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India’s Neighbourhood Policy

Prospects and challenges

“India’s neighbourhood is not just a geography; it is a reflection of

our ethos, our culture, and our traditions.”

T
he centrality of neighbours in
IN THIS DOCUMENT
India’s foreign policy stems from the
clear understanding that a peaceful 1. Who are India's neighbours and what is India's 2
periphery is essential for India to achieve neighbourhood policy?
her multifarious developmental goals. 1.1. How has India's Neighbourhood policy evolved? 3
However, India’s neighbourhood presents
complex dynamics, with many countries 2. What is relevance of India's Neighbourhood Policy in 4
suffering from high inflation, economic today's geopolitical landscape?
instability and popular unrest. Regional 3. What are the challenge that India face in pursuing the 5
cooperation becomes critical as geographic spirit of its Neighbourhood First Policy?
imperative binds neighbours i.e., any
challenges faced by people beyond the 4. How can India make its Neighbourhood policy more 7
border has huge potential to spill inside the robust and impactful
border. India’s 'Neighbourhood First' Policy 9
Conclusion
underlines the renewed primacy that the
country seeks to attach to its neighbouring Topic at a Glance 10
countries and achieve the goal of lasting
Boxes and Figures 11
peace, stability and prosperity in the region.

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1. Who are India’s neighbours and what is India’s neighbourhood policy?

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 Extended neighbours or countries geographically
Asian Region with which India shares its geographical located further away from India (such as in the Indian
land/maritime boundaries. These include countries Ocean Region, South-east Asia region or West Asian
like Afghanistan, Bangladesh, Bhutan, China, Maldives, region) but still have significant political, economic,
Myanmar, Nepal, Pakistan, and Sri Lanka. cultural and strategic interactions with India.
With these countries, India enjoys civilizational The policy of Neighbourhood First has been an integral
relations characterized by shared history, culture component of Indian foreign policy since 1947. It aims
and people-to-people contacts. to foster stronger ties, enhance regional cooperation, and
These immediate neighbours have been India’s “first address mutual concerns with immediate neighbouring
circle of priority” since Independence provided countries.
they remain sensitive to India’s core security
concerns. The Policy is driven by India’s consultative, non-
reciprocal and development-oriented approach.
Figure 1.1. India’s Neighbours

Extended
Neighbourhood

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Box 1.1. Extended neighbourhood: A gateway to India’s global leadership

As India aspires to be a regional superpower and global leader, it is pursuing as strong relationships with its
extended neighbours as with its neighbours.

These extended neighbours include countries in the following regions:

Asia-Pacific: India’s ‘Act East’ policy is a diplomatic initiative to promote economic, strategic and cultural
relations with the region at different levels. The Act East Policy rests on four central themes – Connectivity,
Commerce, Culture and Capacity-Building.
» ASEAN, ASEAN Regional Forum (ARF), the East Asian Summit (EAS), etc. are the key institutional
structures that have lent support to expanding bilateral engagements in the region.
Indo-Pacific: India’s policy for the region is based on the principles of “inclusiveness”, “openness” and the
concept of “ASEAN centrality”.
» India’s SAGAR (Security and Growth for All in the Region) policy aims to pursue and promote India’s geo-
political, strategic and economic interests on the seas, particularly in the Indian Ocean.
African seaboard countries: The spirit of “developing together as equals” defines this partnership.
» Island Nations like Seychelles, and Mauritius have a large number of India diaspora.
Central Asia: India has pursued the Connect Central Asia policy to establish deeper economic and cultural
ties in the region.
» India has emphasised on the need to work on 4Cs: commerce, capacity enhancement, connectivity, and
contact.
West Asia: India's policy of "Look West” has been converted to "Link and Act West”.
» Link and Act West policy broadly includes the more important sub-region of the GCC (Gulf Cooperation
Council) countries, alongwith Iran, Israel and other Arab countries.
» Recent launch of the India-Middle East-Europe Economic Corridor (IMEC) is a testimony to India’s rising
position in this region.

