India’s Retaliatory Options Against Larger Powers

Foreign Policy & Geopolitics
Published

July 6, 2026

Foreign Policy, Defence & Geopolitics strategy trade

When you are a big buyer, you have power. The question is whether you are willing to use it.

Origin

Developed by Pranay Kotasthane in Anticipating the Unintended #316 (September 2025), building on Swaminathan Aiyar’s argument and analysis of China’s SAMR as a geopolitical instrument.

What it says

India’s domestic market is already a source of leverage. Four retaliatory options exist beyond conventional tariffs:

  1. Defence procurement linkage — India is among the largest arms importers globally. Telling the US that India cannot buy arms from a country that imposes punitive tariffs turns foreign policy into trade leverage.

  2. Pharmaceutical patent pressure — US drug firms fear India will restrict fresh patents or liberally issue compulsory licenses. India can calibrate this pressure without formal announcements.

  3. SAMR-type regulatory authority — China’s State Administration for Market Regulation uses merger review as a geopolitical lever. India, as the only other market of comparable scale, can build a regulator that considers national strategic interests alongside market competition. The current CCI focuses narrowly on competition; a broader mandate would give India structural leverage over multinational deals.

  4. Market access calibration — using procurement preferences, data localisation, and standards-setting as graduated pressure tools.

Each option sets in motion effects that extend beyond the bilateral relationship, which is why calibration matters more than maximalism.

Applied

  • When designing India’s response to trade coercion from the US, EU, or China.
  • When arguing against the defeatist view that India must simply accept external pressure until it grows richer.
  • When building institutional infrastructure (a SAMR equivalent) before it is urgently needed.

When it falls short

Each option carries escalation risk. Arms procurement linkage damages interoperability built over decades. Pharma pressure can invite WTO challenges and damage India’s broader trade reputation. And a SAMR-type regulator requires sophisticated institutional capacity that India’s bureaucracy does not yet possess. The framework identifies cards; it does not guarantee they can be played cleanly.

Further reading