India’s South Asian policy has evolved significantly since its independence in 1947, shaped by changing regional dynamics, security concerns, and economic priorities. Initially, India adopted a more inward-focused approach, prioritizing domestic economic growth and nation-building. However, as the global and regional political landscape evolved, India’s strategy began to emphasize regional cooperation and security within South Asia.

Development of South Asian Policies

In the early years, India pursued a leadership role within the South Asian region, driven by its size, economic potential, and strategic interests. It advocated for regional cooperation through institutions like:

1. The South Asian Association for Regional Cooperation (SAARC), founded in 1985, sought to promote peace and development among South Asian countries. Despite India’s efforts, SAARC has faced challenges, particularly due to geopolitical tensions, notably between India and Pakistan.
2. Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) was formed in 1997.

We shall study about these organisations in the next chapter.

Economic Diplomacy

In the 1990s, India shifted focus to economic reforms, opening up its economy and seeking deeper ties with both regional and global powers. This period saw India’s South Asian policy moving towards economic diplomacy, with initiatives like the South Asian Free Trade Area (SAFTA) and increased connectivity projects aimed at fostering regional trade.

The policy seeks to build deeper economic and political ties with countries like Nepal, Bhutan, Sri Lanka, Bangladesh, Myanmar, and the Maldives, while also engaging in regional multilateral forums like SAARC and BIMSTEC.

Gujral Doctrine (97-98):

Unilateral support to its smaller neighbours to gain their confidence, especially given the Chinese presence. We should leverage the shared culture-history & economic complementariness and build people-to-people relationships to build strong relationships between nations.

Regional Security

The 2000s marked a more proactive and assertive stance, with India striving for enhanced regional security cooperation, especially concerning terrorism and insurgencies in countries like Pakistan and Afghanistan, especially in the context of the Kargil war.

• The concept of India as a regional power began to take shape, with a focus on improving bilateral relations, enhancing connectivity, and countering security threats.

Neighbourhood first policy:

In 2014, Prime Minister Narendra Modi’s “Neighbourhood First” policy further emphasized fostering stronger relationships with India’s immediate neighbours. It is aimed at strengthening ties with its immediate neighbours to promote regional stability, peace, and prosperity. It emphasizes a people-centric approach to diplomacy, prioritizing bilateral cooperation with neighbouring countries in areas such as trade, connectivity, security, and culture.

Key Aspects of the Neighbourhood First Policy

The Neighbourhood’s first policy aims to achieve the following:

1. Fostering economic collaboration through free trade agreements,
2. Improving connectivity through infrastructure projects (such as road and rail networks),
3. Addressing security concerns like cross-border terrorism,
4. India also aims to leverage its soft power by promoting people-to-people exchanges and cultural diplomacy. For example, Making the anti-COVID-19 vaccine freely available.

Through this approach, India seeks to enhance regional stability, reduce tensions, and ensure that its neighbours benefit from India’s growth and development. The policy reflects a shift towards prioritizing relations with countries in India’s immediate vicinity, recognizing that the country’s security and economic future are closely intertwined with the stability of the South Asian region.

Problem India’s engagement in South Asia

Despite India’s long-standing efforts to engage with our neighbourhood. South Asia is the least connected region of the world both physically and diplomatically, despite being heavily connected culturally.

The Indian sub-continent is too far from achieving an engagement at the scale of the European Union!

Major problems causing such a diplomatic gap include:

Lack of Engagement:

• Trade & commerce: South Asia is one of the least integrated regions in the world with intra-regional trade teetering at barely 5% of total South Asian trade, compared to 25% of intra-regional trade in the ASEAN region.
• Diplomatic engagement: India started investing in other regional instruments, such as BIMSTEC, as an alternative to SAARC.
  • India has been trying hard to isolate Pakistan internationally for its role in promoting terrorism in India. However, as Professor S.D. Muni argues, that Pakistan is not facing any isolation internationally.
  • Also, BIMSTEC cannot replace SAARC for reasons such as the lack of a common identity and history among all BIMSTEC members.

India’s ambivalence on tackling political issues:

For example, the case of Myanmar v/s Bangladesh. In the case of the Rohingya crisis, it lost precious ground in Bangladesh when India refused to mention the Rohingya refugee situation during PM Modi’s visit to Nay Pyi Taw in 2017. In both cases, India reversed its stand, adding to the sense that it is unsure of its next steps when dealing with neighbours on political issues.

In such situations, India is often trapped between two counter-intuitive approaches:

• The interventionist approach of the U.S.: which has openly championed concerns over ‘democratic values’ and human rights in Sri Lanka, Maldives and Bangladesh, and the
• Chinese Approach: this is to turn a blind eye to all but business and strategic interests.

Now the question is, should India rely on a principle-based approach, or a purely pragmatic approach?

Completion of Projects:

India’s efforts to complete projects in SAARC countries often encounter multiple challenges, hindering progress and success. Despite strong regional ties, various factors make project execution difficult in neighbouring nations.