1.1. How has India’s Neighbourhood policy evolved?

India has always strived for huge level of humility when it comes to dealing with neighbours. Based on preferences and
perceptions towards the South Asian region, the strategies and priorities with regard to neighbouring region has evolved
over time. This evolution can be summarised as follows:
Colonial phase: Anti-colonialism, anti-imperialism, » Liberation of Bangladesh from Pakistan in 1971
anti-racism, (Asian Relation Conference of 1948) and signing of Shimla agreement between India
cemented India’s relations with its neighbours. and Pakistan in 1972.
» India’s militarily involvement in Sri Lanka in
1950s and 1960s (India was driven by Idealism and 1987.
Focussed on immediate neighbours in order to
» SAARC was established in 1985 to cement the
pursue only India’s security interests)
cooperation from neighbours.
India chose to deal with its neighbourhood by
engaging in bilateral talks and treaties and not in 1990s - 2000s (Being a Responsible Big Brother)
a regional framework. Instead of viewing the security dilemma in South
» Treaty of Friendship was signed with Bhutan Asia as conflictual in nature, efforts were made to
(1949) and Nepal (1950). create a social structure in which states trust one
» Panchsheel Agreement(1954) was signed another to resolve disputes without war.
between India and China. » Gujral Doctrine was introduced under which
India made an attempt to assure the region
1960s - 1990s (Phase of Regional Assertion and of its support through the policy of providing
Establishing sub-continental hegemony) unilateral concession.
Foreign policy was based on the ‘Monroe Doctrine’ » Post-1990s economic reforms, India took
to position India in its South Asian neighbourhood initiatives for economic integration of the
and not accepting foreign interference in the region. region.
» Sikkim was included (later merged with India
in 1975) under Indian territory.

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2008 onwards: The Chinese influence in India’s

Figure 1.2. Principles of Gujral Doctrine periphery started growing. Therefore, India pursued the
‘Gujral doctrine’ more vigorously.
5 key Principles Gujral Doctrine
‘Neighbourhood First Policy (NFP) was concieved
India does not ask for reciprocity with the in 2008 wherein the principles of engagement
neighbours but gives all that it can in good faith under NFP has been outlined in the form of 5Ss:
and trust. » Samman (respect),
No South Asian country will allow its territory » Samvad (dialogue),
to be used against the interest of another » Shanti (peace),
country of the region. » Samriddhi (prosperity) and
All South Asian countries must respect each » Sanskriti (culture).
other’s territorial integrity and sovereignty.
2014 onwards: Revamping NFP to strengthen ties
through economic cooperation, development assistance,
Non interference in the internal affairs of and addressing shared challenges.
another country. The NFP received a boost from all neighbours
except Pakistan. India's cooperation hinges on
Settle all the disputes through peaceful
Pakistan's creation of a peaceful environment without
bilateral negotiations.
terror, hostility, and violence.
Greater emphasis on regional and sub-regional
initiatives, through SAARC and BIMSTEC.

Box 1.2. Mandala theory: Looking back at the neighbourhood policy in ancient India
The Mandala theory of statecraft was proposed by Kautilya
(Chanakya) in 3rd century BC.

The theory is guided by the philosophy that "Your neighbour is

your natural enemy and the neighbour’s neighbour is your
friend."

The Mandala theory is based on the principle of the balance of

power and depicted through concentric circles.
In this circle, an immediate neighbour state is most likely to be
an enemy (real or potential), and a state next to the immediate King
neighbour is likely to be one's friend, and so on.

The litmus test for any state in the centre of the concentric circles
is to maintain the balance of power between other nations in
the region to safeguard its sovereignty.

In a system of Mandala, Kautilya advocated a six-fold policy to

interact with neighbors: co-existence, neutrality, alliance, double
policy, march, and war. likey to be friend likey to be enemy
To achieve this, he advised the king to use following tactics:
conciliation, gifts, bribery, dissent, deceit, pretense, and open attack or war.

On the question of treaties and alliances, he suggests, "a king should not hesitate to break any friendship or alliances
that later prove to be disadvantageous."

