The year 2025 tested Indian foreign policy in ways few in New Delhi had anticipated. Instead of steady alignment and calibrated partnerships, the Narendra Modi government faced a series of shocks — from abrupt shifts in Washington to turbulence in the neighbourhood and renewed great-power rivalry. As South Block takes stock, the question is not just what went wrong or right in 2025, but how India recalibrates its diplomacy for a more uncertain 2026.
The Trump factor and a shaken global order
The single most consequential global development for India in 2025 came from Washington, with the return of Donald Trump for a second term. His “Liberation Day” tariffs destabilised the multilateral trading system, sharply increasing protectionism and injecting unpredictability into global markets.
For India, expectations of a transactional but broadly favourable Trump presidency were quickly undercut. The imposition of steep tariffs and surcharges on Indian imports over New Delhi’s purchase of Russian oil, combined with a hardline stance on immigration, H-1B visas and student visas, generated both economic and political pressure. Trump’s erratic diplomacy — from claiming credit for mediating Operation Sindoor to hosting Pakistani leaders and clearing F-16 supplies — undercut India’s narrative on cross-border terrorism and strained strategic messaging.
Global trends complicating India’s strategic space
Beyond the US, wider global trends added to India’s diplomatic discomfort. The rise of ultra-right and nationalist politics across Europe, parts of Asia and Latin America signalled a less cooperative international environment. At the same time, falling oil prices due to OPEC overproduction raised concerns about slowing momentum in the renewable energy transition.
The prolonged Russia–Ukraine war entered its fourth year, but for the first time India faced direct economic fallout. Sanctions on Indian-linked entities such as Nayara Energy, alongside restrictions on Russian oil majors, narrowed India’s room for manoeuvre. Meanwhile, the Gaza conflict continued with devastating humanitarian costs, even as a fragile, US-backed ceasefire towards the end of the year offered limited hope.
West Asia, Iran and diplomatic tightropes
India’s West Asia policy also faced strain. The India–Middle East Economic Corridor remained stalled amid regional instability. New Delhi’s decision not to criticise Israeli strikes on Iran in June led to awkward moments at forums such as the Shanghai Cooperation Organisation and BRICS, where Iran is now a member.
Balancing strategic partnerships with Israel, energy interests in the Gulf and engagement with Iran became increasingly complex in a polarised geopolitical climate.
Neighbourhood turbulence and credibility questions
Closer home, 2025 was particularly unsettling. A conflict with Pakistan, Gen Z–led protests in Nepal that toppled the government, and mob violence in Bangladesh that turned sharply anti-India all raised questions about the effectiveness of India’s “Neighbourhood First” policy.
These developments underscored how domestic political churn in neighbouring countries can quickly spill over into diplomatic challenges for India, demanding constant engagement rather than episodic outreach.
Diplomatic successes amid adversity
Despite the turbulence, Indian diplomacy registered notable gains. Relations with Canada improved after a prolonged freeze, with Mr. Modi engaging constructively with the new Canadian Prime Minister Mark Carney at the G-7 outreach. Another striking move was India’s calibrated engagement with the Taliban, culminating in a high-profile visit by Afghan Foreign Minister Amir Khan Muttaqi — a decision that drew criticism but also reflected strategic pragmatism amid shifting regional equations.
India also sustained a cautious rapprochement with China, reopening Kailash–Mansarovar travel, restoring visas and resuming water data sharing, even as Beijing continued backing Pakistan. Simultaneously, New Delhi strengthened ties with Bhutan, Sri Lanka and the Maldives, with India’s swift humanitarian assistance after Cyclone Ditwah in Sri Lanka earning widespread appreciation.
Trade diplomacy and unfinished business
A major focus of 2025 was trade diplomacy. India concluded bilateral trade agreements with the UK, Oman and New Zealand, but larger negotiations with the US, EU, ASEAN, GCC and the Eurasian Economic Union remain pending. These talks are expected to reach critical stages in early 2026, especially with the anticipated finalisation of the India–EU free trade agreement during Republic Day celebrations.
What lies ahead in 2026
The coming year will test India’s ability to convert lessons into leverage. Elections in Myanmar, Bangladesh and Nepal will require careful diplomatic calibration. Hosting the Artificial Intelligence Summit in February offers India a chance to shape global technology governance, while high-level visits — including potential Quad and BRICS summits — will signal India’s strategic priorities.
At the same time, managing ties with an unpredictable US administration, navigating China–Pakistan alignment, and restoring confidence in the neighbourhood will demand realism rather than rhetoric.
What to note for Prelims?
- Key foreign policy developments involving the US, China and Russia
- India’s role in SCO, BRICS and Quad
- Neighbourhood First policy and recent challenges
- Major trade agreements signed and under negotiation
What to note for Mains?
- Impact of global political shifts on India’s strategic autonomy
- Assessing India–US relations under a second Trump presidency
- Balancing neighbourhood stability with great-power diplomacy
- Trade agreements as tools of foreign policy
After a year defined by surprise and disruption, India’s foreign policy in 2026 will need tempered expectations, sharper prioritisation and sustained engagement. The challenge for South Block is not merely to react to shocks, but to build resilience in a world where uncertainty is fast becoming the norm.
