India's Neighbourhood First Policy — SAARC, BIMSTEC & Sub-Regional Cooperation

Neighbourhood First — India's Strategic Imperative

India shares land or maritime boundaries with eight countries. How New Delhi manages these relationships determines its ability to project power beyond the subcontinent, protect its internal security, and realise its ambitions as a leading power. Neglecting the neighbourhood creates vacuums that strategic rivals — above all China — are quick to fill.

The Neighbourhood First Policy (NFP) was adopted by Prime Minister Narendra Modi at the very outset of his first term. Its symbolic launch came on 26 May 2014, when Modi invited the heads of all eight SAARC member-states to his swearing-in ceremony — an unprecedented gesture that signalled a deliberate shift in India's diplomatic priorities.

Three core objectives of NFP:

Five operational pillars: enhanced physical connectivity; economic integration and trade; people-to-people contacts; security cooperation; and multilateral institutional engagement through SAARC and BIMSTEC.

SAARC — Structure, Summits and Paralysis

Key Facts

Summit History

SAARC holds summits at the level of Heads of State or Government. The 18th SAARC Summit was held in Kathmandu, Nepal on 26–27 November 2014 — and remains the last summit held to date (as of 2026). The 19th Summit was scheduled in Islamabad in November 2016 but was indefinitely postponed after India and several other members withdrew following the Uri terrorist attack.

Why SAARC Is Paralysed

SAARC's charter requires consensus for all decisions — giving any single member an effective veto. Pakistan's state-sponsorship of cross-border terrorism, and the resulting breakdown in India-Pakistan relations, have made progress impossible. India has consistently maintained that meaningful regional cooperation cannot proceed in an atmosphere of cross-border violence.

SAARC's intra-regional trade is under 5% of members' total trade — one of the lowest figures for any regional grouping — compared with over 25% for ASEAN and over 60% for the EU.

BIMSTEC — India's Preferred Regional Architecture

With SAARC stalled, India has actively promoted BIMSTEC as its preferred sub-regional platform. BIMSTEC excludes Pakistan and includes Thailand — spanning both South and Southeast Asia.

Key Facts

BIMSTEC Charter (2022/2024)

The Charter, adopted at the 5th BIMSTEC Summit held virtually in Colombo on 30 March 2022, gave the organisation a formal legal personality. It entered into force on 20 May 2024 after ratification by all seven members including Nepal (the last to ratify). The Charter consolidates BIMSTEC's institutional framework, streamlines the secretariat, and formally reduces the cooperation sectors.

Sectors of Cooperation (Restructured 2022)

At the Colombo Summit, BIMSTEC reduced its thematic pillars from 14 unwieldy sectors to 7 priority areas, each led by one member:

India leads three of the most strategically significant sectors, reflecting its centrality to BIMSTEC's functioning.

India-Bangladesh

Historical foundation: Bangladesh was born in 1971 with direct Indian military intervention against Pakistan — the Liberation War remains the bedrock of the bilateral relationship.

Sheikh Hasina era (2009–2024): Prime Minister Sheikh Hasina presided over the strongest phase of India-Bangladesh ties. Land Boundary Agreement (2015) resolved the decades-old enclave problem; connectivity through rail and road was deepened; power and energy trade expanded significantly.

Political change — August 2024: In a student-led mass uprising, Sheikh Hasina resigned on 5 August 2024 and fled to India. Nobel laureate Muhammad Yunus was sworn in as Chief Adviser of the interim government on 8 August 2024. The new government has sought a recalibration away from what critics had called an "India-centric" foreign policy.

Teesta water sharing: A draft agreement on sharing the Teesta river waters has been ready since 2011 but remains unsigned, blocked by West Bengal's opposition at the domestic level. The Teesta is crucial for Bangladesh's agriculture in the north-west. The Yunus government has signalled its intent to revive negotiations.

Connectivity: The Agartala–Akhaura rail link, renewed BIMSTEC engagement, and Mongla/Chittagong port access agreements are key connectivity anchors for India's North-East.

India-Nepal

Special relationship: India and Nepal share an open, Treaty of Peace and Friendship (1950)-governed border. Millions of Nepali citizens work in India; both armies share an exceptional institutional bond.

Kalapani border dispute: In May 2020, India inaugurated a road connecting Dharchula in Uttarakhand to the Lipulekh Pass. Nepal immediately protested, claiming the road passes through Nepali territory. On 20 May 2020, Nepal's parliament approved a new political map incorporating Kalapani, Lipulekh, and Limpiyadhura as Nepali territory. The dispute roots in differing interpretations of the 1816 Treaty of Sugauli regarding the true source of the Mahakali River.

Mahakali Treaty (1996): A landmark water-sharing treaty on the Mahakali river (Sharada/Mahakali); implementation remains incomplete.

BBIN MVA: The BBIN Motor Vehicles Agreement was signed on 15 June 2015 in Thimphu. Bangladesh, India, and Nepal have ratified it. Bhutan's upper house rejected ratification in November 2016 owing to domestic environmental concerns, though in March 2024 Bhutan signalled willingness to re-engage.

Hydropower: Nepal has vast hydropower potential (~83,000 MW). India imports Nepali hydro power and is a major investor in projects like Upper Karnali and Arun-III.

India-Sri Lanka

Historical backdrop: The ethnic Tamil issue — involving the rights of Sri Lankan Tamils (including the Indian-origin Tamil community) — has been a persistent sensitivity in bilateral ties. India's intervention via the Indian Peace Keeping Force (IPKF) in the 1987–1990 period left complex legacies.

Economic crisis 2022: Sri Lanka suffered a catastrophic sovereign default in 2022 — its worst economic crisis since independence — triggered by forex reserve depletion, fuel shortages, and food insecurity. India responded swiftly: approximately USD 4 billion was extended through lines of credit for petroleum, food, and medicines. This was India's largest-ever economic assistance package to a neighbour.

Hambantota Port: China's growing influence in Sri Lanka, symbolised by the Hambantota Port (handed to China Merchants Port on a 99-year lease in 2017 after Sri Lanka struggled with Chinese loan repayments), remains a strategic concern for India.

Fishermen's dispute: Tamil Nadu fishermen regularly stray into Sri Lankan territorial waters; arrests by Sri Lanka's navy are a recurring bilateral irritant.

India-Bhutan

Special friendship: India and Bhutan share a uniquely close partnership. Their 1949 Treaty of Friendship was renegotiated in 2007 — the new treaty replaced a provision requiring Bhutan to seek India's guidance on foreign policy with a broader sovereignty clause, while maintaining close consultations on security and defence matters.

Economic integration: India is Bhutan's largest trading partner and primary source of development aid. The hydropower partnership is central: India imports Bhutanese hydro power, financed through Indian project grants and loans.

Bhutan-China border talks: China and Bhutan have no diplomatic relations but have held over 24 rounds of boundary negotiations since 1984. The unresolved boundary — particularly around Doklam — has direct implications for India. The 2017 Doklam standoff arose when Chinese forces began building a road in territory claimed by Bhutan that India views as strategically vital to protect the Siliguri Corridor ("Chicken's Neck"). Any Bhutan-China settlement that concedes strategic heights without India's awareness would fundamentally alter the security calculus.

India-Maldives

Historically close: India has been the traditional security provider and first responder for the Maldives — from foiling the 1988 coup attempt (Operation Cactus) to providing disaster relief post-2004 tsunami.

"India Out" campaign and Muizzu: Mohamed Muizzu, running on an explicit "India Out" platform, won the Maldivian presidential election in September 2023. He requested India to withdraw approximately 89 military personnel managing two Indian helicopters and a Dornier aircraft gifted to the Maldives.

Troops withdrawal 2024: India agreed to complete the troop withdrawal by 10 May 2024. Muizzu made his first state visit to China in January 2024 (within days of taking office), signing several cooperation agreements. India responded by temporarily restricting direct flights from mainland Indian tourists, and Lakshadweep was promoted as an alternative tourism destination.

China factor: China's strategic interest in the Maldives as a potential Indian Ocean node is well-documented; Muizzu's pivot towards Beijing is a direct expression of the "String of Pearls" dynamic.

India-Myanmar

2021 coup: Myanmar's military (Tatmadaw) seized power on 1 February 2021, detaining elected leader Aung San Suu Kyi. The subsequent civil war has destabilised Myanmar's border regions adjoining India's northeastern states (Manipur, Mizoram, Nagaland, Arunachal Pradesh).

Free Movement Regime (FMR): The FMR, in place since 1968, allowed residents within 16 km of the India-Myanmar border to cross without a visa — recognising that colonial-era borders split ethnic communities. India suspended the FMR in February 2024, citing cross-border infiltration of armed groups and drug trafficking. Plans to fence the entire 1,643-km border are underway.

Caladan Multimodal Project and connectivity: India's connectivity projects through Myanmar (to Sittwe port and onward) face uncertainty because of the civil war and the junta's loss of territorial control.

India-Afghanistan

Strategic assets: India invested over USD 3 billion in Afghan infrastructure — including the Salma Dam, the Afghan Parliament building in Kabul, and the Zaranj–Delaram highway — under the elected Afghan governments.

Taliban takeover — August 2021: India evacuated its diplomatic personnel following the Taliban's return to power in August 2021 and initially maintained only a "technical team" in Kabul. By October 2025, India reopened its full embassy in Kabul, signalling pragmatic engagement with Taliban 2.0 as Pakistan's influence with the Taliban diminished.

Chabahar — alternative route: Since the land route through Pakistan is blocked, India uses Iran's Chabahar Port linked to the Zaranj–Delaram Highway as an alternative trade corridor to reach Afghanistan and Central Asia, bypassing Pakistan entirely.

Sub-Regional Groupings

Challenges: Trust Deficit and China's Expanding Footprint

String of Pearls: China's strategy of developing strategic port infrastructure across the Indian Ocean littoral — Gwadar (Pakistan), Hambantota (Sri Lanka), Kyaukpyu (Myanmar), Chittagong (Bangladesh), and growing interest in the Maldives — creates potential military-use nodes encircling India.

China's BRI in the neighbourhood: Almost all of India's neighbours have signed on to China's Belt and Road Initiative (BRI). India remains the only major regional power to formally reject BRI, citing sovereignty concerns over the China-Pakistan Economic Corridor (CPEC) passing through Pakistan-Occupied Kashmir.

Trust deficit drivers:

• Water disputes (Teesta, Mahakali, Feni) unresolved for decades
• Kalapani boundary dispute with Nepal straining an otherwise close relationship
• Perception of India as a "big brother" interfering in smaller neighbours' politics
• India's sometimes slow or reactive diplomacy compared with China's proactive chequebook diplomacy

Way Forward

1. Revive SAARC selectively — pursue functional SAARC cooperation on non-contentious issues (disaster management, health) while maintaining the political boycott of Pakistan-hosted summits
2. Deepen BIMSTEC — operationalise the 2024 Charter; push for a BIMSTEC Free Trade Agreement and the BIMSTEC Grid Interconnection
3. Settle water disputes — sign the Teesta accord with Bangladesh; implement the Mahakali Treaty with Nepal
4. Resolve Kalapani diplomatically — re-engage Nepal through joint technical committees; avoid unilateral road-building provocations
5. Connectivity as diplomacy — accelerate BBIN MVA, Agartala–Akhaura rail, Raxaul–Kathmandu railway, and Chabahar-linked corridors
6. Development finance — scale up the Indian Development and Economic Assistance Scheme (IDEAS) to compete with Chinese BRI offers
7. People-to-people ties — expand ITEC (Indian Technical and Economic Cooperation) training scholarships; liberalise visa regimes for students and professionals

Quick-Reference Tables

SAARC Members

BIMSTEC Members

Key Bilateral Facts — Exam Ready