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2. What is the relevance of India’s Neighbourhood Policy in today's

geopolitical landscape ?
Geographically, the neighborhood is a country’s first point of diplomacy and key to growth. India’s relationship with its
neighbouring countries is crucial for its economy, social and geopolitical growth.
Geostrategic interests: Economic interests
Regional leadership: Cooperation from neighbours Energy security: India’s northern neighbours-
in the Indian Ocean Region (IOR) that has become a Nepal and Bhutan-have a huge hydro-power
pivotal zone of global strategic competition would potential. Also, cooperation with neighbours in
reinforce India's central position in South Asia. the Indian Ocean is critical to prevent disruption
Countering China: Cooperation with neighbours in import of oil and gases.
will help India counter Chinese influence and meet » More than 80% of India's oil and over 50% of
the aspiration of becoming a ‘net security provider’ gas is sourced from various parts of the world
in the IOR. that travels over the sea.
Support in multilateral forum: Cooperation Bridging development deficit in the North East:
with its neighbouring partners is critical for India’s Active outreach to neighbouring countries would
leadership as a representative of Global South in also be helpful in the development of India’s North-
various multilateral fora like UNSC, WTO, IMF, etc. Eastern states. For example,
» Cooperation with them at multilateral fora has » Bangladesh has approved the use of its
introduced a regional/sub-regional dimension Chattogram and Mongla ports by India for
to bilateral relations and led to a stronger transit and trans-shipment of cargo to its
understanding of the region. North-East states.
» North East could also be connected to
Security Southeast Asia for trade and economic
Territorial integrity: Separatist groups may find cooperation through Myanmar (the only ASEAN
refuge across borders. India needs neighbours who country sharing a land border with India).
respect her sovereignty and territorial integrity and
Soft power diplomacy: India’s rich cultural and
do not allow any insurgent group. For example,
historical ties with its neighbours help promote its
» Myanmar is seen as a key partner in the fight diverse cultural values and soft power influence in
to end insurgency in India's North-Eastern the region.
states.
For instance, the prevalence of Buddhism in India
Maritime Security: Maritime domain enables a and Southeast Asia acts as a tool to strengthen
ready flow of threats and challenges, such as the people-to-people ties and diplomatic relations.
2008 Mumbai terrorist attack.
» Cooperation with neighbouring countries like
Maldives, Sri Lanka, Bangladesh and Myanmar
will help India effective policing of its waters.

3. What are the challenges that India face in pursuing the spirit of its
Neighbourhood First Policy?
In its pursuit of the Neighbourhood First Policy, India faces a diverse array of challenges that range from historical tensions
to complex security dynamics. These include:
Lack of a comprehensive policy: Experts claim that due Security risks:
to the lack of a well-defined neighbourhood policy, Cross border terrorism: The existence of
India has focused more on ‘managing its relationships permeable borders, backing from the host nation
with its neighbours rather than shaping them. such as Pakistan, and the escalation of extremism
Strained bilateral relations among some nations in the in neighbourhood may collectively contribute to
region have posed severe challenges to implementation emergence of terrorist activities within India.
of policies at a regional level. Drug Trafficking: India's drug trafficking problems
For instance, out of the three agreements on cross- have been exacerbated by its proximity to Golden
border energy, motor vehicle movement and railway Triangle, and Golden Crescent.
cooperation presented in the last SAARC summit, Piracy off the coast of Somalia and use of
only one was signed on energy cooperation as waterways by terrorist.
Pakistan refused to sign the other two agreements.
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China’s inroads in South Asia: With the push of OBOR, Effect of domestic politics: Domestic-political
China’s trade volume with SAARC countries has compulsions and ethnic considerations have many
grown significantly and at a fast pace over the past a time dictated India’s neighbourhood policy and
decade. impacted it adversely. For example;

