Straining Ties: The 2025 India Neighborhood First Policy Crisis

India's once-dominant influence in South Asia is hitting a major roadblock. New Delhi's Neighborhood First policy, designed to foster regional cooperation, is currently facing a structural breakdown as neighbors pivot toward a multipolar strategy. From the streets of Dhaka to the islands of Male, a growing mistrust is reshaping the geopolitical landscape of the subcontinent.

Structural Shifts in the India Neighborhood First Policy Crisis

The gap between India's economic promises and its diplomatic reality is widening. While India extended lines of credit worth $7.9 billion to Bangladesh and $1.6 billion to Nepal, bureaucratic red tape and slow implementation have soured these relationships. Recently, Bangladesh dropped 11 projects due to lengthy approval processes, signaling a decline in New Delhi's role as a reliable partner.

Regional Recalibration: From Male to Dhaka

Political upheavals have accelerated this estrangement. Following the August 2024 ouster of Sheikh Hasina, the interim government in Bangladesh led by Muhammad Yunus is diversifying its ties, reaching out to both China and Pakistan. Meanwhile, in the Maldives, President Mohamed Muizzu successfully campaigned on an 'India Out' platform, resulting in the withdrawal of all Indian military personnel by May 2024.

The Toll of Ideology and Security-First Diplomacy

Domestic political rhetoric, such as the 'Akhand Bharat' map displayed in 2023, has sparked diplomatic outrage among neighbors who view such symbols as a threat to their sovereignty. This, combined with India's security-centric posture—highlighted by military escalations with Pakistan in May 2025—has overshadowed economic engagement. Consequently, despite a $62 billion trade potential, India struggles to unlock regional economic integration.