India’s polyalignment follows the money

In an era of intensifying strategic competition, most notably between China and the United States, business and policy elites in many countries are reluctant to choose sides, leading them to try to engage with as many external partners as possible to maximise gains and minimise risks.

India, with its long history of rejecting strong geopolitical alignments —is an oft-cited example of this approach. But what gets overlooked how its calibration of ties between China and the United States is not merely reflective of a calculated state strategy, but also of the competing economic interests of powerful alliances of state and private actors.

Following India’s deadly border clashes with China in the Himalayas in June 2020, Prime Minister Narendra Modi’s government increased cooperation with the United States, despite continuing to engage in various multilateral fora that included China. Following Russia’s full-scale invasion of Ukraine in 2022, Delhi remained insistent on its right to purchase Russian arms and oil — a policy which contributed to Washington imposing an additional 25 per cent tariff on India in August 2025. India has started pushing for closer relations with partners like the European Union in response to the volatile relationship with the second Trump administration.

India’s engagement with these actors is often framed as part of a hedging or multialignment strategy. Yet this underplays how Indian ‘polyalignment’ is shaped by the interests of different corporate forces within the Indian economy. Corporate actors play a key role in shaping the behaviour of Indian state institutions, including in potentially inconsistent and incoherent ways. India’s polyalignment is not the outcome of a rational state but of domestic economic dynamics.

Private capital has become substantially more powerful in India over the past few decades. India’s post-independence economic model largely worked to repress private capital, but this started to shift from the mid-1970s onwards. As the economy became more liberalised in the 1980s and 1990s, private capitalists became increasingly powerful and more capable of influencing policy.

This process intensified once Modi was elected as prime minister for the first time in 2014. During his time as chief minister of the western Indian state of Gujarat, Modi had established close relations with Gautam Adani, chairman of the Adani Group, and Mukesh Ambani, chairman of Indian conglomerate Reliance Industries.

Modi has remained close to the two since becoming prime minister. The alliance with the conglomerates has allowed him to make substantial progress in the rollout of digital and transport infrastructure. At the same time, it has entrenched oligarchic structures characterised by crony capitalism, in which close access to Modi is key for firms to grow.

These shifts in Indian politics and the economy under Modi also shape how India acts externally, as Delhi’s strategic policies on infrastructure financing and technology exchanges illustrate. Infrastructure financing is an area where Indian policymakers have long been concerned about the expansion of China’s presence in South Asia through the Belt and Road Initiative. In the process of increasing foreign aid expenditures to compete with China, the Modi government has actively promoted the Adani Group in often controversial infrastructure projects in countries such as Bangladesh, Kenya and Sri Lanka.

While Modi has leant on Adani to pursue strategic goals, Adani has been able to leverage his influential position to promote ventures that advance his conglomerate’s commercial objectives. Adani has played a key role in promoting the India–Middle East–Europe Economic Corridor, a proposed economic corridor that would make extensive use of ports in India, Greece and Israel that the Adani Group holds stakes in. Indian security hawks have been able to make use of Adani’s reach because Delhi’s security interests converge with his commercial aims.

These dynamics look different in the technology sector. Indian companies have long depended on access to Chinese electronics hardware and components to be globally competitive. Following the 2020 border clashes, Delhi identified China’s role in the technology sector as a national security risk and imposed new restrictions on Chinese goods and investments. These restrictions hurt the interests of Indian technology firms and their allies in the state apparatus, who frequently lobbied Modi to weaken the measures.

This lobbying resulted in the easing of many policies that aimed to ‘derisk’ India’s relationship with China, including restrictions on Chinese investments and joint ventures with Chinese firms, even as bans on Chinese mobile phone apps persisted. While this has shielded the commercial interests of Indian information technology firms that depend on Chinese inputs, it has meant that many of the security dependencies the Modi government was concerned about following the 2020 border clashes have not been addressed.

This shows that India’s polyalignment is not the carefully considered foreign policy of a strategically minded state. Instead, the country’s foreign policy is frequently shaped by the different — and often competing — interests of corporate actors. When interests align, policy is broadly consistent and coherent, but it becomes less so when interests diverge — a dynamic also seen in countries such as Japan. Corporate actors are more influential in shaping India’s foreign policy than is commonly assumed.

Aaron Magunna is PhD Candidate at the University of Queensland.