India And Its Neighbourhood In 2025: A Year Of Reset, Realignments And Renewed Engagement
India navigated a turbulent neighbourhood in 2025, balancing crises, political transitions and strategic competition while reinforcing connectivity, security partnerships and its Neighbourhood First commitments.
Published : December 21, 2025 at 6:05 PM IST
New Delhi: India's diplomacy in its immediate neighbourhood in 2025 was marked by a blend of strategic recalibration, crisis management, and new avenues of cooperation.
While New Delhi continued to project itself as a stabilising force in South Asia, shifting political landscapes and regional security developments compelled India to rethink traditional approaches and reinforce partnerships with pragmatism.
Bangladesh
The biggest geopolitical churn in India’s neighbourhood came from Bangladesh. The sudden ouster of Prime Minister Sheikh Hasina of the Awami League in August 2024 and the subsequent transition of power in Dhaka influenced the entire year’s diplomacy in 2025. India worked to maintain engagement with the interim leadership while safeguarding security cooperation – especially in the areas of counterterrorism and border management – which had been a hallmark of the Hasina era.
The departure of Hasina, India’s closest partner in Dhaka for over 15 years, created a vacuum in bilateral ties. Throughout the year 2025, New Delhi maintained measured engagement with the interim administration in Bangladesh led by Chief Adviser Muhammad Yunus, focusing on continuity in security and connectivity cooperation while avoiding actions that could be interpreted as interference in Bangladesh’s domestic politics.
Security cooperation – particularly on counterterrorism and border management – continued at the operational level, though without the high-level political synergy seen in previous years, given the rise of anti-India Islamist forces in the eastern neighbour. India’s primary goal remained to preserve hard-won gains in areas like intelligence-sharing, cross-border crime control and infrastructure connectivity.
The long-pending Teesta River water-sharing agreement did not see progress in 2025. Bangladesh once again turned to China for help with the Teesta River management project. The Teesta water-sharing pact, stalled for years due to political sensitivities within India, has been a major point of contention between the two South Asian neighbours. With Beijing now being actively considered as a partner, India faces the challenge of balancing its diplomatic ties with Bangladesh while countering China's growing presence in the region.
On January 29, the Bangladesh Water Development Board (BWDB) and Chinese state-owned PowerChina signed an extension to a memorandum of understanding (MoU), pushing the Teesta River Comprehensive Management and Restoration Project (TRCMRP).
The extradition of Hasina, who took refuge in India following her ouster last year, continues to be an issue of contention between New Delhi and Dhaka. Last month, the International Crimes Tribunal (ICT) in Bangladesh sentenced Sheikh Hasina and former Home Minister Asaduzzaman Khan Kamal to death on November 17, holding them responsible for alleged crimes against humanity committed during last year’s July Uprising.
Dhaka has since written to New Delhi seeking the extradition of Hasina. But New Delhi has remained non-committal on the issue.
“The request is being examined as part of ongoing judicial and internal legal processes,” External Affairs Ministry spokesperson Randhir Jaiswal said in response to a question in this regard. “We remain committed to the best interests of the people of Bangladesh, including peace, democracy, inclusion and stability in that country and will continue to engage constructively in this regard with all stakeholders.”
Meanwhile, Hasina’s main rival, Khaleda Zia of the Bangladesh Nationalist Party (BNP), is in a critical health condition and is undergoing treatment at a hospital in Dhaka. Prime Minister Narendra Modi, while expressing concern for her health, has said that India is ready to offer all possible help. This has drawn a positive response from the BNP, a party that was not seen as favourable for India in the past.
With Bangladesh headed toward crucial parliamentary elections in February 2026, India’s strategy in 2025 was defined by strategic patience, calibrated engagement, and a sharp focus on protecting long-term interests – a trend likely to continue into the next year.
Nepal
India’s ties with Nepal in 2025 unfolded against the backdrop of persistent political flux, rising public discontent and, eventually, a dramatic youth-driven political upheaval. The ‘Gen Z Revolution’ that swept across Nepal in September 2025 reshaped the country’s internal dynamics and added a new layer of unpredictability to New Delhi’s engagement with its Himalayan neighbour.
