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COVER STORY JANUARY 16, 2026 | The Indian Eye 4

LOOKING AHEAD 2026

INDIA AT THE

CROSSROADS

As 2026 begins, India faces simultaneous tests on the global stage, in its economic trajectory, and within its domestic

politics—yet under Narendra Modi, the country is preparing to convert uncertainty into strategic opportunity.

OUR BUREAU

New Delhi
ndia enters 2026 with a paradoxi-
cal inheritance from the year gone
Iby. On the surface, the country
looks stronger than ever: the world’s
fourth-largest economy, among the
fastest-growing major nations, with
inflation at historic lows and a leader-
ship confident of its global standing.
Beneath that confidence, however, lie
three intertwined challenges—an un-
settled foreign policy environment, an
economy facing new headwinds despite
stellar growth, and a domestic political
landscape that demands calm even
as electoral competition intensifies.
What makes this moment conse-
quential is not merely the scale of the
challenges, but their simultaneity. Few
countries today confront geopolitical
uncertainty, economic realignment,
and domestic churn all at once. In-
dia does—and under Prime Minister
Narendra Modi, it is attempting to
respond with a mix of strategic au-
tonomy abroad, reform continuity at Prime Minister Narendra Modi and US President Donald Trump shake hands at their last meeting at the White House (Reuters/ANI)
home, and political mobilization that
seeks stability rather than drift. the diplomatic courtesies of the past. ued. Russian oil imports have slowed credible Plan B. If U.S.-China ties deep-
Strategic Autonomy Under For India, the setback went be- modestly. Tensions with Pakistan have en at India’s expense, New Delhi must
Stress yond trade. The fraying of India–U.S. receded after the brief flare-up of be ready to widen its strategic canvas.
ties challenged assumptions that had 2025. But New Delhi has resisted the That diversification is already un-
he biggest foreign policy sur- shaped New Delhi’s Indo-Pacific temptation to appear pliant. For Mo- derway. India’s partnership with Rus-
prise of 2025 was India’s cool- strategy, the future relevance of the di’s government, repairing ties with sia is being deepened with a renewed
Ting equation with the United Quad, and India’s positioning vis-à- Washington is no longer about clinch- emphasis on delivery—energy securi-
States. After months of negotiations, vis China. Speculation mounted that ing a trade agreement alone; it is ty, connectivity, trade expansion and
a long-anticipated trade deal failed to Washington’s recalibration—its re- about reshaping strategic perceptions. defense cooperation. Europe, long
materialize. As 2026 opened, President newed engagement with Pakistan and South Block’s challenge in 2026 under-prioritized, is emerging as a
Donald Trump signaled the possibility a possible consolidation of a U.S.-Chi- is twofold. First, to persuade the U.S. strategic hedge. The visit of the Euro-
of higher tariffs on India, citing New na “G2”—could obstruct India’s nat- establishment that India’s strategic, pean Union’s top leadership to Delhi
Delhi’s continued imports of Russian ural rise. technological and economic comple- in January, and the possibility of con-
oil. The message was unmistakable: Yet India’s response has been mentarities make it indispensable— cluding the long-pending India–EU
Trump 2.0 would be transactional, characteristically measured. Calls be- regardless of oil imports or tactical free trade agreement, offer India a
impatient, and unencumbered by tween Modi and Trump have contin- disagreements. Second, to prepare a Continued on next page... >>

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