Time and again India’s neighbours including Sri Teesta Waters agreement got delayed due to
Lanka, Maldives and Nepal among others have played opposition by West Bengal.
Chinese card against India. Support for the Sri Lankan Tamil struggle
» For example, Nepal projected China as a possible against Sinhala–Buddhist majoritarianism was due
alternative to India as a source of essential to ethnic considerations.
supplies during the border blockade. Support to the cause of Madhesis in the Terai
region of Nepal as they share close familial ties with
Suboptimal confidence building with neighbours:
India.
India's neighbours have long felt that it doesn't treat
them equally. India’s military involvement in Delayed implementation of development projects:
Bangladesh, Sri Lanka and Maldives is viewed even today India’s Line of Credit (LOC) projects to its neighbours
as evidence of regional apprehensions. increased from $ 3.3 billion in 2014 to $14.7 billion
in 2020 (50% of India’s global soft lending goes to its
Economic crisis in the neighbourhood: For example,
neighbours).
economic uncertainty and acute scarcity of foreign
exchange in Sri Lanka have hit India’s major exports to However, there is a huge delay in the
the island nation. implementation of such projects which can lead
to frustration, mistrust and reduces India's
Connectivity and Border Infrastructure: Poor influence in the region.
infrastructure limits the impact of free trade and
investment deals. Many of the border districts are less Climate Change and Natural Disasters: The region is
developed. prone to natural disasters and climate change-related
challenges. These environmental issues can disrupt
There were more railway connections between
development efforts and may even lead to issues of
India and East Pakistan in the early sixties than
Climate Migration.
there are today with Bangladesh.
The India-Nepal border is an open border on
paper. But circulation is extremely difficult due to
the absence of basic infrastructure.

Box 3.1. COVID-19: A challenge as well as an opportunity for Neighborhood First Policy
COVID-19 pandemic had placed enormous challenges on the entire South Asian region in terms of rising inflation,
reduced food security and increasing political instability. India emerged as a major provider for public-goods and
services such as healthcare, education, training and providing scientific and technical support in the neighborhood
during the crisis.

Opportunities during COVID- 19

Vaccine Diplomacy: India prioritized providing COVID-19 vaccines to its immediate neighbours under the
Vaccine Maitri initiative. It served as a powerful soft power tool to counter china’s influence.

Leadership role: As part of NFP, India reactivated SAARC forum to formulate a regional action plan to combat
the pandemic and adopted bilateral diplomacy to reach out to its neighbours.

Build Trust and Cooperation: India mobilized military relief, set up laboratory for testing, and delivered
critical medicine and hospital supplies thus strengthening bilateral ties with countries like Maldives.

Goodwill: India's initiatives to help its neighbours including extended neighbours enhanced its global image
and earned goodwill.

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Box 3.2. In conversation: India's Neighbourhood Developmental Initiatives

Vinay, India's neighborhood developmental initiatives are

intriguing, aren't they?

Absolutely, Vini. India provides assistance in various

forms to its neighbours. Including grants, credit lines,
disaster relief, scholarships, and capacity-building
programs.

Yes, India has also established multilateral platforms

like SAARC, BIMSTEC, and BBIN which are integral to
its Neighbourhood First Policy.

I'm particularly intrigued by India's role in BIMSTEC.

India is leading the security pillar which covers areas
like Counter-Terrorism, Disaster Management, and
Energy Security.

Indeed. Also the BBIN Motor Vehicle Agreement signed

among Bangladesh, Bhutan, India, and Nepal in 2015 is
promising, especially with ongoing efforts to make it
operational despite Bhutan's withdrawal from the agreement. Vini

That's a great step towards enhancing regional

connectivity. Unfortunately, SAARC has faced obstacles
Vinay to its optimal functioning, primarily due to issues with
Pakistan.

Certainly Vinay, but despite these challenges, India's

efforts, such as the SAARC-level COVID-19 Emergency
Fund and the financial support to member states
during the pandemic are commendable.

Absolutely, Vinay. Regional cooperation is vital for

shared prosperity and stability.

