UPSChub

India’s neighbourhood policy is a core pillar of its foreign policy, shaped by geography, history, and security imperatives. India follows a mix of bilateral engagement, regional cooperation, and strategic balancing.

The region is not only complex and volatile, but also one of the most socially and politically divided regions of the world. The South Asian countries, individually as well as collectively, represent a world of historical links, shared legacies, commonalities as well as diversities which are elaborately reflected in their ethnic, linguistic, religious and political fabric.

The South Asian region is also full of contradictions, disparities and paradoxes. In the post-colonial period, the South Asia has been a theatre of inter-state as well as civil wars; it has witnessed liberation movements, nuclear rivalry, military dictatorships and continues to suffer from insurgencies, religious fundamentalism and terrorism, besides serious problems associated with drugs and human trafficking.

The South Asian Association for Regional Cooperation (SAARC) has remained in existence for over 33 years; yet South Asia is considered as the least integrated of the global regions—this is despite the stipulation in its Charter that “bilateral and contentious issues shall be excluded” from its deliberations.

India’s Neighbours

Although there isn’t a single, universally accepted official definition of India’s neighbourhood, the concept of neighbourhood is often a matter of geopolitical interpretation and can vary based on historical, political, economic, and security considerations.

Largely, the term neighbourhood includes:

• Immediate neighbours or countries in the South Asian Region with which India shares its geographical land/maritime boundaries. These include countries like Afghanistan, Bangladesh, Bhutan, China, the Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka.
• With these countries, India enjoys civilizational relations characterised by shared history and culture and people-to-people contacts.
• These immediate neighbours have been India’s “first circle of priority” since Independence, provided they remain sensitive to India’s core security concerns.
• Extended neighbours or countries geographically located further away from India (such as in the Indian Ocean Region, Southeast Asia region or West Asian region) but still have significant political, economic, cultural and strategic interactions with India.

Characteristics of India’s neighbourhood/South Asia:

• It is home to 1.89 billion people, more than 20 percent of the world population.
• It is a region that lies between the sea routes of the Indian Ocean (Persian Gulf and the Asia-Pacific) and the land routes of Central Asia connecting Europe to the East.
• It is a large reservoir of natural and human resources, making it a prime destination for financial capital, a lucrative market for trade, and a source of cheap raw material.
• It also sits at the confluence of the richest sources of oil, gas, rubber, manganese, copper, gold, tea, cotton, rice and jute, and is the transit point for most of the resources and manufactures that cris-cross the world.
• Moreover, it is the most heavily militarized and bureaucratized zone in the world and it has a variety of complex and violent primordial ethnic groups.
• The region has been registering a healthy growth (average of more than 6% per annum) during the past several years.
• Democratic forms of governance (howsoever flawed and feeble) are beginning to gain some ground in most parts of the region.
• The political, economic and social landscape in India’s immediate neighbourhood has changed significantly since the end of the Cold War.
• The centre of gravity of power is shifting towards the Asia-Pacific. The simultaneous rise of India and China is a development of great significance.
• The traditional concept of national security is being broadened gradually to include human non-military issues like climate change, energy security, competition for scarce resources, food and water security, pandemics, migrations, etc.
• India’s position in South Asia is unique as it shares borders with all other South Asian nations, whereas no other South Asian nation (except Afghanistan and Pakistan) shares borders with any other South Asian nation.
• Democracy and rule of law as instruments of political governance are well entrenched in India. Transfer of power has been more or less peaceful and transparent. In relative terms, India can be arguably considered as the most stable country in the region, moving ahead on the fast tracks of development.

India’s approach towards Neighbours

India has consistently endeavoured for a stable and peaceful neighbourhood. Basic approaches followed by India are:

• India advocates the policy of constructive engagement, despite such serious provocations as have been in the past (attack on Parliament, Mumbai terrorist attacks, etc). It believes that violent retaliation and confrontation can only complicate matters. This applies in particular to Pakistan, the origin of State-sponsored terrorism targeted at India.
• India adheres to its benign and noble policy of non-interference into the internal affairs of other countries in the region.
• India does not believe in exporting democracy; rather, it helps in promoting democracy wherever potential exists; this is done by proactively providing assistance in capacity building and strengthening the institutions of democracy. Example: Nepal.
• India has skilfully used its policy of non-prescriptive development assistance as its soft power since early 1950s. In return, India has sought “good will” and “friendship with India”.

