India's foreign policy is built around a simple idea. It does not have to choose one side of the global divide.

Instead of treating the Western alliance and non-Western groupings as opposing camps, India uses different international platforms for different strategic goals. Brics and the Shanghai Cooperation Organisation (SCO), for instance, provide avenues for India to strengthen energy ties, expand trade, push for changes to the global financial system and deepen its engagement with the Global South.

At the same time, India's partnerships with the US and other Western countries are important for advanced technology, defence cooperation, semiconductor supply chains and security in the Indo-Pacific.

This approach is often described as multi-alignment. The objective is to keep India's strategic options open while ensuring that no single power becomes indispensable to its economic or security interests.

Russia, energy and India's balancing act

The clearest example of this approach is India's relationship with Russia.

After Russia invaded Ukraine, India sharply increased its purchases of Russian crude. Russian oil, which accounted for less than 1 per cent of India's oil imports before the war, rose to more than 40 per cent of the country's oil basket.

India imported commodities worth $55.4 billion from Russia, with discounted energy being a major driver of the relationship.

New Delhi faced criticism and pressure from Washington over its continued purchases of Russian energy, particularly as the US and its allies imposed sanctions on Moscow. India, however, defended its position by arguing that buying Russian crude was necessary for its domestic economy and helped prevent a sharper rise in global oil prices.

At the same time, India did not allow its relationship with Russia to stop it from deepening ties with the US. It expanded defence and technology cooperation under the Initiative on Critical and Emerging Technology, or iCET, and continued maritime exercises with the US, Japan and Australia through the Quad.

In other words, India maintained its energy relationship with Moscow while building stronger security and technology partnerships with Washington and its allies.

Brics, the dollar and local currencies

Finance is another area where India's multi-alignment is visible.

Countries such as Russia, China and Iran have pushed within Brics for reducing dependence on the US dollar. There have also been proposals for a common Brics currency.

India, however, has been more cautious.

Rather than backing an explicitly anti-dollar currency bloc, New Delhi has promoted trade settlements in local currencies. This could include arrangements such as rupee-dirham or rupee-rouble trade, allowing businesses to reduce transaction costs and their exposure to currency fluctuations.

At the same time, India has not sought to cut itself off from the existing global financial system. Its financial institutions remain connected to Western capital markets and international payment networks such as SWIFT.

India has also sought to expand the international use of its own digital infrastructure, including the Unified Payments Interface, or UPI.

The approach therefore is not about replacing one financial system with another overnight. It is about creating more options while remaining connected to the dollar-based global economy.