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4. How can India make its Neighbourhood policy more robust and
impactful?
Strengthening the impact and resilience of India's Neighbourhood First Policy requires a multifaceted approach that
addresses the diverse challenges and opportunities within the region. India can consider the following strategic measures:
Rejuvenating Regional Forums and Organizations: organizations and forums such as the United
To foster sustained diplomatic engagement among Nations, BRICS, and G20.
neighbouring countries, India should actively utilize
regional platforms such as SAARC, BIMSTEC, Indian Sustained engagement with smaller neighbours:
Ocean Rim Association (IORA), among others. India's diplomatic efforts should be attuned to
the expectations and apprehensions of its smaller
These forums can serve as vehicles for continuous neighbours.
engagement, dispute resolution, and the promotion
of regional integration. This can be accomplished by enhancing domestic
coordination and promoting closer collaboration
Engaging China: Ongoing negotiations should between the foreign and security ministries to craft
prioritize a clear definition of the Line of Actual individualized strategies for each country and the
Control (LAC). Simultaneously, India should be ready wider region.
to firmly oppose any incursion that violates the
established norms outlined in the Border Defence Bridging Connectivity Deficits: Make substantial
Cooperation Agreement between both nations. investments in the enhancement of infrastructure,
encompassing roadways, railways, inland waterways,
Addressing Terrorism from Pakistan: Proactively ports, energy networks, and digital customs.
collaborate with regional and international organizations Also, there is a need to think about economic
to create a unified platform for countering terrorism openness and connectivity to the neighbourhood as
within the framework of the NFP. an advantage and not its a threat to India’s security.
Additionally, India could explore the possibility The parliamentary committee has suggested to
of fostering economic connections with Pakistan, establish a regional development fund under the
should it demonstrate a commitment to promoting BIMSTEC for this purpose.
broader people-to-people interactions.
Promoting Tourism: Under the NFP, channelling
Strengthening internal security architecture: To investments into the tourism sector, including medical
elicit a proactive response from neighbouring nations, tourism, can significantly bolster people-to-people
India must first bolster its own internal security ties, amplify India's soft power, and foster economic
architecture to effectively address the challenges integration within the region.
posed by terrorism.
Numerous Bangladeshi nationals seek medical
Cooperation with global powers: India's historical treatment in India. Additionally, India witnesses
approach focused on keeping major powers out of its a considerable influx of visitors from Nepal for
neighbourhood. However, in the face of challenges religious tourism, exemplifying the potential for
posed by China and Pakistan, a reorientation of foreign enhancing regional tourism exchanges.
policy is necessary to address them effectively:
Water Sharing and Environmental Cooperation:
This involves forging strategic partnerships Collaborative efforts on water sharing, sustainable
with the United States, Russia, and the European resource management, and environmental protection
Union and active participation in multilateral can help address common challenges and promote
cooperation among neighboring countries. This can be
achieved through the exchange of data and scientific
research.

Box 4.1. European Union (EU): A Model for Regional Integration

Prior to 1945, European history was marked by prolonged periods of conflict, with intermittent, shorter phases of
peace.

Post-World War II, the recognition that closer collaboration could prevent the horrors of war led to the establishment
of the European Union (EU).
Joining the EU requires member countries to relinquish some political and economic authority. In
return, they enjoy the benefits of a single European market, encompassing a free-trade zone, as well as the
free movement of people, goods, services, and capital throughout the EU bloc.
This framework fosters stability, prevents conflicts among members and enhances economic
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competitiveness.
This makes the EU a unique governing body and the world’s first supranational organization.

Lessons from EU’s success:

Historical reconciliation: Success of EU is attributed to historical reconciliation between France and Germany.
Success of other regional organisations also need similar reconciliation. For example,
Reconciliation between Pakistan and India is a necessity for success of SAARC.
Similarly, a genuine reconciliation between Japan and China; and Japan and Korea is needed for success of
East Asia.

Political and public will: If integration is to succeed, the public along with the government should believe that
it is in their vital national interest.