Significance of South Asia to India

• South Asia is considered by some to be a ‘nuclear flashpoint’ where an incident could escalate militarily to the point of nuclear weapons being used in a conflict.
• Indian Ocean as a major trade route is lifeline not only to India, but also to other littoral countries. Hence, peace and stability of the region is vital.
• String of Pearls (China) and Pivot to Asia (USA) have made Indian Ocean a theatre of conflict and differences.
• The political and socio-economic development of India is largely dependent on a stable, secure and peaceful neighbourhood.
• To achieve its objective of becoming one of the principal powers in Asia, India needs to maintain cordial relations with its neighbours.
• India can reap huge economic gains from the neighbours which are rich in variety of resources that are unearthed and unexplored till date.

Neighbourhood First Policy (NFP)

The policy of Neighbourhood First has been an integral component of Indian foreign policy since 1947. It aims to foster stronger ties, enhance regional cooperation, and address mutual concerns with immediate neighbouring countries.

Four Aspects of India's NFP:

• Willingness to give political and diplomatic priority to its immediate neighbours and Indian ocean Island States.
• Providing them assistance and support in any and every form when required. This is evident when India became the first responder after the Nepal earthquake and provided considerable assistance both in terms of monetary help and physical assistance through the National Disaster Response Force (NDRF).
• Develop greater connectivity and deepening integration with neighbours.
• Promote a model of India-led regionalism with which its neighbours are comfortable.

Core Purposes of NFP:

Connectivity: India has entered into MoU (Memorandum of Understanding) with members of the SAARC. These ensure free flow of resources, energy, goods, labour, and information. Example: BBIN grouping for motor vehicles, waterpower management and inter-grid connectivity.

Dialogue & Economy: Focuses on vigorous regional diplomacy. Enhancing trade ties and participating in SAARC as a vehicle for development.

Disaster & Defense: Focuses on cooperating on disaster response, weather forecasting and communication. Deepening security through military cooperation by conducting various defence exercises.

Challenges to Neighbourhood First Policy

• The Pakistan Roadblock: It is a major impediment. For example, repeated cross-border terrorism led to the cancellation of the SAARC Summit.
• The US Tilt: India’s deeper engagement with US becomes a matter of concern for neighbours particularly Pakistan, looking for alternative powers.
• Muscular Policy Criticism: Criticism levied against India for legitimizing certain political forces and ignoring others (Nepal - Madhesi issue, Maldives 2015 cancellation).
• Weak Capacities: The Ministry of External Affairs simply does not have enough people. Scholarship on these countries is sparse; lack of a dedicated think tank.
• Growing Chinese Pressure: Chinese pressure has prevented the country from winning allies. Impact of India’s tilt towards West (Quad) while Sri Lanka faces Western criticism on human rights.

Evolution of India’s Neighbourhood Policy

Recent Developments (2020s–2026)

• Vaccine Maitri (2021–22): Supplied vaccines to Bangladesh, Nepal, Sri Lanka, Maldives, Bhutan.
• DPI Sharing: Sharing UPI, Aadhaar stack with neighbours (2023-26).
• Crisis Response: Over $4 billion assistance to Sri Lanka (2022–23). Operations Devi Shakti, Ganga, Kaveri.
• Geostrategic Balancing: India–Middle East–Europe Economic Corridor (IMEC) (2023) to counter BRI. Active role in Quad.
• Connectivity: Agartala-Akhaura rail link. Kaladan Multimodal Project nearing operationalisation.
• Energy: Power grid integration with Nepal, Bhutan, Bangladesh.

Extended Neighbourhood Regions

As India aspires to be a regional power, it pursues robust relationships with its extended neighbourhood reflecting “Vasudhaiva Kutumbakam”.

Challenges Facing NFP Implementation

• Strained Relations: At the last SAARC summit, only the energy pact was signed due to Pakistan’s refusal.
• Security Risks: Drug trafficking proximity to Golden Triangle and Golden Crescent. Piracy off Somalia coast.
• China Inroads: Neighbours play the "China Card" (Nepal turned to China during border blockade).
• Suboptimal Confidence: Neighbours feel India does not treat them as equals.
• Domestic Politics: Teesta Water Agreement delayed due to West Bengal opposition. Tamil Nadu/Sri Lanka ethnic factors.
• Implementation Gaps: Line of Credit (LoC) increased to $27–32 billion by 2024–25, but project delays and cost overruns persist.