When Strategic Partnership Becomes Strategic Dependence

Chinese scholar Keji Mao has put forward an interesting formulation to explain India’s current predicament: the Blood Bag Hypothesis. The theory depicts the United States as a superpower that, having entered a more contested international order, increasingly seeks to draw economic, technological and strategic advantage from both allies and partners as it attempts to renew its strength. 

Like from a blood bag.

Several recent developments appear, to proponents of this hypothesis, to support this view:

• India is not on the list of countries allowed access to frontier models, irrespective of being in the Pax Silia alliance. 

• The US did not express any remorse or regret even after its navy bombed commercial vessels transiting the Strait of Hormuz, resulting in the death of 3 Indian sailors. 

• Export sectors which generate employment are being taxed with higher tariffs by the Trump administration at a rate higher than other countries. 

• The US insists on controlling where India buys its oil from and enforcing it via licenses, waivers, sanctions and tariffs. 

• The success it had in convincing Indian conglomerates to invest billions of dollars in the US. 

The hypothesis thus points to an uncomfortable reality. 

Compared with China, India possesses fewer instruments with which to resist external economic or strategic pressure. If sovereignty is defined as the freedom to defend national interests, then India’s room for manoeuvre may be narrower than many assume.

This naturally raises the next question: how did India arrive at this position?

Keji Mao argues that the decisive choices were made around 2017, when India aligned more closely with the US. 

Mumbai Consensus
The 1991 balance-of-payments crisis triggered sweeping reforms. Yet industrialisation did not emerge as the dominant engine of growth to the extent seen in several East Asian economies. 

Instead, after sanctions imposed following India’s nuclear tests were eased, policymakers increasingly prioritised integration with the global economy, strong relations with the US and service exports as a means of financing energy imports.

The strategy proved remarkably successful. It attracted capital flows, expanded the middle class and prompted thinkers such as Larry Summers to describe the “Mumbai Consensus” as an alternative development model to the Beijing Consensus. The model relied on broadening the middle class through services-led growth, avoiding mercantilist export strategies, emphasising private enterprise over state-led development and promoting democratic institutions over authoritarian alternatives.

In doing so, Summers provided external validation for a model that had evolved partly in response to India’s own structural realities. Having received validation from the dominant superpower of the era, many policymakers came to assume that the American-led international order would remain broadly durable. The extraordinary success of the Indian diaspora in the US reinforced that assumption.

Unlike several other countries, India did not place the same emphasis on universal primary and secondary education as it did on building elite institutions of higher learning. Graduates from these institutions, facing limited opportunities at home, migrated in large numbers to the US and other Western economies. Many achieved remarkable success, building companies or leading major corporations. In turn, they often advocated policies that had contributed to their own success, policies that broadly aligned with the principles of the Mumbai Consensus.

American engagement with India has reflected a mix of strategic, economic and geopolitical interests. The US supported India’s economic rise through market access, investment and integration into global capital flows. At the same time, these links created forms of dependence that gave Washington significant influence over India’s economic environment.

Its support for the Mumbai Consensus can therefore be interpreted not merely as economic advocacy but also as a strategic preference for a model of development different from the Chinese path. Such a path ensured India’s integration into the global economy while reducing the likelihood that it would emerge as a peer competitor in the manner China eventually did.

Great Power
The advocacy of this model also produced an unintended consequence. Many Indian elites came to believe that the Indian century had effectively arrived and that great-power status was now only a matter of time.

Meanwhile, the global environment was changing. The American effort to constrain Chinese technological progress through export controls and sanctions has produced mixed results and remains the subject of intense debate. Yet China has continued to make advances in robotics, artificial intelligence, semiconductor design, electric vehicles and renewable-energy technologies. Having followed its own developmental model, it has established a significant presence not only in traditional manufacturing but also in several frontier industries.

Recent developments in West Asia have also raised questions about the effectiveness of traditional American coercive tools in shaping regional outcomes. Likewise, Western support for Ukraine has not produced the decisive outcome many anticipated at the outset of the conflict.

The United States also benefited for decades from the privileged position of the dollar and its central role in the international financial system. Capital flowed in from allies, partners and investors seeking safety and liquidity. Yet critics argue that the resulting economic structure contributed to widening inequality and the erosion of parts of the domestic manufacturing base.

Critics further argue that recent American policies increasingly encourage allies and partners to direct capital, investment and industrial activity towards the US as part of a broader effort to rebuild domestic economic strength.

This pressure is applied through a variety of mechanisms, but the underlying logic remains similar: the weaponisation of interdependence. Supply chains, technology access, sanctions regimes and financial networks are increasingly used as instruments of statecraft, amplified by the enduring influence of the dollar-centric international system.

India’s current predicament is therefore unlikely to disappear simply because circumstances change in Washington. For India, the more important question is not whether American behaviour changes, but whether India develops sufficient economic, technological and strategic capabilities to reduce its vulnerabilities.

Where India goes from here depends on confronting the central challenge—whether its intellectual framework for understanding the world has kept pace with the emergence of a genuinely multipolar order.

If it has not, India’s ambition for strategic autonomy may prove more difficult to realise than many currently believe.