India's Neighbourhood Policy

2.1 SAARC and Its Limitations

The South Asian Association for Regional Cooperation (SAARC) was founded in 1985 and is headquartered in Kathmandu. It has 8 members: India, Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka, Afghanistan, and Maldives.

Why SAARC has stalled:

• SAFTA (South Asian Free Trade Area) has been largely ineffective due to India-Pakistan tensions
• The 2016 Islamabad SAARC Summit was boycotted by India after Uri attacks — Bangladesh, Bhutan, and Afghanistan followed

India's alternative: BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) — members: India, Bangladesh, Myanmar, Sri Lanka, Nepal, Bhutan, Thailand.

2.2 India's Key Bilateral Neighbourhood Relations

India-Nepal

• Open border; 1950 Treaty of Peace and Friendship; Hindu-Buddhist cultural ties
• Hydropower cooperation: Nepal's potential 80,000+ MW; India buys Nepali power
• 2024 approvals: Arun-4 (695 MW), Phukot Karnali (480 MW), Upper Karnali, West Seti
• Tensions: Nepal's 2020 map incorporating Kalapani-Lipulekh-Limpiyadhura; China's growing BRI footprint

India-Bangladesh

• Transformed relationship under Hasina government (2010 onward) — connectivity and counterterrorism
• Land Boundary Agreement (2015): Resolved 68-year boundary dispute — India transferred 111 enclaves (17,160 acres); Bangladesh transferred 51 enclaves
• August 2024: Sheikh Hasina's government fell amid student protests; Muhammad Yunus-led interim government challenges India's influence
• Teesta river water sharing still pending; West Bengal's opposition blocks India from signing
• Bangladesh is India's largest development assistance recipient — $8 billion LoC

India-Sri Lanka

• Tamil issue: Sri Lanka's civil war ended 2009 (LTTE defeat); post-war Tamil minority issues remain sensitive
• China factor: Hambantota Port leased to China (2017, 99 years); debt trap concerns in 2022 economic crisis
• India's response to 2022 crisis: Provided $4 billion emergency credit support — solidifying bilateral goodwill
• Fishermen disputes over Palk Strait; Trincomalee petroleum tank farm energy cooperation ongoing

India-Maldives

• 2023–24 diplomatic strain: President Mohamed Muizzu elected on "India Out" platform (November 2023); requested withdrawal of Indian military personnel
• China stepped in with infrastructure projects to fill the vacuum
• Historical anchor: India's Operation Cactus (1988) saved Maldives' democratic government from coup
• India's Neighbourhood First policy holds despite the strain

India-Myanmar

• Military coup (February 2021): Tatmadaw overthrew elected government; ongoing civil war
• Rohingya crisis: 1+ million fled to Bangladesh (2017); India avoids direct intervention
• Connectivity projects: Kaladan Multi-Modal Transit Transport Project; India-Myanmar-Thailand Trilateral Highway
• Northeast India insurgent groups using Myanmar territory remain a security concern

India-Bhutan

• Closest ally — no Chinese diplomatic relations until recently; operates under India's security umbrella
• China-Bhutan border negotiations: Ongoing without India's direct involvement — raises concerns about strategic Doklam plateau
• India manages Bhutan's hydropower exports; relationship anchored by Treaty of Peace and Friendship (2007)

India-Pakistan

• No formal peace treaty; divided by the Line of Control (LoC) in Kashmir (ceasefire 1949; UNSC Resolution 47)
• Cross-border terrorism: Lashkar-e-Taiba (26/11), Jaish-e-Mohammed (Pulwama 2019)
• India announced suspension of MFN status to Pakistan (2019, post-Pulwama)
• Indus Waters Treaty (1960): Signed under World Bank mediation; India suspended modification talks post-Pahalgam attack (2025)
• Nuclear dimension: Both tested in May 1998; Pakistan maintains "full spectrum deterrence" (no NFU)

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