Throughout the year, India pursued a strategy focused on political outreach, connectivity expansion and careful management of emerging sensitivities as Nepal underwent its most significant socio-political churn in nearly two decades.
The Gen Z Revolution, triggered by anger over corruption, unemployment, rising cost of living and frustration with the traditional political elite, led to the ouster of the Prime Minister KP Sharma Oli-led CPN (UML)-Nepali Congress coalition government. Interim Prime Minister Sushila Karki, a 73-year-old former chief justice appointed in September, has passed the halfway mark of her six-month mandate to restore order and conduct elections by March 5, 2026.
For India, the movement had three key implications. One is that new political actors emerged, many with no established ties to New Delhi, creating both uncertainty and opportunity. Secondly, anti-establishment sentiment grew, but it did not evolve into anti-India sentiment. Still, heightened nationalism required India to recalibrate its diplomatic messaging. Thirdly, policy continuity became uncertain, especially for long-term connectivity, energy, infrastructure and trade mechanisms.
Despite political turbulence, 2025 recorded some progress in several India–Nepal connectivity and energy initiatives. New cross-border transmission lines strengthened Nepal’s role in India’s renewable energy supply chain. India allowed additional import quotas for Nepali hydropower, enhancing Kathmandu’s export earnings. Upgrades on road networks along the Terai region advanced, ensuring smoother movement of people and goods. Talks on expanding railway connectivity through the Jayanagar–Bardibas and Raxaul–Kathmandu corridors continued, though slowed by political uncertainty.
The events of 2025 made it clear that India’s Nepal policy must now account for a younger, more politically assertive generation shaping Kathmandu’s future. With reform commitments pending and political realignment underway, 2026 will be crucial in determining whether Nepal can stabilise or enter another cycle of uncertainty.
Sri Lanka
India–Sri Lanka relations in 2025 were defined by a strong consolidation of strategic ties, high-level political engagement, and India’s timely humanitarian support as Sri Lanka confronted natural disasters and economic recovery challenges. The year reinforced New Delhi’s role as Colombo’s closest and most dependable partner in the Indian Ocean region.
Prime Minister Modi’s visit to Colombo in April this year — his first to Sri Lanka in his third term — was the most significant diplomatic moment between the two countries in 2025. The visit underlined India’s commitment to supporting Sri Lanka’s long-term economic recovery and strengthening connectivity in the Indian Ocean.
Key outcomes included a boost to economic partnership, agreements on renewable energy cooperation, progress on the Trincomalee energy hub, commitments to enhance maritime security cooperation, and a push to accelerate connectivity projects, including ferry services, digital payments integration, and tourism facilitation.
India’s disaster-response mechanism was tested again in late 2025 when Cyclone Ditwah caused severe damage along Sri Lanka’s eastern coast. Under New Delhi’s Neighbourhood First and SAGAR (Security and Growth for All in the Region) doctrines, India mobilised a swift humanitarian assistance and disaster relief (HADR) response.
The Indian Navy’s disaster relief ships carried relief material, medical teams, generators, and diving specialists. There was an immediate supply of essential items like tents, tarpaulins, medicines, clean drinking water units, and food packets. India assisted in restoring communications and repairing damaged jetties and coastal infrastructure.
India’s quick response drew wide public appreciation in Sri Lanka and reaffirmed its status as the region’s first responder.
Though Sri Lanka continued to balance relations with both India and China, 2025 saw Colombo lean more closely toward New Delhi due to India’s extensive crisis-era assistance, transparent financing models, and shared democratic values.
The Maldives
After a turbulent start to President Mohamed Muizzu’s tenure in late 2023 with his “India Out” posture and demands for the removal of Indian military personnel, the India-Maldives relationship in 2025 settled into a cautious reset. India completed the phased replacement of its military staff with civilian technical personnel without compromising the operational capability of platforms used for humanitarian and maritime surveillance missions.