Conclusion
India’s Neighbourhood First Policy (NFP) is a dynamic policy that adjusts to its renewed interests in the region while
evolving according to regional circumstances. India's commitment to its neighbourhood will continue to play a crucial role
in shaping the future of South Asia and beyond. As India navigates the complexities and opportunities of its neighbourhood,
a comprehensive approach is needed to ensure a stable and prosperous neighbourhood that aligns with India’s national
interests and foreign policy objectives.

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Topic at a glance
India’s Neighbourhood Policy: Prospects and Challenges

India’s neighbours and neighbourhood

policy

Immediate neighbours: India shares borders and civilizational relations with them. They are Afghanistan, Bangladesh,
Bhutan, China, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka.
Extended neighbours: Located further away from India but still have significant political, economic, cultural and strategic
interactions with India.
Neighbourhood First Policy: This has been a core element of Indian foreign policy since 1947, focusing on strengthening
regional ties, fostering cooperation, etc.

Evolution of India’s Neighbourhood policy Relevance of India’s Neighbourhood Policy

Colonial phase: Anti-colonialism, anti-imperialism, Geostrategic interests: Regional leadership, countering

anti-racism, (Asian Relation Conference of 1948) cemented China, cooperation in multilateral fora like UNSC, WTO,
India’s relations with its neighbours. IMF, etc.
1950s and 1960s: India chose to deal with its Security: Neighbours that do not allow any refuge for
neighbourhood by engaging in bilateral talks and separatist groups across borders are crucial for territorial
treaties and not in a regional framework. integrity and maritime security.
1960s- 1990s: Phase of regional assertion and establishing Economic interests: Bridging development deficit in
sub-continental hegemony. the North East, ensuring country’s energy security (like
1990s- 2000s: Gujral Doctrine attempted to assure India’s Himalayan neighbours are vital for hydro-power).
support to neighbours through unilateral concession. Soft power diplomacy: For example, Buddhism's presence
2008 onwards: With growing footprint of Chinese in in India and Southeast Asia strengthens people-to-people
neighbouring region conceived ‘Neighbourhood First bonds and diplomatic relations.
Policy (NFP).
2014 onwards: Revamping NFP to strengthen ties through
economic cooperation, development, etc.

Challenges in pursuing India's

Neighbourhood First Policy Way ahead

Lack of a comprehensive policy: Therefore, India is more Rejuvenating Regional Forums: SAARC, BIMSTEC, IORA,
focused on managing relationships with Neighbours than etc. can serve as vehicles for continuous engagement,
shaping them. dispute resolution .
Strained bilateral relations: Thus regional forum like Engaging China: Prioritize a clear definition of the LAC and
SAARC are not able to achieve its potential. oppose breach of provisions of Border Defence Cooperation
Agreement.
Security risks: Cross border terrorism, Drug Trafficking,
etc. Addressing Terrorism from Pakistan: Collaborate with
regional and international organizations to counter such
China’s inroads in South Asia: Many of India’s neighbours
terrorism, also economically engage with Pakistan.
have played Chinese card against India.
Strengthening internal security architecture: It will
Other issues: Suboptimal confidence building, Economic
facilitate a proactive response from neighbouring nations.
crisis in the neighbourhood, Delayed implementation of
development projects, Climate Change, etc. Cooperation with global powers: It will help tackling
challenges posed by China and Pakistan.
Other: Sustained engagement with smaller neighbours,
Bridging Connectivity Deficits, Water Sharing and
Environmental Cooperation, etc.
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Boxes and Figures

Box 1.1. Extended neighbourhood: A gateway to India’s global leadership .................................................... 3

Box 1.2. Mandala theory: Looking back at the neighbourhood policy in ancient India .................................. 4

Box 3.1. COVID19: A challenge as well as an opportunity for Neighborhood First Policy ................................. 6

Box 3.2. In conversation: India's Neighbourhood Development Initiatives ................................................... 7

Box 4.1. European Union (EU): A Model for Regional Integration ................................................................. 8

Figure 1.1 India’s Neighbours .................................................................................................................... 2

Figure 1.2. Principles of Gujral Doctrine ..................................................................................................... 4

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