The summit happened at a time when India faces immense challenges—from the collapse of Saarc due to strained bilateral relations to China’s growing influence in the region through its Belt and Road Initiative (BRI). With China expanding its economic and strategic presence in Nepal, Sri Lanka, Myanmar, and the Maldives, and trade with South Asia exceeding $190 bn in 2023, India finds itself in a fierce competition for influence.
Bangladesh: strengthening historical bonds
India’s deep ties with Bangladesh are rooted in shared history, especially the 1971 liberation war, fostering an emotional connection. At the BIMSTEC meet, Modi reaffirmed India’s support for a democratic, stable, and inclusive Bangladesh. Emphasising a people-centric approach, he highlighted the long-standing cooperation between the two nations that has benefited both. He reiterated India’s commitment to fostering a positive, pragmatic relationship with Bangladesh in discussions with Professor Muhammad Yunus.
However, younger Bangladeshis are increasingly distancing themselves from this attachment, and anti-India rhetoric is gaining traction in certain political circles. Despite being Bangladesh’s second-largest trading partner, bilateral trade has declined by 5% due to Bangladesh’s foreign currency shortages and economic challenges. With trade standing at $14 bn annually, this decline threatens these exchanges. In response, India must engage with Bangladesh’s government, considering the shifting political landscape.
To counter this growing drift, India should expand cultural diplomacy, deepen educational collaborations, and enhance infrastructure partnerships.
Myanmar and Thailand: balancing engagement
Myanmar’s 2021 military coup has destabilised key infrastructure projects, such as the Kaladan Multi-Modal Transit Transport Project and the India-Myanmar-Thailand Trilateral Highway, exacerbating security concerns along India’s border. However, bilateral trade has remained steady at $1.74 bn, driven by agricultural and energy exchanges. Yet, disruptions in trade routes due to border conflicts demand a recalibrated approach. India’s agricultural sector depends on imports from Myanmar, particularly toor daal, making smooth trade relations vital.Despite international criticism over Myanmar’s human rights violations, India’s presence in agriculture and energy remains essential. Engaging local businesses while managing political sensitivities is key to maintaining India’s strategic interests. Additionally, Myanmar’s refugee influx of around 100,000 people adds complexity to India’s relationship with its neighbour.
In Thailand, a key gateway to Asean, China’s growing economic influence through the BRI is evident, especially in the transport and energy sectors. To counterbalance China’s expanding footprint, India must position itself as a more reliable economic partner. By emphasising democratic values, promoting sustainable investments, and fostering collaborative growth, India can retain relevance and strengthen its presence in this important region.
The Maldives and Sri Lanka: navigating volatility
The Maldives has shifted between India and China in its geopolitical alignments. Recent shifts have favoured China, but India’s strategic outreach has restored strong bilateral ties. India’s infrastructure projects, defence cooperation, and development aid have reinforced its influence. However, China’s backed projects continue to challenge India’s position. Continued engagement in climate change mitigation, security partnerships, and economic cooperation will be vital for India’s enduring influence.
Sri Lanka’s economic collapse posed a challenge, but India responded with $4bn in credit lines, grants, and stabilisation measures, positioning itself as a crucial economic partner. However, China’s investments in Sri Lanka, such as the Hambantota Port and Colombo Port City, remain a long-term strategic concern.
Right after Thailand, Sri Lankan President Anura Kumara Dissanayake rolled out the red carpet for Modi and welcomed him with a 19-gun salute in the capital’s Independence Square. The two nations signed a five-year defence cooperation agreement for the training of Sri Lankan military personnel in India as well as information and technology sharing. Sri Lanka’s growing debt to China and reliance on Beijing’s financial assistance are challenges for India. India’s focus on trade partnerships, regional connectivity, and investment-driven growth will be key to maintaining influence.
Nepal: shifting geopolitical balance
Nepal, historically within India’s sphere of influence, is increasingly engaging with China. While India remains Nepal’s largest source of foreign direct investment (FDI), China’s rising investments in energy and infrastructure pose economic and strategic challenges. Nepal’s debt to China has increased from $0.07 bn in 2016 to $0.26 bn in 2022, raising concerns about financial dependency. Chinese-backed projects in roads and hydropower are altering Nepal’s economic landscape.
India must counter this by investing in Nepal’s hydropower sector, improving cross-border transport connectivity, and ensuring Nepal views India as a stable, long-term partner. Strengthening people-to-people ties through scholarships, cultural initiatives, and tourism will reinforce India’s position. Expediting projects like the India-Nepal railway and energy trade agreements will help deepen economic integration.
Pakistan and future of SAARC
India-Pakistan tensions have rendered Saarc dysfunctional, with decades of hostility preventing meaningful regional integration. Reopening the Wagah border for trade and fostering economic interdependence could pave the way for gradual normalisation. While political mistrust remains, economic pragmatism could bring peace.
We must not be held hostage by a few malicious actors, and people-to-people contact must continue across borders to overcome divisiveness. India’s deep-rooted historical, cultural, and social connections with its neighbours give it a unique advantage over China. By emphasising this affinity, India can position itself as a natural leader in the region, ensuring it remains the preferred partner in South Asia’s competitive landscape.
