India tried to stabilise its volatile periphery in 2024; it should play the long and pragmatic game to create more wins in 2025
India’s neighbourhood in 2024 remained in ferment, even as the country tried to steady its bilateral relationships in South Asia. Through the year, India worked to stabilize its periphery: engaging cautiously with its traditional adversaries, China and Pakistan; making tactical adjustments with the failing states of Afghanistan and Myanmar; and extending special outreach to new regimes in Bangladesh, Sri Lanka, Maldives, and Nepal. These smaller neighbours, often balancing between India and China, saw shifts in sentiment, including a rise in anti-India rhetoric. The regime change in Bangladesh remained the most troubling, with prospects of a resumption of democracy appearing remote. Amid these challenges, Bhutan remained India’s most steadfast ally, even as it faced pressures from China.
India walked the talk on ‘neighbourhood first’, even as domestic discourse began to accept that neighbours too had their right to strategic autonomy and that internal dynamics driving regime changes or anti-India stances mostly lay beyond India’s control. Privileging its neighbourhood has been a historical tradition for India. From Nehru’s Panchsheel principles of the 1950s, advocating non-interference and peaceful coexistence with China and beyond, to the regionalism envisioned through SAARC in the 1980s, and the Gujral Doctrine of the 1990s, which championed non-reciprocity and respect for smaller neighbours, India has consistently sought to anchor its foreign policy in South Asia. The Modi government’s neighbourhood first initiative since 2014 epitomized this commitment, translated into the participation of SAARC leaders, including Pakistan, for Modi’s first swearing-in ceremony. This tradition continued in 2024, when the re-elected Modi government marked a decade of this policy by inviting regional leaders, though not Pakistan, to the inauguration of Modi 3.0.
The toppling of Sheikh Hasina in Bangladesh this August, accompanied by a surge in anti-India rhetoric, reignited debates about whether India is perceived by its neighbours as the overbearing big brother, and is consequently losing its foothold to China or hostile forces. While all neighbours do not suddenly see India as the villain, the country must now contend with three enduring realities. First, no neighbour may ever again fully align with Indian interests, requiring India to engage with neighbours as they are, rather than as it might wish them to be. Second, South Asian nations will continue to hedge between the two dominant Asian powers, so India must establish a unique relevance to each. Third, anti-India sentiments or regimes will periodically emerge, demanding strategic patience and pragmatic engagement. The central challenge for India lies in crafting both immediate and enduring benefits for ruling elites and the broader populations of these countries. Even in a landscape where neighbours play India and China against each other, or where anti-India forces occasionally gain traction, India must persist in creating meaningful wins that foster stability and goodwill across the region. For the neighbours, India must offer a simple value proposition: if they take care of India’s security concerns, India would be a valuable partner for their security as well as prosperity.
Balancing Pragmatism and Partisanship
Critics argue that with a preference to engage exclusively with friendly leaders and governments, New Delhi risks undermining its broader regional interests, particularly since the benign ruling elites can be replaced rapidly by inimical ones. While such criticism has some merit, India has increasingly adopted a pragmatic approach, engaging with less amicable regimes to safeguard its strategic goals. India’s historical reliance on aligned political entities stems from an impulse to find friends in a region marked by political volatility, anti-India sentiment, and now, growing Chinese influence. Recognising the limitations of this approach, India has increasingly followed a more realist policy and diversified its engagement. It now engages equally with nationalistic, anti-India, or pro-China leaders, even with coup-makers, balancing principles with pragmatism. For example, despite tensions, India did intermittently engage with Bangladesh’s opposition BNP, (though these efforts yielded limited outcomes until Hasina’s ouster) or with the Taliban in Afghanistan or with rebel factions within Myanmar.
Economic initiatives underpin this pragmatic turn. India’s investments in regional connectivity—spanning rail, road, port, and telecommunications—have created shared economic equities. Over the past decade, India’s credit lines to Bangladesh (USD 8 billion), Sri Lanka (USD 4 billion), and others have surged. Developmental aid, coupled with India’s growing economic clout, has fostered optimism among neighbours. Yet, competition with China remains a persistent challenge. Domestic politics in South Asia layered with China’s influence, complicates New Delhi’s efforts to secure its interests. By blending pragmatic diplomacy with economic integration, India seeks to mitigate risks while maintaining influence in its strategically vital neighbourhood. But India also needs to nuance its policy, since no one size will fit the three categories of neighbours: the adversaries, the failing states and the smaller, hedging neighbours.
