoeuvre, without over-reading China’s rise or Russia’s value, and while staying alert to the limits of legacy partnerships.

Key Takeaways

(Read Time: 2 min)

• The US is stepping back from the multilateral system it created, so others are learning to “mark America absent” and move ahead on issues like climate without it. The emerging reality is a world with some rooms where Washington is missing, and others where it tries to decide who is allowed in—but its ability to enforce that gatekeeping is shrinking.
• US security policy is shifting from underwriting others’ defence to asking allies and partners to pay more, which undercuts Washington’s ability to keep making the rules while others foot the bill. In such a world, control of the purse and willingness to deploy resources—not just nominal military or economic heft—will decide who sets the agenda.
• Western dominance of the last 500 years is clearly fraying, yet the financial and legal plumbing built by the West will persist, creating a long phase of hybrid order where old and new norms run in parallel. China seeks to shape this system rather than overthrow it, because even Beijing recognises how hard it is to replace entrenched rules overnight.
• China is firmly the world’s number two power, but faces structural headwinds—a slowing economy and the risk of “growing old before it grows rich”—so its resources and rise are not limitless. Modernity now has multiple versions; China is a major node, but not the sole template. For example, India's contribution in the digital stack. India may not be in the same league as China today, but in some niche areas, it is in a position to offer those global public goods.
• For India, the relationship with the US is important in the economic transformation of India. Even though the overall strategic perspective of the US is changing, there are components of the relationship which are continuing undisturbed—for example, the renewal of the 10-year defense cooperation framework. We should not be the ones to disturb it, but we should understand that the overall context of the relationship has changed. We cannot depend on the assumption that the US will be as invested in the Indo-Pacific as it has been in the past.
• China’s recent stance toward India reflects a mix of assertiveness and strategic pragmatism—pressuring India to accept Beijing’s terms amid a perceived weakening of US influence, while also signaling interest in cooperation because of the uncertainty of the US under Donald Trump. There’s also a recognition that India and China are the two anchors of stability in an uncertain world and that they should work together on convergent interests.
• India’s approach to China and Pakistan must operate in the “gray areas” of diplomacy, not rigid either-or choices. While China’s ties with Pakistan won’t end, pragmatic engagement with Beijing can help moderate Pakistan’s hostility toward India. Similarly, even limited improvement in India-Pakistan relations can expand India’s diplomatic flexibility and reduce others’ leverage over regional tensions. The strategic goal is to manage relationships—with China, the US, and Pakistan—to diminish security threats and widen diplomatic space.
• Pakistan’s long-standing nuclear understanding with Saudi Arabia—likely dating back to the 1980s—has only now been made public as a signal of deterrence in the Gulf, not as a new development. For India, this does not significantly alter regional dynamics, since its relations with key Middle Eastern powers like Saudi Arabia, the UAE, and Qatar have strengthened markedly over the past two decades.
• The international landscape is becoming more diffused. For India, this diffusion translates into a wider but more complex room for manoeuvre, demanding nimble diplomacy rather than alignment with any single camp.
• Russia remains an important legacy partner for India in critical defence technologies such as advanced air-defence systems, where diversification cannot happen overnight. Energy ties and broader trade, however, are constrained by limited complementarity and payment hurdles, so New Delhi should avoid over-expecting from the relationship even as it uses the signal of a “strong, enduring partnership” with Moscow to widen its strategic options.

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Coming Soon:

The Big Picture Essay: To wrap up the series, Dinesh will author a sharp essay capturing the common threads and major takeaways from all five conversations.