India is facing a severe strain on its relations across all its borders. New Delhi, the economic giant of South Asia, is dealing with a deterioration in relations with its neighbors – not in a bilateral isolated manner, but as a structural shift visible across the regional spectrum. These include rising tensions with Bangladesh, friction on the western border with Pakistan, and strategic shifts in Nepal, Sri Lanka, and the Maldives. The reason behind these shifts is a growing mistrust among the neighbors, owing to India’s security-centric diplomacy, ideological signaling, and aggressive leadership rhetoric.  

Despite promises of connectivity, trade, and cooperation under India’s “Neighborhood First” policy, the influence India aspired to is not being realized. India’s extension of Lines of Credit (LOCs) to Bangladesh (roughly $7.9 billion) and Nepal ($1.6 billion), showed an intent of interdependence, but India was unable to build trust. Additionally, the challenges are compounded by politics and ideology. Hindutva-driven symbolism based on concepts such as “Akhand Bharat” and aggressive statements by prominent leaders, including Prime Minister Narendra Modi, tend to concretize India’s interventionist image, persuading neighbors to diversify their options and hedge in a multipolar setting of South Asia. 

Formally articulated over a decade ago, India’s “Neighborhood First” policy aimed at strengthening regional connectivity, trade facilitation, and enhanced political engagement with its neighbors. The main objective was to project India as a cooperative South Asian leader that offers all sorts of support and aid to countries such as Bangladesh, Nepal, and the Maldives. The intent of win-win cooperation was reassured by high-level diplomatic visits aimed at institutionalizing dialogue and fostering long-lasting partnerships. 

Practically, the policy delivered measurable outcomes. By extending lines of credit to Bangladesh, Nepal, and the Maldives, and financing transport, energy, and infrastructure projects, India reinforced its role as a reliable partner in the region. Furthermore, India also extended credible humanitarian support to its neighbors in times of natural disasters. 

However, the “Neighborhood First” vision faced immense challenges in the realm of implementation. Multiple projects faced delays due to disagreements over territorial and water disputes, bureaucratic red tape, and conditions requiring the use of India-based contractors.........

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