Nepal is the latest flashpoint in India’s neighbourhood. Prime Minister KP Sharma Oli resigned this week after massive ‘Gen Z’ protests shook the Himalayan nation, leaving Kathmandu politically adrift and New Delhi watching warily. For India, which shares a porous and culturally intertwined border with Nepal, the turmoil is only the most recent in a chain of destabilising events across South Asia. Afghanistan’s Taliban takeover, Myanmar’s military coup, Sri Lanka’s economic collapse, Pakistan’s deepening instability, the Maldives’ pro-China tilt, and Bangladesh’s post-Hasina shift are all reshaping India’s strategic environment.
Beyond political crises, recalibrating ties between Bangladesh and China, and between Bangladesh and Pakistan, are also creating new risks for India’s long-term security and influence in the region.
Nepal
Nepal has always been central to India’s neighbourhood policy because of the open border, shared religious and cultural ties, and the large number of Nepalis working in India’s security forces. Relations, however, have not been without friction. Oli’s previous administration in 2020 angered New Delhi by issuing a new map claiming Indian territories of Limpiyadhura, Kalapani, and Lipulekh.
When Oli returned to power in July 2024, he again signalled a preference for Beijing, making his first foreign visit to China rather than India. During his December 2024 trip to Beijing, Nepal reiterated its commitment to China’s Belt and Road Initiative, which India opposes over sovereignty concerns. In April this year, Modi and Oli met on the sidelines of the BIMSTEC Summit in Bangkok. Oli at the time played down any rift with New Delhi, promising that an India visit would happen at the “appropriate time”.
But by August 2025, Nepal was in turmoil. A series of youth-led protests known as the ‘Gen Z’ movement intensified, fuelled by anger at unemployment, corruption, and the perception of political elites being beholden to external powers. On 10 September, Oli stepped down. Prime Minister Narendra Modi appealed to Nepal’s citizens to maintain peace and order. For India, the timing is delicate. The vacuum in Kathmandu risks being filled by anti-India forces or greater Chinese influence, complicating New Delhi’s outreach.
Afghanistan
If Nepal is the newest crisis, Afghanistan remains the most enduring challenge. When the United States under President Joe Biden withdrew its troops in 2021, ending two decades of “nation building”, it also terminated the external support system of the elected Afghan government. The Taliban swept back to power, declaring the end of foreign occupation. For India, this was a strategic jolt.
New Delhi had invested heavily in Afghanistan’s democratic order, building roads, dams, schools, and the parliament building itself. As the Taliban advanced, India evacuated its citizens and officials under Operation Devi Shakti and halted funding for development projects, pivoting instead to humanitarian relief. Shipments of wheat, medicine, earthquake relief materials, winter clothing, hygiene kits, polio vaccines, and COVID-19 vaccine doses have continued since 2021.
India has been careful to maintain some engagement with the new regime. In June 2022, it deployed a “technical team” to the Kabul embassy to coordinate aid distribution. In January this year, Foreign Secretary Vikram Misri met the Taliban’s acting foreign minister Amir Khan Muttaqi in Dubai — the first high-level contact since 2021. External Affairs Minister S Jaishankar also spoke with Muttaqi in May, thanking him for condemning the Pahalgam terror attack in Jammu and Kashmir.
India’s slow and steady approach reflects a balancing act between its commitment to democratic principles and the need to protect its security and connectivity interests, especially in countering Pakistani terror groups that once found refuge in Afghanistan.
Myanmar
Myanmar’s military coup in February 2021 opened another front of instability. Senior General Min Aung Hlaing seized power after the ruling party lost elections, deposing Aung San Suu Kyi and plunging the country into a bloody civil conflict. Today, the junta controls less than a third of Myanmar’s territory, battling multiple armed ethnic groups like the Arakan Army and the Kachin Independence Army (KIA).
For India, Myanmar is both a gateway to Southeast Asia and a sensitive borderland. Instability spills into India’s Northeast, where refugees cross into Mizoram and Manipur, and insurgent groups seek sanctuary. New Delhi has tried to maintain working ties with the junta, dispatching aid after the March 2025 earthquake that killed nearly 5,500 people. But it has also quietly engaged with some ethnic armed groups. Reports suggest Indian officials have met Arakan Army representatives in New Delhi and Aizawl, while Mizoram state leaders have hosted informal discussions with the group.
India is even exploring resource cooperation with the KIA, which controls areas rich in rare earths. Yet China looms large. Beijing backs the junta, finances major infrastructure projects under the China-Myanmar Economic Corridor, and operates mines and plants even in rebel-held regions. This leaves India in a dilemma: whether to openly support pro-democracy forces and risk pushing Naypyitaw further into Beijing’s arms, or to maintain ties with the military while hedging with non-state actors along the border.
Sri Lanka
In 2022, Sri Lanka’s economy imploded under the Rajapaksa family. Hyperinflation, power cuts, and shortages of food and fuel triggered mass protests in Colombo, culminating in President Gotabaya Rajapaksa fleeing to the Maldives. Mahinda Rajapaksa resigned as prime minister amid public anger.
India stepped in with nearly $4 billion in emergency aid, supplying fuel, food, and medicines under its “Neighbourhood First” policy. This stabilised Sri Lanka temporarily and reinforced India’s image as a first responder. By mid-2023, ties had improved, with then-acting President Ranil Wickremesinghe visiting New Delhi to deepen connectivity projects.
But the political landscape shifted again in 2024 when Anura Kumara Dissanayake of the National People’s Power coalition assumed office. Despite his party’s leftist leanings and perceived ideological closeness to China, his first overseas visit was to India — a symbolic nod to New Delhi’s importance. In April this year, Modi visited Colombo, and the two countries signed their first-ever defence cooperation MoU, alongside agreements on energy and economic collaboration.
