Think Tank


India’s foreign policy choices have become significantly complicated with the Russian invasion of Ukraine. Apart from the immediate threat to world peace, the significance of China borrowing from the Russian template to fuel its own expansionist plans is lost on no one. For India, the choices are not easy, given its legacy of military dependence on Moscow, an ‘incomplete’ relationship with the US and the rise of an aggressive China at its doorstep. To seek a view on these issues, we hosted Jayadeva Ranade, former Member and Additional Secretary, National Security Advisory Board, and President of the Centre for China Analysis and Strategy, at a recent India CEO Forum session.

The war has split the world into two distinct camps: the liberals and the authoritarians


Russia’s invasion of Ukraine has forced many countries to make hard decisions. The struggle today is not just between two nations but between two competing ideologies. On the one side is the West, which believes in a world founded on liberal ideals and the free movement of commerce and capital; on the other are unelected, authoritarian regimes that seek to impose themselves on other countries. There is no longer any doubt (if there ever was) about which side China, the world’s only other true superpower, belongs to. With the globe so clearly split into two camps, the fence-sitters, including India, will eventually have to choose sides.

A February summit signalled China’s backing of Russia over Ukraine

China and Russia have overcome decades of mistrust…

…but the setbacks in Ukraine have given China pause for thought


On February 4th, 2022 when Vladimir Putin and Xi Jinping met in Beijing, they had two goals in mind. One was to demonstrate Russia’s backing for China at the Winter Olympics, which had suffered a diplomatic boycott by many countries, including India and the US . The other, more important goal was to address issues of regional and global importance, which they highlighted in a joint statement. Crucially, they asserted the two countries’ indivisible security, emphasising their right to intervene in any ‘potentially dangerous developments’ in the neighbourhood. The statement also claimed that the US is behind various ‘colour revolutions’, or the oft-insidious grassroots efforts to overthrow hostile regimes, such as China’s.

Plainly, Mr Xi has invested significant amounts of political capital in both, Mr Putin and Russia. Unlike many in the Chinese Communist Party’s leadership, he saw the fall of the Soviet Union and its Communist Party as a major blow to the worldwide communist movement. Consequently, Moscow and Beijing have put aside decades of mutual suspicion and now cooperate on a range of issues, including security. China has provided unflinching diplomatic support to Russia over Ukraine. It is heavily dependent on Russia for military hardware and, increasingly, oil and gas. In exchange, Russia receives hard currency and consumer goods.

Recent events have, however, given China pause for thought. There are signs of unrest within Russia and Mr Putin’s own position is becoming less secure. By the 70th day of the war, 600 of the world’s most powerful MNCs had fled Russia. Meanwhile, the US and Europe continue to provide Ukraine with advanced military technology. This has put China, which is even more deeply interconnected with the world economy, in a quandary. Its leaders realise that, should China invade Taiwan, the economic fallout for it may be even bigger. Moreover, sanctions on Russia have brought into doubt its ability to continue supplying China militarily.

India is rethinking its ties with Russia

Re-evaluating the Indo-Russian relationship

A deepening Sino-Russian connection fundamentally impacts India’s relationship with Russia. Notably, Russia failed to support India during the Chinese incursion in Ladakh in 2020; nor did it back India over Kashmir at the UN. As a result, India has had to fundamentally reconsider its policy toward Russia and has begun to both diversify and indigenise its defence supplies with greater urgency. (This was visible, for instance, in the Rafael-jet deal with France, which bypassed Russia’s MIGs.) The West possesses the advanced technologies that India requires, as well as the funds to invest here. Moreover, there are no major disputes between India and the West, nor any shared borders, so it makes sense for the two sides to align.

AUKUS is meant to extend the US-UK-Australian security dominance in Asia


The recently-formed trilateral security pact between Australia, the UK and the United States is a direct response to a rising China and a hostile Russia. AUKUS is very plainly an Anglo-Saxon power alliance designed to extend these countries’ dominance in Asia, and which excludes other potential allies, including Europe. America will gain from this initiative because its technology will underpin the hardware; the British will build some of the submarines; and the Australians, who have no experience with nuclear technology, will foot the bill.

Frictions with the West have intensified since the Russia invasion but the roots were laid years ago

China’s Zero-Covid policy is causing economic pain and internal discontent


China remains the world’s manufacturing hub, and is responsible for about 70% of all global trade. Steadily, however, other countries are electing to produce crucial components in-house rather than outsourcing them to China. The Ukraine war has accelerated this trend but the roots were laid years ago, when Mr Xi announced his intent to make China a major power with ‘global pioneer influence’ by 2049. Donald Trump reacted strongly, and China’s technology sector bore the brunt. When America ‘took down’ ZTE and Huawei, Mr Xi quickly realised that China’s claim to technology independence/self-reliance had been called into doubt. Accordingly, China accelerated its efforts around science and technology innovation.

The Chinese leadership is keeping a close eye on the situation in Ukraine. Taiwan remains high on its agenda and Xi Jinping’s medium-term goal is to ‘reunify’ China. This is driving Japan not only to ramp up its own defence spending but also to push the US to unambiguously state that it will defend Taiwan in the event of an invasion. For now, Mr Xi is focused on the forthcoming 20th Party Congress, where he aims to secure a historic third term.

However, China’s zero-Covid policy is breeding much internal discontent. Economists estimate that the lockdowns in Shanghai, sections of Beijing and other parts of China, will impact as much as 35% of China’s GDP. There are also competing views on whether the zero-Covid policy is working at all. Tellingly, there have recently been three emergency, high-level government meetings, including one of the Economic and Finance Committee, which only meets under dire circumstances. Recently, it met to explore how to deal with sanctions, should they be imposed on China.



For the CFO, the significance of day-to-day ‘Finance’ work is diminishing relative to new demands around business leadership. Apart from a basic technical/accounting background, the key skills and competencies today’s CFO must possess rest on four fundamental pillars: leadership, operations, controls and strategy. Sumendra Jain, CFO (India & Asia Pacific) at SMS India, believes that for Finance leaders to be effective business partners, they must have the necessary leadership and communication skills. Additionally, to be able to offer an independent perspective, they must possess a strong understanding of the company's business model and industry. CFOs should also be able to identify opportunities for top-line growth, manage downside risks and drive profit improvement, not just through the traditional methods of cost-control, but using new methods like product line/regional profitability analysis and benchmarking against industry players. Sumendra’s 25-year-long career offers insightful lessons and learning for executives in general and CFOs in specific.