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As US and China compete in India’s neighbourhood, Delhi must become more transactional with both

02 Jul 2026
2 min

Reshaping US Asia Strategy and Implications for India

The United States is revising its strategy in Asia as it acknowledges that containing China is no longer feasible at a manageable economic or military cost. This adjustment is diminishing India’s strategic significance in Washington's plans while broadening US engagement across South Asia.

Shift in American Approach

  • The US is experiencing declining influence and strategic setbacks globally.
  • In Europe, the Ukraine war imposed significant financial and military costs, prompting the US to encourage European nations to contribute more to NATO.
  • Middle East conflicts, notably involving Iran, have undermined US security guarantees, leading allies like Saudi Arabia and the UAE to deepen ties with China.
  • In the Indo-Pacific, despite strong military alliances and frameworks, China remains the largest trading partner, affecting regional alignments.

Changing Dynamics in US-China Relations

  • The US is now treating China as a potential equal in global affairs, akin to a G2 partner.
  • Efforts are made to maintain influence in Asia-Pacific without directly challenging China, reducing vocal support for initiatives like the Quad.

Impact on US-India Relations

  • India is viewed less as a strategic partner and more as a market for American goods and technology.
  • The US encourages India to align economically and strategically more closely with American interests.

US Engagement in South Asia

  • Washington is expanding cooperation with Bangladesh, Sri Lanka, Nepal, and the Maldives.
  • This allows these countries to leverage their positions against India, China, and the US for economic and political gains.

Challenges for India

  • Pakistan’s strategic relevance to both the US and China complicates India’s regional strategy.
  • India faces fluctuating relations with neighbors and must navigate the dysfunctional SAARC framework.

Strategic Recommendations for India

  • Strengthen the economic base by focusing on manufacturing, AI, semiconductors, and reducing reliance on Chinese imports.
  • Maintain strategic autonomy by keeping relations with the US and China transactional.
  • Enhance connectivity projects and development partnerships with neighboring countries.
  • Avoid actions that invite external powers into South Asian affairs.

India’s strategic environment is increasingly complex, and it must act to preserve its autonomy and regional leadership.

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RELATED TERMS

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G2

A hypothetical geopolitical arrangement or partnership between the two largest global economies, typically referring to the United States and China, to jointly manage global affairs.

Strategic Autonomy

The ability of a nation to pursue its own interests and make independent decisions in critical sectors, free from undue influence or dependence on external powers. A strong manufacturing base contributes significantly to strategic autonomy.

Indo-Pacific

A vast geopolitical region encompassing the Indian and Pacific Oceans. It is a key area of strategic competition and cooperation, particularly between the US and China, with the Quad playing a significant role.

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