Traditional Adversaries
- China. In 2024, India and China cautiously resumed talks to ease tensions following the military standoffs that began in 2020. High-level meetings, including a Modi-Xi interaction in Russia (October) and discussions between NSA Ajit Doval and Chinese Foreign Minister Wang Yi (December), marked tentative steps toward mending ties, Talks focused on maintaining peace along the Line of Actual Control (LAC) and implementing earlier troop disengagement agreements. However, underlying mistrust lingers, fuelled by China’s assertive military postures in Ladakh; the unresolved border disputes and the overall strategic rivalry remains a challenge. What India would hope to achieve with China in the short term are tactical adjustments and not strategic breakthroughs, given the realities of economic interdependence and trade levels of over USD 130 billion. The larger relationship would need to be situated in the context of China’s challenge to the dominant global hegemon, the US. India’s bilateral positioning with the traditional rival would therefore need to be bolstered by global diplomacy, as through the QUAD, which could call out China’s belligerent behaviour.
- Pakistan. While stabilising relations with China, India also reached out to its western adversary, Pakistan. External Affairs Minister S. Jaishankar visited Pakistan for the Shanghai Cooperation Organisation (SCO) Summit, the first such visit in nine years since Sushma Swaraj visited Islamabad for a conference on Afghanistan in 2015. This was followed by the renewal of the Kartarpur Corridor agreement, continuing visa-free access for Indian pilgrims to Gurdwara Kartarpur Sahib. While Pakistan continued to reel under a poly-crisis from 2021, threatening political, economic and security meltdowns, it also was seeking some degree of stabilisation on its eastern border. India’s gesture to send an influential minister, even if for a multilateral meet, was a clear signal of a willingness to stabilise relations in a backdrop of longstanding tensions. Effectively, India’s message was that if Pakistan could move positively to curtail cross- border terrorism in Jammu & Kashmir, India would be willing to work towards normalising the relationship. The window for rapprochement would remain open in 2025.
Failing States
- Myanmar. Three years after a military coup toppled an elected and partially democratic government, Myanmar has spiralled downwards into becoming a failed state, with civil war fragmenting the country. Only 14% of its territory and 33% of its population remain under stable control of the military junta. Escalating violence, including scorched-earth tactics by the junta, has displaced millions, creating a dire humanitarian crisis, with an estimated 18.6 million people requiring assistance in 2024, a sharp increase from previous years. For India, Myanmar’s instability poses security risks, including of cross-border insurgencies, terrorism, and drug trafficking, particularly along the porous northeastern border. The junta’s challenge from ethnic insurgent groups has seen internal battles, particularly the Arakan Army’s control over significant chunks of territory- the Rakhine and Chin States. These threaten India’s strategic interests, including the crucial US$484 million Kaladan Multi-modal Transit Transport Project (KMTTP). This project, vital for directly linking India’s eastern coastline with its Northeastern states through Myanmar, was designed to alleviate logistical challenges and enhance regional integration. But the Arakan Army’s hold on vital areas along the Kaladan project route requires India to balance engagement with the ruling junta with an outreach to armed ethnic factions to safeguard its strategic interests. India will need to be less shy of engagement with all actors who matter.
Afghanistan. Afghanistan remains a failing state under Taliban rule since US troop withdrawal in August 2021. The country faces economic collapse, food insecurity, and rising extremist threats, including from the ISIS-K, apart from the wrath of the Pakistan army for sheltering the deadly TTP. For India, Afghanistan’s instability risks fostering anti-India militant activity, jeopardizes development projects, and raises concerns about potential refugee inflows. India’s pragmatic approach to Afghanistan is guided by its historical goodwill and friendship with its people while being in lockstep with the global community and UN resolutions. Even as India closed its embassy in the aftermath of the Taliban takeover of 2021, it positioned an Indian ‘technical team’ in the embassy in 2022: for monitoring projects, continuing humanitarian assistance and having an ear to the ground. While India is in no rush to recognise the ‘Islamic Emirate of Afghanistan’ its civilizational ties with Afghanistan are updated with a development partnership that has more than five hundred projects spread across each of the 34 provinces of the country in critical areas of power, water supply, road connectivity, healthcare, education, agriculture and capacity building. India needs to build on the goodwill by giving visas more generously to Afghans, particularly students, and to pragmatically engage the Taliban to ensure it does not allow any anti-India violence from Afghan soil, while at the same time pressing it to adopt more inclusive policies for women and girls education.
Hedging Neighbours
- Bangladesh: Since the ouster of Sheikh Hasina in August 2024, Bangladesh has begun to distance itself from India, marking a significant shift in its foreign policy. Hasina’s administration had fostered strong ties with India, prioritizing security cooperation and economic collaboration. Under her leadership, Bangladesh effectively managed Islamist forces and maintained a pro-India stance, which included welcoming Indian investment and addressing mutual concerns regarding terrorism.