Yet Sri Lanka remains vulnerable to Chinese leverage. Beijing’s loans financed the Hambantota Port and the Colombo Port City, key pieces of its “String of Pearls” strategy encircling India. New Delhi’s challenge is to deepen economic integration without appearing overbearing, while offering alternatives to Chinese capital.
Pakistan
Pakistan has been in political turmoil since Imran Khan’s ouster in 2022. His arrest in May 2023, after a falling-out with the army, underscored the enduring dominance of the military establishment. Relations with India have remained frozen since Pakistan downgraded diplomatic ties and halted trade following the abrogation of Article 370 in Jammu and Kashmir.
In January this year, Jaishankar confirmed that no talks had taken place on resuming trade. The relationship hit a new low in April after the Pahalgam terror attack killed 26 people. India responded with unprecedented measures: suspending the Indus Waters Treaty, closing the Attari–Wagah border post, cancelling Pakistani visas under the SAARC scheme, expelling military advisers, and reducing diplomatic staff.
Defence Minister Rajnath Singh vowed a “very loud response”. In May, India launched Operation Sindoor, striking over two dozen terror bases inside Pakistan, including deep in its territory. Modi, in a 12 May address, declared that India would no longer distinguish between “state” and “non-state” actors in responding to terrorism and would not be intimidated by “nuclear blackmail”.
This marks a strategic shift in New Delhi’s approach to Pakistan: deterrence through decisive retaliation and diplomatic isolation, rather than waiting for international mediation.
Maldives
In November 2023, Mohamed Muizzu assumed the presidency of the Maldives after running an “India Out” campaign promising to remove Indian troops. His early rhetoric was pointed. “We may be small, but that does not give you the licence to bully us,” he said after signing nearly two dozen agreements with China.
Three of his ministers made derogatory remarks about Modi, sparking calls in India to boycott Maldivian tourism. Arrivals of Indian tourists — crucial to the island nation’s economy — dipped in early 2024. Yet New Delhi did not retaliate harshly. Modi met Muizzu on the sidelines of COP28, and Jaishankar held a “frank conversation” at the NAM Summit in January 2024. Indian troops were quietly withdrawn ahead of Muizzu’s deadline but replaced with civilian technicians to maintain the same platforms.
By May 2024, Maldivian ministers were appealing for Indian tourists to return. Muizzu attended Modi’s swearing-in ceremony in June, and during his October 2024 visit to India the two countries signed a $400-million currency swap agreement. In July 2025, during Modi’s visit to the Maldives to mark 60 years of diplomatic ties, India announced a $565-million line of credit for infrastructure projects.
The Maldives remains a stage for India-China rivalry. Male joined the Belt and Road Initiative in 2013, giving Beijing a foothold in the Indian Ocean. India’s task is to maintain goodwill and economic leverage without being dragged into domestic political rivalries in a small but strategically vital neighbour.
Bangladesh
Perhaps the most dramatic shift has occurred in Bangladesh. Sheikh Hasina, a long-time ally of India, was ousted by student-led protests in August 2024 and fled to India. An interim government headed by Nobel laureate Muhammad Yunus has since taken charge.
This government has adopted a markedly pro-Pakistan stance. Dhaka resumed direct trade with Islamabad for the first time since 1971, importing 50,000 tonnes of rice through a government-to-government deal. Bilateral trade surged 27 per cent between August and December 2024, aided by simplified inspections and visa processes. Pakistan reciprocated by waiving fees and security screenings.
Dhaka has also drawn closer to China, securing LNG support, port funding, and industrial investments worth $2.1 billion. At the same time, Bangladesh has formally asked India to extradite Hasina, straining ties further.
For New Delhi, this is deeply unsettling. Bangladesh under Hasina had been a cornerstone of India’s “Act East” and counterterrorism strategy, cracking down on insurgent groups operating from its territory. The recalibration of Dhaka’s ties with both China and Pakistan threatens to undercut two decades of progress and open new security vulnerabilities along India’s eastern flank.
A region in flux: The common threads
Taken together, the crises in Nepal, Afghanistan, Myanmar, Sri Lanka, Pakistan, the Maldives, and Bangladesh reveal a South Asian landscape in flux. Democratic backsliding, economic instability, and great-power rivalry are reshaping the region. China’s growing footprint, from ports and highways to rare earth deals and currency swaps, intersects with political shifts that are not always favourable to India.
New Delhi has responded with a mix of quick crisis aid, high-level diplomacy, and calibrated security actions. In Afghanistan, it pivoted to humanitarian relief while keeping channels open. In Myanmar, it hedged between the junta and armed groups. In Sri Lanka, it emerged as the first responder. In Pakistan, it demonstrated a willingness to retaliate militarily. In the Maldives, it used quiet diplomacy to offset hostile rhetoric. In Bangladesh, it now faces the prospect of losing a trusted partner.
A test of India’s Neighbourhood First policy
India’s ‘Neighbourhood First’ policy was built on the idea that stable, prosperous neighbours would reinforce its own security and economic growth. But as the events of the past four years show, political upheavals, external influence, and anti-India sentiments can swiftly reverse these gains.
New Delhi’s challenge is to combine principled support for democracy with pragmatic engagement, to offer credible alternatives to Chinese financing without overextending itself, and to respond firmly to security threats without appearing heavy-handed. The resignation of Nepal’s prime minister is a reminder that instability can erupt even in countries with deep ties to India. Whether India can manage this shifting environment will shape not only its regional stature but also its ability to act as a net security provider in the wider Indo-Pacific.
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