Is India leaving South Asia behind? – DW – 06/19/2025
India is aiming for a global leadership role, but strained ties and regional instability in South Asia are testing its Neighborhood First policy.
India, the world's fourth-largest economy, aspires to become a top power on the international political stage.
"India is emerging as a global leader in different aspects of technology, be it space, AI [artificial intelligence], digital innovation, green technology and more," Indian Prime Minister Narendra Modi said on X last month.
However, some experts told DW that India's global ambitions come at the cost of its relationship with regional neighbors that have turned hostile to New Delhi's quest for regional hegemony.
India's rise comes as economic instability and political fragility are threatening South Asia.
As India positions itself on the global stage, questions remain over whether it can truly rise without its neighbors Image: DPR PMO/ANI Photo
More than half of Afghanistan's population has slipped below the poverty line since the Taliban came to power, while Myanmar grapples with political instability under military rule.
Pakistan, Sri Lanka and Bangladesh have turned to the International Monetary Fund for bailouts, and India itself faces a rise in sectarian violence.
China is meanwhile expanding its influence across South Asia through deepening economic and strategic partnerships.
Neighborhood First — on the backburner?
After coming to power in 2014, Modi signaled a revitalization of India's Neighborhood First Policy, aimed at repairing and bolstering its ties with countries in the region.
But Chietigj Bajpaee, senior fellow for South Asia at the London-based Chatham House, said that a decade on, "the neighborhood remains a weak component of India's foreign policy." He suggested that there has been "a degree of benign neglect by New Delhi."
Despite rhetorical nods to regional solidarity, India's foreign policy has primarily focused outward, toward the US, Europe and East Asia — rather than toward South Asia.
Bajpaee said there is little appetite in India to reactivate the South Asian Association for Regional Cooperation (SAARC), a regional bloc comprising Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.
"Everyone except India is interested in reviving it," Bajpaee said, but noted that the "India-Pakistan relationship ... undermines any prospect of [reviving] SAARC."
Hostilities between India and Pakistan have effectively frozen the bloc since 2016, when India withdrew from a summit in Islamabad following a deadly attack in Indian-administered Kashmir.
Kanak Mani Dixit, a Nepal-based writer and founding editor of Himal South Asian magazine, says India has often taken a unilateral approach on regional issues.
Citing the launch of the SAARC satellite in 2014, Dixit says Prime Minister Narendra Modi "bypassed regional consultations."
"Courtesy requires talking with your neighbors," said Dixit. "This strategic aloofness has fed resentment against India in countries like Nepal and Sri Lanka." Dixit noted that other rising powers, most notably China, invested first in regional networks before turning outward.
"China regionalized before it globalized. India is attempting the opposite," Bajpaee added.
Tracking the tense relationship between India and China
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Missed opportunities
South Asia is now widely considered the least economically integrated region in the world, according to the World Bank.
Intra-regional trade makes up barely 5% of total trade in the region. By contrast, intra-EU trade stands at about 60%.
"There is a strong market of 500 million people outside of India in South Asia," said Biswajeet Dhar, a former economics professor at New Delhi's Jawaharlal Nehru University. He pointed to textiles, pharmaceuticals, energy and services as areas with huge potential.
"We studied regional value chains for the Asian Development Bank. The complementarity was incredible," Dhar added, noting that the "potential remains largely unrealized due to narrow political disputes."
Dixit echoed Dhar's sentiment: "This is the region that could benefit the most from trade, and yet there is none."
Sri Lankan economist Ganeshan Wignaraja said that India could benefit economically if it fostered closer links across its borders.
"If India neglects its neighborhood, it will let others, such as China, enter the neighborhood, and that would compromise India's national security," said Wignaraja.
India's trade with Pakistan collapsed following diplomatic hostilities, depriving both sides of economic links that could foster stability. China has already benefited from the regional gap, by investing in Bangladeshi ports, Sri Lankan airports and Pakistani motorways.
Are India, the EU ready for a free trade agreement?
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India's diplomacy of domination
Dixit challenged what many people perceive to be India's diplomacy by domination.
"It would like the rest of South Asia to be subservient," Dixit said. "For India to do well on the global stage, it has to make peace with its neighbors by accepting a one-on-one sovereign relationship."
Bajpaee said that India "cannot control these countries' internal politics. The era of spheres of influence no longer exists."
In the past, India has sacrificed long-term regional cooperation for short-term geopolitical alignment. Citing the Iran-Pakistan-India gas pipeline as an example, Dixit says that it was abandoned under former Prime Minister Manmohan Singh due to US pressure.
"Had that happened, we would have created forward and backward linkages for gas to keep flowing, and that would have compelled peace," Dixit said.
Is India setting a new diplomatic course?
India's focus has shifted towards the Indo-Pacific, the Quad group — which is made up of the US, Japan, Australia and India — and the West. However, for India to be sustainable, its borders would need to be stable.
"India's engagement with East Asia is held hostage by instability in Bangladesh and Myanmar," Bajpaee said. "It needs to have good relations with countries on its borders if it wants to engage more broadly."
Dixit explained that India's global aspirations, including its efforts to become a veto power in the UN Security Council, also suffer from the regional deficit. "A UNSC seat needs regional credibility. But when the region is in a mess and India isn't reaching out, it weakens its case," he told DW.
Wignaraja concluded that "India can [perhaps] rise alone — but it will be in a stronger position if it can rise with its neighbors."
Edited by: Keith Walker
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