1. Political Instability: In countries like Afghanistan, ongoing political unrest disrupts Indian-led projects such as infrastructure development and humanitarian aid efforts, delaying completion.
2. Bureaucratic Delays: In Nepal, India’s construction projects like roads and bridges often face long approval processes due to bureaucratic red tape, hindering timely progress.
3. Funding Constraints: Financial issues can delay Indian projects in Bangladesh, like the Padma Bridge, where Indian investments faced delays due to funding and loan disbursement problems.
4. Security Concerns: In Afghanistan, Indian-backed infrastructure projects were hindered by security threats in the previous regimes.
5. Cultural and Language Barriers: Cultural differences in Sri Lanka can affect the smooth execution of projects such as the housing schemes India has implemented, leading to delays in implementation.

Economic Dependence on China:

Investment Competition from China:

India simply does not have the political, material or financial wherewithal to outdo China in building infrastructure.  India has lagged behind in investment figures as data collated from the Central Bank of Sri Lanka, Bangladesh Bank and Nepal Rashtra Bank showed in a recent study by ORF. As per reports India was the foremost investor in Sri Lanka, Bangladesh & Nepal in 2014-15, but the order was reversed by 2017-18.

• In the Maldives where Indian investment has increased 4 folds, no Chinese investment was cancelled, even after the coming of the Pro-Indian government till 2024. It is feared that under President Mohammed Muizzu, who came into power with a “pro-China policy”, Maldives would tilt towards China even more.
• In Sri Lanka, the Hambantota port has been leased to China for 99 years, due to its mounting debt. However, India has proved to be more reliable recently when a Balance of Payment crisis hit Sri Lanka. India helped with more than $4 bn in 2022 to avert the crisis.
• Nepal has stepped up its engagement with China; Several Road, Rail, infrastructure projects and dry port access are under work.
• Bangladesh arguably India’s closest partner in the region, saw $3.6bn in FDI from China in 2017, along with the ‘Belt and Road promise’ of $50bn.

Import Dependency:

• China’s proximity to Pakistan is well known.  Nepal is moving closer to China for ideological and material reasons. China is wooing Bangladesh by offering tariff exemption for 97% of Bangladeshi products, and it has intensified its ties with Sri Lanka through massive investments.
• According to a Brookings India study, most South Asian nations are now largely dependent on China for imports despite its geographical proximity to India.

The Problem of India’s Internal Issues Affecting International Politics:

• Issues like dilution of Article 370, the Citizenship amendment bill, NRC and detention centres for illegal residents and cases of Mob Lynching are discussed intensely in the neighbourhood.
• New Delhi’s lecture on constitutional rights for Madhesis in Nepal, on the treatment of minorities in Sri Lanka, Bangladesh & Pakistan; on Rohingya Muslims to Myanmar; would not be taken seriously given the publicity of concerns over our own minorities.

‘India’s big game hunting attitude’:

Another problem is as one diplomat quotes, “India chases its neighbours to cooperate on various projects and courts us assiduously, but once they have ‘bagged the game’, it forgets about us. As a result, crises grow until they can no longer be ignored, and the hunt begins again.”

For example, Sri Lanka: After India’s crucial support in defeating the LTTE, Sri Lanka was considered “in the bag”. India did not venture into the Hambantota project despite Sri Lanka’s invitation and its pressing infrastructure needs. China materialized.

Overall Strategic Weakness in South Asia:

India’s traditional clout in its neighbourhood is slipping:

• Tensions with Pakistan have been high keeping the troops occupied in the border areas;
• Nepal has raised boundary issues with India;
• Sri Lanka is diversifying its foreign policy and China is making deep inroads into that region; and
• Bangladesh was deeply miffed with the CAA.
• Even in Afghanistan, where Pakistan, China, Russia and the U.S. are involved in the transition process, India is out.

Lessons from the Past:

India’s experience from engagement with South Asia gives us the following lessons for the future.

• Shed the aggressive attitude in the sensitive neighbourhood. The ability of diplomacy lies in subtly persuading the smaller neighbour to accept an argument rather than forcing it to, which is bound to backfire.
• Meddling in domestic politics would always end in disaster. Case in point – Nepal. India overreacted on the issue of the Constitution formation of Nepal. We lost out to China when we allowed a five-month-long blockade at the border in 2015, calling for a more inclusive constitution to be implemented by Kathmandu.
• We must always follow up on our promises. We have a terrible record on the completion of our infrastructure project.
• No point in competing with China, where China is at an advantage vis-a-vis India; this is especially true of regional infrastructure projects. Hence, India must invest where China falls short, especially at the level of institution building and the use of soft power. For example, the South Asian University (SAU) must ensure that its students get research visas to India without much hassle.
• There are several possible areas of convergence, including counter-terrorism, regional trade & infrastructure development. For example, any non-military infrastructure building by China in the region can also be beneficial to India while it trades with those countries.
• Convergence within South Asia: The scope of SAFTA could be increased to cover more items with no tariff barrier. If Pakistan becomes a barrier, then the BIMSTEC initiative can be leveraged. We shall study these organisations in the next section of this book.