The year 2025 began with optimism for Indian foreign policy. After a politically intense 2024 dominated by national elections, New Delhi appeared poised to return to proactive diplomacy — expanding trade ties, repairing strained neighbourhood relations and leveraging India’s growing global stature. By the end of the year, however, that promise had largely faded, replaced by strategic uncertainty across economic, energy, global and regional security fronts.
High expectations after a political pause
With domestic political recalibration behind it, the government expected Prime Minister to re-engage the world through bilateral visits and multilateral summits. There was confidence that ties with the United States would stabilise under the second Trump presidency, building on earlier personal rapport with .
At the same time, India anticipated closure of long-pending Bilateral Trade Agreements with partners such as the U.S., the U.K., Australia, New Zealand and the European Union. Diplomatic outreach was also visible across fault lines — from tentative engagement with China after years of military standoff at the Line of Actual Control, to deepening economic ties with Russia driven by discounted oil imports.
Regionally, New Delhi sought to repair relationships strained by political churn, reaching out to Bangladesh’s interim leadership, engaging Pakistan diplomatically, opening channels with the Taliban, and preparing for renewed engagement with neighbours such as Nepal and Sri Lanka. Five years after Balakot and the reorganisation of Jammu and Kashmir, the government projected confidence in its counter-terror posture.
Economic and energy security setbacks
Instead of a reset, India–U.S. relations deteriorated sharply in 2025. Trade, immigration and sanctions policies from Washington pushed bilateral trust to its lowest point in decades. A 25% reciprocal tariff imposed by the U.S. on Indian exports hurt labour-intensive sectors such as apparel, gems and jewellery, and seafood. This compounded earlier damage caused by the withdrawal of India’s Generalized System of Preferences benefits during Trump’s first term.
The blow was intensified by a U.S. surcharge on Indian imports of Russian oil, effectively making India one of the most heavily tariffed U.S. trading partners. Even if a future trade agreement moderates these measures, lost contracts and factory closures have already imposed economic costs. Restrictions on H-1B visas further weakened remittance flows, a critical support for India’s foreign exchange earnings.
While India did conclude trade agreements with the U.K., Oman and New Zealand, the more consequential deals with the U.S. and the EU remained elusive by year’s end.
Managing uneasy ties with China and Russia
Relations with China and Russia, despite symbolic optics, remained fragile. High-profile moments — including trilateral images of Mr. Modi with President Xi Jinping and President Vladimir Putin at the Shanghai Cooperation Organisation summit — failed to translate into substantive gains.
Although India and China restored limited people-to-people links such as flights and pilgrimages, core concerns around border stability and investment restrictions persisted. Incidents like the detention of an Indian passenger from Arunachal Pradesh in Shanghai revived anxieties over Beijing’s intentions.
On Russia, India faced renewed pressure as Western sanctions tightened. After years of resisting demands to curb Russian oil imports, New Delhi appeared to soften its stance, raising questions about whether it may once again be compelled to sacrifice energy security, as it did earlier with Iranian and Venezuelan oil. The India–Russia summit, which ended without major breakthroughs in defence, nuclear or space cooperation, underscored the limits of the partnership under present conditions.
A shifting global strategic landscape
India’s external challenges were magnified by global uncertainty. The contrast between the U.S. National Security Strategies of 2017 and 2025 was stark. While the earlier document labelled China and Russia as revisionist powers and described India as a leading global power, the 2025 version softened criticism of Beijing, treated Moscow cautiously and offered India only a narrowly defined role in the Indo-Pacific and critical minerals supply chains.
With Washington showing ambivalence even toward its traditional allies, deeper strategic alignment with the U.S. appeared riskier. Speculation about a potential U.S.–China “G-2” arrangement further fuelled concerns about India’s strategic space in Asia.
Simultaneously, acceptance of controversial peace proposals on Gaza and Ukraine signalled erosion of the rules-based international order. China’s push for alternative “Global Governance” frameworks added to the sense that existing multilateral institutions, including the UN, are losing relevance — forcing India to reflect on its own long-term vision for global order.
Regional volatility and security dilemmas
India’s neighbourhood, initially calm in early 2025, grew increasingly unstable. The terror attack in Pahalgam was a stark reminder that militancy in Jammu and Kashmir remains deeply entrenched. While India’s retaliatory Operation Sindoor was tactically effective, the diplomatic response exposed limitations. Many countries condemned terrorism but stopped short of endorsing India’s cross-border action.
Persistent ambiguity over reports of Indian aircraft losses hurt credibility, compounded by claims of external support for Pakistan. Although New Delhi downplayed China’s role, relations with Türkiye and Azerbaijan deteriorated sharply. The announcement of a Saudi–Pakistan defence pact further complicated India’s regional calculations.
Political churn in neighbouring countries added to uncertainty. Transitional governments in Bangladesh and Nepal, ahead of elections in 2026, reduced predictability, while relations with Dhaka reached a new low. In Myanmar, elections conducted under the junta’s terms, despite India’s efforts at dialogue, highlighted New Delhi’s limited leverage.
Limits of symbolism and strategic messaging
One of the clearest lessons of 2025 was the limitation of performative diplomacy. High-visibility summits, symbolic gestures and public displays of camaraderie did not yield commensurate strategic or economic returns. Similarly, threats of isolation or boycott carried little weight without broader international backing.
The government’s earlier shift from projecting India as a “Vishwaguru” to a “Vishwamitra” reflected realism. Yet, there is now a risk of sliding into a narrative of victimhood — attributing setbacks solely to external hostility while overlooking internal inconsistencies.
Norms, consistency and credibility
India’s credibility abroad is increasingly tied to consistency at home. Concerns raised about minority rights, democracy or political violence in neighbouring countries ring hollow if similar issues within India are not addressed with equal seriousness. The same contradiction is visible in selective engagement — expressing alarm over regional Islamism while simultaneously engaging pragmatically with the Taliban.
In a world becoming more transactional, principles retain value only if they are applied uniformly. As India looks toward 2026, its challenge will be to reconcile ambition with realism, symbolism with substance, and strategic autonomy with ethical coherence.
What to note for Prelims?
- Key challenges to Indian foreign policy in 2025: economic, energy, global and regional security
- Impact of U.S. tariffs and sanctions on India’s trade and energy imports
- Continuing tensions at the India–China LAC despite diplomatic engagement
- Changing contours of the global rules-based order
What to note for Mains?
- Evaluate India–U.S. relations in the context of trade protectionism and strategic uncertainty
- Assess the effectiveness of India’s neighbourhood policy amid political instability
- Discuss the limits of performative diplomacy in achieving foreign policy objectives
- Analyse the importance of consistency between domestic values and external messaging
