For decades, India has operated under the assumption that South Asia is its natural strategic backyard. As the region’s largest economy and military power, New Delhi has lng exercised significant influence over the domestic and foreign affairs of its neighbors. Geopolitical hegemony—the ability of one state to shape regional political, economic, and security arrangements through overwhelming influence—has been central to India’s regional strategy. Backed by its geographic size, demographic weight, and economic dominance, India has positioned itself as both South Asia’s primary security provider and economic anchor. 

Yet, that strategy is becoming increasingly unsustainable. Across the region, governments and populations alike are pushing back against what many perceive as India’s paternalistic approach to diplomacy. Rather than encouraging long-term partnerships, New Delhi’s reliance on political favoritism, unilateral policymaking, and close relationships with individual leaders has generated growing resentment. As South Asia enters an increasingly multipolar era, India's traditional “Big Brother” playbook is producing diminishing returns. 

Nowhere is this shift more visible than in Bangladesh. For more than a decade, India concentrated its diplomatic strategy on supporting the government of Sheikh Hasina, viewing her administration as a reliable partner against anti-Indian militancy and a stabilizing force along India’s northeastern border. While this approach produced short-term security cooperation, it also tied India’s regional strategy to the fortunes of a single political leader while alienating significant portions of Bangladeshi society.

That gamble unraveled quickly. When Hasina was ousted amid a mass uprising and fled to India on August 5, 2024, the political vacuum immediately exposed the fragility of India’s position. A robust “India Out” campaign gained momentum, with campaigners urging Bangladeshis to boycott Indian goods and choose local products over Indian imports, striking at the heart of a bilateral trade relationship in which India’s exports to Bangladesh had reached $16.15 billion in FY2021–22. By prioritizing strategic convenience over broader engagement with Bangladeshi institutions and civil society, New Delhi sacrificed long-term public goodwill for short-term political stability.

Today, the textile sector in Bangladesh—which accounts for more than 80 percent of export earnings and employs more than four million workers—is actively exploring ways to reduce its reliance on Indian cotton and yarn, even as India remains a major supplier. The vulnerability of roughly 19,000 Indian nationals in Bangladesh, including about 9,000 students, and the corporate interests left exposed during the regime change served as a sobering reminder of the costs of anchoring foreign policy too closely to individual leaders rather than building durable relationships with democratic institutions and broader society.

The Maldives offers another example of how perceptions of Indian influence have shifted. Strategically located along critical Indian Ocean shipping routes, the island nation became the center of regional attention after President Mohamed Muizzu won office on an explicitly “India Out” platform. One of his administration’s first major foreign policy priorities was demanding the withdrawal of Indian military personnel stationed in the country.

By May 10, 2024, New Delhi was forced to complete the politically damaging replacement of its uniformed personnel with civilians, after India agreed to withdraw troops who had been operating a Dornier aircraft and two helicopters provided for humanitarian and emergency services. Maldivian officials later said 76 Indian military personnel had been replaced by civilian staff, while earlier local documentation had put the number of Indian soldiers at 89. New Delhi fundamentally misunderstood the optics of its presence; what Indian policymakers viewed as benign capacity-building, the Maldivian public perceived as a creeping infringement on their national sovereignty. The episode underscored a recurring challenge for Indian foreign policy. Even initiatives framed as development assistance or security cooperation can generate backlash when local populations perceive them as symbols of external influence rather than partnership.

Sri Lanka presents a different, but equally revealing, case. Following the country’s devastating economic crisis, India emerged as one of Colombo’s most important partners, providing emergency credit lines, humanitarian assistance, and financial support. Initially, these efforts generated considerable goodwill.

However, the goodwill generated by this assistance was quickly squandered by the perception that New Delhi was leveraging its geopolitical weight to secure lucrative contracts for favored Indian corporations. The controversy surrounding the Adani Group is the prime example. The Sri Lankan government’s decision to award renewable energy projects in the Mannar and Pooneryn districts to Adani Green Energy sparked protests and legal scrutiny; the project was widely reported as a 484 MW wind-power development worth roughly $440 million, while some reporting placed the broader investment, including transmission, closer to $1 billion. Critics pointed to highly irregular terms, including a guaranteed power purchase rate of 8.26 US cents per kWh for 20 years, which Sri Lanka’s subsequent government sought to renegotiate before Adani withdrew.

Even India’s historically closest relationships have not been immune to strain. Nepal, whose military and political ties with India stretch back decades, illustrates how unilateral policymaking can erode long-standing partnerships.

The clearest example is India’s 2022 introduction of the Agnipath military recruitment scheme, which replaced traditional enlistment with a four-year tour-of-duty model for new recruits. India enacted this massive shift without adequately consulting Kathmandu, disregarding the spirit of the 1947 Tripartite Agreement between Nepal, India, and Britain that has governed Gurkha recruitment. 

