Indian Prime Minister Narendra Modi shocked the world when he decided to make Russia the destination of his first bilateral visit following his unprecedented third term reelection and his visit to the G7 Summit in Italy. While in Moscow, Modi signed a host of agreements with his Russian counterpart Vladimir Putin on areas ranging from defense to science and technology to visa free travel. The impact of Modi’s visit to Russia might seem to just be contained to geopolitics. However, it also matters deeply to the economic security of America.

India has aligned with the U.S. on many issues including South Asian regional engagement, ASEAN (Association of Southeast Asian Nations), and the Quad (Quadrilateral Strategic Dialogue). Particularly, the two nations share the desire to limit Chinese power projection in the Indo-Pacific. In July, both Secretary of State Antony Blinken and his Indian counterpart External Affairs Minister Subrahmanyam Jaishankar met and “affirmed the United States and India’s commitment to promoting a free, open, and prosperous Indo-Pacific region.” American diplomatic engagement with India is growing, and there is much work to be done to strengthen economic and political relationships.

India’s Green Technology Revolution

India is in the beginning stages of multiple massive domestic development programs. The United States currently stands to be the principal foreign power involved in these efforts through its private and public financing, as well as by manufacturing much of the needed technology. The U.S. stands to gain considerably by further aligning Indian and American commercial interests, ensuring that a strong geopolitical relationship follows and grows thereafter.

Should India decide to go another way, the U.S. could miss out on this economically and politically lucrative engagement. Secretary Antony Blinken noted that, “This could not be.. a more critical, a more vital time for our business communities, our private sectors to be working together.” It is imperative for America to use its diplomacy and development toolkit to ensure we do not lose this opportunity.

One of the biggest areas of commercial collaboration between the U.S. and India is in renewable energy and green manufacturing. The Indian government has set a seemingly impossible target for itself: achieve 450 GW of renewable energy by 2030. The government knows that it cannot achieve this goal by itself and will need the support of foreign firms and the investment and financing of foreign governments. American firms and American foreign direct investment have emerged as the key partners to India’s green technology transformation.

The Indian national and state governments are doing everything they can to create a business environment attractive to both FDI and foreign firms. Because of these efforts, the Indian energy market has roughly $333 billion worth of financially attractive projects, promising to earn high returns for U.S. investors. For comparison, in 2021, U.S. exports to India totaled $40.1 billion. Noticing this, the U.S. International Development Finance Corporation’s India Green Transition Fund currently stands at $1b.

As one example of the DFC’s work in India, in Tamil Nadu, they provided $500 million to help an American company build a solar manufacturing facility in the state. The project will produce roughly 30 million light bulbs for homes, schools, and businesses across India, it will create over a thousand jobs for both Americans and Indians, and it will shift green manufacturing supply chains away from China.

Diversifying from China 

American investment in its economic relationship with India also helps advance diversification from China. The green manufacturing and critical minerals supply industries are almost wholly dominated by China. Investment in India’s renewable energy transformation is one of the ways that the U.S. can diversify these industries. However, the impact of this goes beyond just green manufacturing.

The COVID-19 pandemic was a wakeup call to many Western firms on just how centralized their sourcing and manufacturing operations were and the critical weakness this posed to their supply chains. Thus, many of these firms have begun implementing what has been called a “China Plus One” strategy, wherein production supply chains are diversified beyond China—but really beyond any one country. India has emerged as one of the prime locations for businesses seeking to implement a C+1 strategy.

India benefits from highly competitive labor costs, an English-speaking workforce, and a strategic location for global shipping routes. Saliently, India also benefits from those reforms undertaken by the national and state governments to attract foreign firms and investment. Large-scale deregulation as well as tax benefits and subsidies are some of the efforts that have been made to attract firms and FDI. Apple, famous for their highly centralized production channels, has even begun manufacturing some iPhones in India as part of their C+1 strategy. Intel, Microsoft, and Dell have all signaled their intention to shift some of their production out of China in similar C+1 strategies.

Alignment with Russia

While trade between Russia and India has never been higher–reaching $65.7 billion–it is also important to note that the U.S. has maintained its position as India’s largest trading partner (with trade reaching $191.8 billion), and the trade between the two is only expected to grow and at a rate faster than trade between Russia and India. While a minor part of their commercial relationship, Indian FDI in the U.S. sustains more than 72,000 American jobs.

Much of the commercial opportunities in India may  be lost by the way of geopolitics if India aligns itself more closely with Russia, especially if the two—as they are currently seeking—increase collaboration in the science and technology sectors.

The U.S. stands to gain greatly should it capitalize on the budding economic relationship emerging between itself and India. Both India and the U.S. stand to lose just as much, should India continue to drift toward Russia and reach an alignment that is unacceptable to American foreign policy. Few single markets have the potential to be more lucrative for American businesses and the American economy. American diplomacy must be strategic in its use of both political and economic statecraft to make sure India does not become a missed opportunity.