Much of the discussion surrounding Indian Prime Minister Narendra Modi’s recent visit to Russia was about its implications for India’s relations with the West, given the optics of Modi hugging Vladimir Putin as Moscow conducted airstrikes on Ukraine and Western leaders were meeting in Washington, D.C. for the NATO Summit. However, overlooked in this discussion is the fact that Modi stepped away from the standard practice of Indian leaders making their first overseas state visits to a neighboring country.
The first overseas visits of Modi’s first two terms in 2014 and 2019 were to Bhutan, and Maldives and then Sri Lanka, respectively. In 2024, following the start of Modi’s third term, he paid a visit first to Italy in June for the G-7 Summit and then, in July, traveled to Russia.
This alludes to an emerging facet of Indian foreign policy: As the country continues its rise as an increasingly consequential global power, its regional role is being eclipsed. This is a far cry from Modi’s initial commitment to the neighborhood when he assumed power in 2014 by inviting the leaders of all South Asian countries to his inauguration and his government announcing a “Neighborhood First” policy. Modi’s surprise visit to Pakistan in December 2015 to meet then-counterpart Nawaz Sharif on his birthday also raised hopes of a rapprochement in the perennially difficult India-Pakistan relationship.
However, as India has been swept up in its own global aspirations – from its G-20 presidency in 2023 to its ambitions to play the role of a “bridging power” between the West and the Global South – its presence in South Asia has fallen off the radar.
Poor Connections
This matters for two reasons. First, one often forgets that China’s rise as a global power was preceded by its emergence as a regional power. In other words, China regionalized before it globalized by integrating its economy and infrastructure with neighboring countries in East Asia. This helped to cement China’s subsequent centrality to global supply chains and transnational production networks. India will need to do the same as it seeks to emerge as a beneficiary of the push to de-risk or diversify supply chains away from China.
To its credit, New Delhi has made some efforts to strengthen regional connectivity. For example, India, Bangladesh, and Nepal are close to concluding a tripartite agreement aimed at improving cross-border electricity trading. However, this does not detract from the fact that South Asia remains the least integrated region in the world, with intra-regional trade accounting for 5 percent of South Asia’s total trade (compared to a quarter for Southeast Asia).
The region’s institutional architecture also remains underdeveloped, with the South Asian Association for Regional Cooperation (SAARC) not holding a summit meeting since 2014. Many will argue that the India-Pakistan relationship is to blame for this, but even regional initiatives that exclude Pakistan have failed to make significant progress. The SAARC alternative, BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), has only held five summit meetings since it was founded in 1997, with its sixth – the first in two years – due to take place in Bangkok in September.
Arc of Instability
The second reason why developments in India’s neighborhood matter for the country’s global aspirations is the chronic instability facing the region.
To India’s east, Bangladesh – a country with which New Delhi has arguably maintained the most stable relations in recent years – has been embroiled in instability for the past two weeks. The immediate reason for this was the reversal of a 2018 reform that had scrapped public sector job quotas for relatives of veterans of the country’s war of independence in 1971. The reinstitution of the quotas drove university students to the streets in protest. However, underlying this is a skewed political system that favors those affiliated with the ruling Awami League and a struggling economy with high levels of youth unemployment in a country where the median age is less than 30. The fact that India has been a key supporter of Prime Minister Sheikh Hasina’s government has brought New Delhi under scrutiny, as noted by a “India out” campaign that emerged after Hasina was elected for a fourth consecutive term in January.
To India’s north, Nepal just appointed its 14th prime minister in 16 years. The country’s revolving door of leaders since it became a republic in 2008, which followed a decade-long civil war, has impeded Nepal’s development. To its south, Sri Lanka is going to the polls later this year as the country continues to recover from a sovereign default in 2022. Sri Lanka maintains the world’s highest ratio of interest payments to government revenue.
To India’s west, Pakistan has been on a downward spiral, having just secured its 24th IMF bailout (a world record); renewed pressure on jailed leader Imran Khan despite his party winning the largest number of seats in Pakistan’s parliamentary election in February; and surging terrorist attacks. This has direct implications for India, as noted by a recent string of attacks in Kashmir as the Pakistani military seeks to burnish its credentials and justify its overwhelming presence in the country’s politics.
All it would take is another high-profile terrorist attack inside India attributed to Pakistan-based militants to see a mobilization of both nuclear-armed countries’ militaries. When this happened in the early 2000s, it undermined investor confidence and led to foreign companies downsizing their presence in India.
The China Factor
Overlaying these instabilities is China’s growing influence in the region. China has emerged as a leading trade partner, source of foreign investment, and an increasingly important defense partner for countries in South Asia. This has complicated India’s engagement with neighboring countries. While a handful of countries are clearly in the China camp (Pakistan) or India camp (Bhutan), most continue to oscillate between pro-India and pro-China governments. This has given these states leverage in extracting concessions from New Delhi and Beijing to meet their development needs while retaining their strategic autonomy. The Maldives has provided the most recent example of this, with the government of Mohamed Muizzu elected on an “India out” platform in September 2023.
To be sure, this has not always worked out. Several countries in the region are beholden to Beijing’s opaque lending practices and coercive economic activities: China accounts for over 70 percent of Pakistan’s external debt, over two-thirds for the Maldives, and over 50 percent of Sri Lanka’s foreign debt. Sri Lanka’s Hambantota port project became synonymous with China’s “debt trap” diplomacy narrative after Beijing secured a 99-year lease for the project after Colombo was unable to service its debt obligations.
One potential saving grace is India’s growing willingness to work with other major powers in the region. Contrary to its position during the Cold War when India regarded South Asia as its exclusive sphere of influence, New Delhi is now open to like-minded states working on development initiatives in the region. This has given countries in the region a choice beyond New Delhi and Beijing, as noted by the Japan financing Bangladesh’s first deep-water port; the United States providing a grant to fund power transmission and transport projects in Nepal; and the European Investment Bank financing transport and renewable energy projects across South Asia.
Ultimately, can India rise without the region? The fact that its neighbors include three countries facing IMF bailouts (Pakistan, Sri Lanka, Bangladesh), two countries that are failed or near failed states (Afghanistan, Myanmar) and two nuclear-armed states that maintain active border disputes and chronically difficult relations with New Delhi (China, Pakistan) suggests not. India will need to renew its regional engagement as it seeks to fulfill its global aspirations.