Nepal responded by suspending recruitment into the Indian Army under the new system. The decision disrupted one of the region’s most enduring defense partnerships, affecting recruitment for the Indian Army’s seven Gorkha regiments while also limiting an important source of employment and pension income for thousands of Nepali families. More broadly, the episode illustrated how even well-intentioned domestic reforms can generate diplomatic costs when neighboring states perceive themselves as excluded from decisions that directly affect their interests.

India’s regional challenges extend beyond individual bilateral relationships. They also reflect the broader failure of South Asia to develop meaningful economic integration. Despite its geographic proximity and shared history, South Asia remains one of the least economically integrated regions in the world. Intra-regional trade accounts for barely 5 percent of South Asia’s total trade, a stark contrast to the roughly 25 percent seen in ASEAN and far higher levels within the European Union. 

This lack of integration carries substantial economic costs. According to the World Bank, South Asian intra-regional trade could jump from $23 billion to at least $67 billion if countries removed artificial trade barriers. Instead, protectionist policies, inefficient customs procedures, and inadequate transportation infrastructure continue to hinder commerce. Trucks carrying perishable goods between neighboring countries frequently spend days waiting at congested border crossings, increasing transportation costs and reducing regional competitiveness.

These persistent obstacles undermine not only economic growth but also India’s own aspirations for regional leadership. A country seeking to lead its neighborhood must also demonstrate the capacity to facilitate commerce, strengthen institutions, and lower barriers to cooperation. When regional trade remains more difficult than commerce with distant markets, claims of regional leadership become increasingly difficult to sustain.

India’s regional ambitions have also stalled at the institutional level. The South Asian Association for Regional Cooperation (SAARC), once envisioned as the cornerstone of regional integration, has been effectively paralyzed by the enduring rivalry between India and Pakistan. No SAARC summit has been held since the 18th gathering in Kathmandu on November 26–27, 2014, underscoring the organization’s inability to advance meaningful regional cooperation amid persistent political tensions.

The deterioration of India-Pakistan relations has carried significant economic consequences. Direct trade between the two nuclear-armed neighbors has nearly vanished; in the 2023–2024 fiscal year, India exported roughly $1.18 billion to Pakistan and imported only $2.88 million. Such figures highlight the extent to which geopolitical disputes continue to override opportunities for regional economic integration.

Frustrated by SAARC’s paralysis, India has increasingly shifted its attention toward the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Although BIMSTEC has gained diplomatic momentum in recent years—including at the 6th BIMSTEC Summit in Bangkok on April 4, 2025—it has yet to emerge as an effective substitute for SAARC. Ongoing political instability in Myanmar has delayed key connectivity projects, including the India–Myanmar–Thailand Trilateral Highway, limiting the organization’s ability to deliver tangible economic integration.

These institutional shortcomings reinforce a broader reality: South Asia remains fragmented despite its enormous economic potential. When regional organizations cannot facilitate trade, infrastructure, or political cooperation, outside powers inevitably expand their influence through bilateral investment, strategic partnerships, and infrastructure financing. The resulting geopolitical competition leaves India operating in an increasingly crowded regional landscape rather than the uncontested sphere of influence it once envisioned. 

As South Asia’s strategic environment evolves, India’s traditional approach to regional leadership appears increasingly outdated. Geography, population size, and economic weight remain important advantages, but they are no longer sufficient to sustain regional influence on their own. Durable leadership depends as much on trust and mutual respect as it does on material power.

If New Delhi hopes to restore its regional credibility, it will need to rethink the assumptions underlying its “Neighborhood First” policy. Rather than relying on close relationships with individual political leaders or unilateral decision-making, India must invest in stronger institutions, broader public engagement, and more equitable partnerships. Treating neighboring states as sovereign partners rather than subordinate buffer states would strengthen—not weaken—India’s long-term strategic position.

Ultimately, the challenge facing India is not whether it can remain South Asia’s largest power. It almost certainly will. The real question is whether it can transform that power into durable regional leadership. Without a more cooperative and inclusive approach, New Delhi risks accelerating the very strategic drift it seeks to prevent.

Acknowledgement

The Institute for Youth in Policy wishes to acknowledge Michelle Young for editing this op-ed.

Image Credit

Aditya Siva. Man in White and Green Long Sleeve Shirt Standing Near Brown Concrete Building During Daytime. Photograph. October 27, 2016. Unsplash. Accessed June 25, 2026. https://unsplash.com/photos/man-in-white-and-green-long-sleeve-shirt-standing-near-brown-concrete-building-during-daytime-6rDbvXzIVpQ.