Reorienting India's Foreign Policy
Neighborhood First

by Deep Pal
January 14, 2016

This essay is part of a Strategic Asia Program series on Trends and Indicators in the Asia-Pacific.

Signals may not speak as loudly as actions, but they go a long way in diplomacy. Narendra Modi’s decision to invite all South Asian heads of state to his inauguration signaled that the neighborhood would be central in his foreign policy. Elected on a mandate to boost India’s sagging growth numbers, Modi knows he has to show results fast. Improving intraregional trade within the South Asian Association for Regional Cooperation (SAARC), which stands at a measly 5%—compared with over 60% in the European Union and 25% in the Association of Southeast Asian Nations (ASEAN)—is a good place to start. Traditionally, poor infrastructure has combined with historical and geopolitical disputes to affect trade-friendly policy.

Investing in neighborhood relationships also makes geopolitical sense. As China looms large on the horizon, India has long needed to shake off a reputation of being “big brother” in the region, standing accused of imposing its views on smaller players. It also must elevate its image from a country that overpromises and underdelivers to smaller partners.

Shaping a “Neighborhood First” Foreign Policy

Modi’s first state visit was to neighboring Bhutan, where he promised assistance with hydroelectric power projects; next was Nepal, which no Indian prime minister had visited in almost two decades. Modi signed a land-swap deal with Bangladesh resolving a 70-year-old political and humanitarian issue involving thousands of people stuck in pockets of land belonging to one country within the other’s territory. In Sri Lanka, where the Rajapaksa government chose to get closer to China at significant strategic cost to India, recovery of lost ground seemed imminent with the election of the new president Maithripala Sirisena.

Modi’s “neighborhood first” approach, however, encompasses more than South Asia and follows a “proactive foreign policy” in the extended neighborhood. It aims not just to react to events unfolding in Asia but to shape them. Modi has developed personal relationships via high-level visits—24 of his 37 trips through 2015 were to Asian countries; for Foreign Minister Sushma Swaraj the numbers were 21 of 28. Visits have been followed by proposals for cooperation in areas of mutual interest in the economic and strategic domains.

The Act East policy, derived from the Look East policy of the 1990s, is an instance of this type of cooperation. The policy envisions pursuing and nurturing strategic and economic relationships in Southeast and East Asia. Recently, this has meant reaching an agreement on civil nuclear cooperation with Japan and initiation of Indo-Japan-U.S. meetings at the foreign minister level; also, Japan has become a permanent member of Exercise Malabar, a naval drill held bilaterally with the United States. Similarly, India has pledged greater cooperation with Vietnam, including port visits by navy ships, sale of patrol boats, and continued joint exploration of oil blocks.

In the Middle East, India’s decision to abstain from condemning Israel at the United Nations over its offensive in Gaza coincides with greater cooperation between the two countries in defense, science and technology, and agriculture. There is also talk of Modi making the first visit by an Indian prime minister to Israel. His visit to the United Arab Emirates (UAE) was not only about energy security but also about the seven million Indians working in Gulf states responsible for remittances worth $6 billion annually.

Modi’s brand of foreign policy has been designed with economic diplomacy at its center. Every state visit focuses on finding investors or opportunities to expand trade. These efforts have been channeled through the “Make in India” initiative, aimed at developing India as a manufacturing hub as rising labor costs decrease China’s competitive edge.

This policy’s aim, however, goes beyond balancing Chinese influence in the economic realm alone. Following China’s example, Modi hopes to use economic cooperation to expand India’s sphere of influence. The policy’s objective is to develop robust trade relationships that will drive countries in India’s immediate and greater neighborhood to invest more in the overall security relationship. Modi’s nuanced approach has been shaping his message to reflect what each country finds important. For instance, in Southeast Asia and East Asia the focus is on China’s increasing assertiveness; in the UAE, it is on terrorism. In Afghanistan, as dialogue with the Taliban begins again, with China playing an active role, India wants to be part of the rebuilding process to ensure that the outcome is not inimical to its interests.

This neighborhood-first policy is also reflected in the burgeoning India-U.S. relationship. To fulfill its ambition of being a bigger regional player, India would need to become a net provider of security in the region. As the 2015 U.S. National Security Strategy explains, this is where the Act East policy converges with the U.S. rebalance to Asia.

Staying the Course on Neighborhood First

Looking ahead, Modi will need to further refine aspects of his foreign policy. Despite efforts, he has failed to make a breakthrough in Pakistan. The relationship seems stuck in the same vicious circle, as a terrorist attack in an Indian airbase days after Modi’s seemingly spontaneous visit to Pakistan has once again raised questions about the prospects of meaningful dialogue. India’s approach to Nepal floundered when a constitution that India finds inadequately representative was promulgated. India was accused of enforcing an unofficial economic blockade, and its image in Nepal has deteriorated rapidly.

Considering that the neighborhood focus comes after years of neglect and ambivalence, the policy will need time to yield results. Many of the issues affecting India’s immediate neighborhood have domestic motivations and offer little scope for India to intervene. Modi has engagements planned for much of 2016, and three objectives will guide his foreign policy—maximizing security, expanding India’s sphere of influence, and securing economic growth.

In recent months, domestic developments have taken up much of the prime minister’s attention. Political opponents have accused him of spending too much time abroad at the cost of priorities at home such as pending economic development, domestic security, and heightened social tension. Additionally, recent electoral defeats at the state level and elections in the Rajya Sabha (upper house of the parliament) in 2016 will require Modi’s attention.

Given Modi’s hands-on foreign policy decision-making, if he becomes unavailable, it will be all too visible. While there are no signs yet, analysts will look for signals like deferred measures on promised reform to aid foreign investment, canceled foreign trips, failure to reach out to neighbors, and inertia on agreements and consultations with major partners. If this happens, India will lose the international gains made in the first years of the present administration and slide back to the days of foreign policy stasis during the previous government. In his 2014 election manifesto, Modi promised to take India to “its rightful place in the comity of nations and international institutions.” If he takes his foot off the foreign policy pedal, that goal is likely to stay out of reach.

This essay is part of the Strategic Asia Program’s Trends and Indicators series. Read other essays in the series:

China’s Vision for a New Asian Economic and Political Order

Climate Policy in the Asia-Pacific: Balancing Economic Growth with Environmental Sustainability

Cheap Oil in the Asia-Pacific: Implications for Energy and Environmental Security

Taiwan Election Politics

The Trans-Pacific Partnership in the Asia-Pacific

Japan’s Double-Edged Defense Reforms

Reorienting India’s Foreign Policy: Neighborhood First

High Tensions over Low-Tide Elevations in the South China Sea

The Iran Nuclear Deal and Asia

Deep Pal is a doctoral student at the University of Washington’s Henry M. Jackson School of International Studies.