However, following Hasina’s removal amid widespread protests and the establishment of an interim government led by Nobel laureate Muhammad Yunus, relations have soured. The new administration has openly signalled a desire to recalibrate its approach to foreign policy, indicating a potential pivot towards Pakistan and other regional actors in an open challenge to India’s influence. The resurgence of the Bangladesh Nationalist Party (BNP), which has historically been more sceptical of India, raises further concerns for New Delhi. The BNP in partnership with Islamist groups like Jamaat-e-Islami, could increase hostility both to the Bangladeshi minority of 13 million and to India, thus threatening Indian security interests. The visit of Foreign Secretary Vikram Misri in December was aimed at sensitising Bangladesh to Indian concerns and assuring strong economic cooperation.
The extradition request for Hasina from Yunus’s interim government is an internal political signal as much as one to India. For India, the request has both political and legal consequences. India, under no political circumstances, would agree to extradite Hasina to Bangladesh and could site several legal reasons for this action. In the medium term, India would need to engage with a less friendly regime, pointing to the benefits for the people of Bangladesh of security and economic cooperation with India.
- Nepal. Prime Minister K.P. Sharma Oli’s December 2024 visit to China underscored Nepal’s deepening ties with Beijing, marked by agreements under the Belt and Road Initiative (BRI). Oli’s policies, including reducing reliance on India for trade and prohibiting anti-China activities in Nepal, highlight a pro-China stance that won’t go away but may be balanced by better ties with India. On its part, India would need to recognise this reality of Nepal hedging between India and China and provide some unique benefits to its contiguous Himalayan neighbour.
- Sri Lanka. Sri Lankan President Anura Kumara Dissanayake’s December 2024 visit to India reflects efforts to rebuild ties as much as rebuild the country following Sri Lanka’s 2022 economic crisis. While discussions focused on trade, investment, and security, most significant was Dissanayake reaffirming commitments to regional stability and ensuring Sri Lankan territory is not used against India’s interests. Clearly, as Sri Lanka navigates its recovery while balancing Indian and Chinese influence, it will have incentives to check China’s growing influence, especially through projects like the Hambantota Port. By balancing relations with India, the leftist Dissanayake signalled a desire to engage both Asian powers while safeguarding national sovereignty. For India, Sri Lanka represents a successful example of proactive and pragmatic engagement across regimes and despite domestic turmoil.
- Maldives: President Mohamed Muizzu’s first bilateral visit to India in October marked a shift from his earlier anti-India rhetoric. Clearly reversed was the earlier ‘India Out’ campaign rhetoric that sought to diminish Indian influence in the Maldives. Muizzu had earlier advocated for the withdrawal of Indian military personnel and leaned towards strengthening ties with China and Turkey, in a diplomatic snub to India. Economic challenges have driven a recalibration of policy, and Muizzu’s pragmatic approach denotes a correction in policy which could lead to normalization of relations.
Strategic Patience with Short-term Wins
All this shows that India’s regional strategy is a delicate balancing act of navigating adversarial relations, managing spillovers from failing states, and maintaining influence over neighbours hedging between global powers. Combining diplomatic pragmatism with robust economic initiatives will be key to safeguarding its interests in this complex and dynamic environment.
India’s neighbourhood policy demands strategic patience, embracing occasional anti-India regimes, navigating Chinese competition, and rejecting zero-sum approaches. A durable framework for regional security and prosperity should prioritize grants over loans, emphasizing economic and security cooperation, connectivity, and humanitarian assistance. Engagement spans energy collaboration, development aid, defence partnerships, disaster relief, cultural exchanges, and infrastructure projects. Encouraging Quad partners like the U.S., Japan, and Australia to join South Asia’s economic initiatives will enhance regional stability, despite occasional differences. Reviving SAARC will offer a more manageable mechanism for dialogue, complementing sub-regional platforms like BIMSTEC and BBIN, while reducing reliance on the China-led SCO.
India has lately pursued active regional diplomacy, blending gentle persuasion with respect for its neighbours’ internal dynamics. Recognizing external counterbalances, especially China’s unprecedented regional investments, India must strategically intensify its efforts to counter these challenges. By stabilizing its periphery and aligning regional policies with its broader goals, India can secure its neighbourhood and focus on its larger global interests, that would include pursuing its aspiration to become a developed major power by 2047.
ABOUT THE AUTHOR
Ajay Bisaria is a corporate strategic advisor and Distinguished Fellow at the Observer Research Foundation, was India’s ambassador in Poland, Pakistan and Canada.