Despite early friction, both sides kept critical development projects alive, including the Greater Malé Connectivity Project. The Maldives’ hedging between India and China remained a defining trend, but New Delhi retained space through calibrated diplomacy and people-centric outreach.
Prime Minister Modi’s visit as the ‘Guest of Honour’ for the 60th anniversary of the Indian Ocean archipelago nation’s independence marked a decisive turning point, signalling renewed political will on both sides to move past friction and rebuild trust.
The visit delivered several outcomes, including reaffirmation of a ‘Neighbourhood First’ partnership, agreement to expedite pending development projects, a new push for maritime cooperation, enhanced collaboration on climate resilience, and a decision to explore digital payments integration and fintech partnerships.
Pakistan
India–Pakistan relations in 2025 remained locked in familiar patterns of distrust, driven largely by heightened security concerns, cross-border terrorism, and the absence of substantive diplomatic engagement. The year was defined by the April 22 Pahalgam terror attack, which claimed 26 civilian lives. It triggered a major shift in India’s counterterror posture. The subsequent Operation Sindoor reaffirmed New Delhi’s hardening stance on cross-border terrorism.
As 2025 ends, India–Pakistan relations appear unlikely to improve in the near term. The combination of Pakistan’s internal instability, India’s unwavering stance against terrorism, and a global environment increasingly intolerant of violent extremism means the bilateral stalemate will likely continue.
Afghanistan
India’s relations with Afghanistan in 2025 were defined by cautious but steady diplomatic engagement with the Taliban regime, reflecting New Delhi’s long-term strategic, security, and humanitarian interests in the region. While India has not recognised the Taliban government, 2025 marked the most significant thaw in ties since the Taliban takeover in 2021, demonstrated most clearly by senior Taliban ministers visiting India and New Delhi’s decision to upgrade its Kabul mission to a full-fledged embassy.
India’s Afghanistan policy in 2025 could be summed up as one of pragmatic engagement without political endorsement. The upgrade of the Kabul embassy and ministerial visits marked progress, but New Delhi remained clear-eyed about the challenges posed by the Taliban’s governance model and regional security dynamics.
Bhutan
India’s ties with Bhutan in 2025 remained one of its most stable and trusted bilateral partnerships, strengthened further by high-level exchanges, deeper connectivity, and renewed cooperation in energy and development. The highlight of the year was Prime Minister Modi’s visit to Bhutan in November 2025, which underscored New Delhi’s commitment to supporting Bhutan’s economic transformation journey and safeguarding shared strategic interests in the eastern Himalayas.
Key outcomes of the visit included deepening economic partnership, push for connectivity, and strategic cooperation amid geopolitical tensions in the wider Himalayan region.
Hydropower continued to be the backbone of India–Bhutan economic relations in 2025. India supported Bhutan in stabilising production from major projects like Mangdechhu and Punatsangchhu-II. Talks advanced on new joint hydropower ventures tailored to Bhutan’s evolving economic model.
Myanmar
With conflict intensifying between the military junta and ethnic armed groups in Myanmar in 2025, India was compelled to reinforce security along the northeastern border. Cross-border refugee flow into Mizoram and Manipur increased pressures on local administrations.
India maintained working ties with the junta for practical security coordination, especially after the suspension of the Free Movement Regime (FMR). At the same time, New Delhi supported Association of Southeast Asian Nations (ASEAN)-led efforts for a political resolution while avoiding any overt tilt that could jeopardise its connectivity projects such as the India–Myanmar–Thailand Trilateral Highway and the Kaladan Multimodal Transit Transport Project.
To sum up, in 2025, India’s neighbourhood diplomacy was defined by navigating uncertainty rather than crisis, recalibrating long-standing partnerships, and countering external influence – especially China’s – across South Asia. While challenges persist, New Delhi’s careful balancing between assertiveness and accommodation ensured that India remained central to the region’s stability.
Read More:
