Neighbourhood Relations

India's Neighbourhood First Policy, launched in 2014, prioritizes immediate neighbours in foreign policy calculations, emphasizing development partnerships, connectivity projects, and people-to-people ties.

Unlike previous approaches that often viewed neighbourhood through security lens or great power competition, this policy focuses on economic cooperation, shared prosperity, and mutual development. It differs from the Gujral Doctrine by being more reciprocal and pragmatic, seeking win-win outcomes rather than unilateral concessions.

The policy emphasizes 'SAGAR' (Security and Growth for All in the Region) vision, digital connectivity, disaster management cooperation, and cultural exchanges. Key initiatives include infrastructure development, capacity building, educational scholarships, and healthcare cooperation.

However, implementation faces challenges from unresolved disputes, domestic political pressures, and great power competition, particularly China's growing influence through Belt and Road Initiative projects in the region.

SAARC's ineffectiveness stems primarily from India-Pakistan tensions that have paralyzed decision-making, with Pakistan often blocking India-led initiatives and India boycotting summits following terrorist attacks.

The organization suffers from lack of political will, minimal trade integration (intra-SAARC trade is less than 5% of total trade), and absence of effective dispute resolution mechanisms. BIMSTEC differs significantly by excluding Pakistan, thus avoiding the India-Pakistan dynamic that hampers SAARC.

It connects South and Southeast Asia, bringing in Thailand's economic dynamism and ASEAN connectivity. BIMSTEC focuses on practical cooperation in 14 sectors including trade, technology, energy, and tourism.

The organization has shown more progress in recent years with India's active leadership, including the 2018 New Delhi summit and various connectivity initiatives. However, BIMSTEC also faces challenges including limited institutional capacity, funding constraints, and varying levels of commitment among members.

The key difference is BIMSTEC's potential to link India's Act East Policy with neighbourhood relations.

Water disputes significantly complicate India's neighbourhood relations due to shared river systems, competing development needs, and climate change impacts. Major disputes include the Indus Waters Treaty with Pakistan, where Pakistan objects to Indian hydropower projects claiming treaty violations, though the World Bank and international arbitration have generally supported India's position.

The Teesta water sharing with Bangladesh remains unresolved due to West Bengal's objections, affecting broader bilateral ties despite progress in other areas. With Nepal, disputes over flood management and water sharing in rivers like Kosi and Gandak create periodic tensions.

China's upstream dam construction on Brahmaputra raises concerns about water security and environmental impacts. These disputes are complicated by federal structure challenges where state governments can constrain central policy, domestic political considerations, and technical disagreements over water allocation formulas.

Climate change intensifies these challenges through changing precipitation patterns, glacial melting, and extreme weather events. Resolution requires technical cooperation, political will, and innovative frameworks that balance development needs with environmental sustainability and equitable sharing principles.

India-China border management faces multiple challenges despite extensive diplomatic and military mechanisms developed since the 1993 Agreement on Maintenance of Peace and Tranquility. The fundamental challenge is the absence of agreed boundary demarcation, with disputes covering approximately 4,057 km across three sectors: Western (Aksai Chin), Middle (Himachal Pradesh and Uttarakhand), and Eastern (Arunachal Pradesh).

Different perceptions of Line of Actual Control (LAC) lead to patrol confrontations and standoffs like Doklam (2017) and Galwan (2020). Infrastructure development by both sides near the border creates new friction points as improved connectivity enables deeper patrols.

The challenge is compounded by difficult terrain, harsh weather conditions, and communication gaps between field commanders. Strategic competition beyond borders, including China's growing influence in South Asia through Belt and Road Initiative, adds complexity to border management.

Despite multiple agreements and confidence-building measures, including Special Representatives dialogue and border personnel meetings, the lack of political will for final boundary resolution means that border management remains crisis-prone.

Recent agreements on disengagement and de-escalation provide temporary stability but don't address underlying territorial disputes.

Cross-border terrorism, primarily emanating from Pakistan, fundamentally constrains India's neighbourhood policy options and regional cooperation initiatives. Terrorist attacks like Mumbai (2008), Pathankot (2016), and Pulwama (2019) have repeatedly derailed peace processes and bilateral dialogue, creating a cycle of tension and mistrust.

This impacts broader neighbourhood relations as India often links regional cooperation to Pakistan's action against terrorism, leading to SAARC summit boycotts and stalled multilateral initiatives. The terrorism challenge extends beyond Pakistan to include concerns about Afghan territory being used by anti-India groups, particularly after Taliban's return to power in 2021.

India's response has evolved from diplomatic protests to surgical strikes and air strikes, demonstrating willingness to use military force while maintaining strategic restraint. Counter-terrorism cooperation has become a key element of India's engagement with neighbours, including intelligence sharing, capacity building, and joint operations.

However, the terrorism challenge also creates opportunities for deeper security cooperation with like-minded neighbours and international partners. The key challenge is balancing firm response to terrorism with broader neighbourhood engagement, ensuring that security concerns don't completely overshadow economic and developmental cooperation possibilities.

Connectivity projects are central to India's neighbourhood relations strategy, serving multiple objectives: economic integration, strategic influence, and people-to-people ties. Key initiatives include the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicle Agreement for seamless cross-border movement, India-Myanmar-Thailand Trilateral Highway connecting South and Southeast Asia, and various border infrastructure projects improving trade and travel.

These projects face significant challenges including funding constraints, environmental concerns (as seen in Bhutan's hesitation on BBIN), security issues in border areas, and coordination difficulties among multiple stakeholders.

China's Belt and Road Initiative creates competitive pressure, with neighbours sometimes playing India and China against each other for better terms. Connectivity projects also have domestic political dimensions, with border states and local communities having varying interests.

Success stories include the Kaladan Multi-Modal Transit Transport Project with Myanmar and various border haats (markets) with Bangladesh facilitating local trade. The strategic significance lies in creating economic interdependence that can help manage political tensions, providing alternatives to traditional routes, and countering China's connectivity initiatives.

However, implementation requires sustained political commitment, adequate funding, and careful attention to environmental and social impacts.

Domestic politics significantly influence India's neighbourhood relations through multiple channels: electoral considerations, federal structure constraints, and public opinion pressures. State governments can effectively veto central initiatives, as seen in West Bengal's opposition to Teesta water sharing with Bangladesh or Tamil Nadu's concerns about Sri Lankan Tamil issues.

Electoral politics often push leaders toward hardline positions, particularly on Pakistan relations, making peace initiatives politically risky. Public opinion, shaped by media coverage and historical grievances, can constrain policy flexibility and force reactive rather than proactive approaches.

Coalition politics adds another layer of complexity, with regional parties having specific neighbourhood interests that may not align with national policy. The federal structure creates coordination challenges where multiple agencies and levels of government must work together for effective implementation.

However, domestic politics can also support neighbourhood engagement when there are clear economic benefits or security imperatives. The key challenge is building domestic consensus for long-term neighbourhood engagement that can survive electoral cycles and political changes.

This requires political leadership that can explain neighbourhood policy benefits to domestic constituencies while managing inevitable setbacks and crises. Success depends on creating institutional mechanisms that insulate core neighbourhood relationships from short-term political pressures while maintaining democratic accountability.

Economic cooperation serves as both driver and outcome of improved neighbourhood relations, offering the potential to create positive-sum outcomes that benefit all parties. Trade integration remains limited due to political tensions, infrastructure constraints, and protectionist policies, with intra-regional trade in South Asia being among the lowest globally at around 5% of total trade.

However, successful examples like India-Bangladesh trade growth (reaching $18 billion in 2021-22) demonstrate the potential when political will exists. Investment flows, particularly Indian investments in neighbours' infrastructure, energy, and manufacturing sectors, create stakeholder interests in stable relations.

Development cooperation through grants, loans, and technical assistance builds goodwill and demonstrates India's commitment to shared prosperity. Challenges include trade imbalances that create political tensions, non-tariff barriers that limit market access, and competition from China's economic engagement through Belt and Road Initiative.

The informal economy and smuggling networks often exceed formal trade, indicating untapped potential. Energy cooperation, particularly in hydropower with Bhutan and Nepal, shows how economic complementarities can drive integration.

The key insight is that economic cooperation requires political stability to flourish but can also contribute to political stability by creating constituencies for peace. Success depends on addressing structural issues like connectivity, trade facilitation, and regulatory harmonization while building trust through smaller, practical projects that demonstrate mutual benefits.