India weighs US ties amid geopolitical risk

The market backdrop shows why this is landing now. The US 10-year Treasury yield has climbed to around 5.2%, a level that keeps dollar funding expensive and narrows room for risk assets globally. That puts more pressure on emerging markets to offer not just growth, but policy stability. India has so far held up better than many peers, but the India ETF INDA has slipped to 47.24 from above 50 in late August, while the iShares India 50 ETF, EPI, is hovering near 40.8. Both sit below their 50-day and 200-day moving averages, a sign that investors are taking profits even in one of the market’s most durable structural growth stories.

The message is that geopolitics is now a valuation input, not background noise. India has built its investment case on being a beneficiary of China-plus-one supply chains, a friendlier manufacturing base, and a bridge between the West and the Global South. But Jaishankar’s warning reflects the reality that Washington’s priorities can shift quickly, from trade and tariffs to sanctions, defense procurement and technology controls. That creates a premium on flexibility — for policymakers and for portfolios.

Adalytica’s US dollar trade signals currently show neutral sentiment but elevated fear awareness, while S&P 500 signals point to extreme fear in awareness even as headline sentiment remains neutral. That combination is consistent with a market that is not panicking, but is increasingly alert to cross-border policy shocks. In that environment, India’s appeal is not just as a growth market, but as a geopolitical hedge against overdependence on any single power center.

The clearest investment implication is to focus on the toll roads of this realignment. India’s domestic manufacturing, defense suppliers, logistics platforms, data-center infrastructure and energy-transition names stand to benefit if New Delhi accelerates self-reliance while still courting Western capital. At the same time, multinational exporters and sectors dependent on seamless US-India policy alignment face more headline risk than they did a year ago. The market underestimates how quickly strategic autonomy can turn into a capital-allocation theme.

For now, the trade is not to abandon India. It is to own the parts of India’s story that get stronger when the world becomes less predictable: infrastructure, defense, electronics assembly, and industrial buildout. If Jaishankar is right, the next phase of global markets will reward countries that can do business with everyone without belonging to anyone.