Finding Opportunities for Cooperation in India's Challenging Neighborhood

India and China have long since been locked in fierce competition to maintain and extend their influence in the South Asian region. South Asia, also known as the Indian subcontinent, is a zone of critical strategic interest. Just within a year, all at once, most of India's neighborhood has undergone rapid political changes that create more discord with India and open up opportunities for further incision by China.

Increasing Chinese influence is inimical to India's national security as China remains unapologetically expansionist with little regard for international law, norms, or diplomatic processes. Let me explain in detail. 

Pakistan is deliberately left out of this analysis as it has long shared acrimonious relations with India. Moreover, Chinese influence over it is well-documented and not new. 

Bangladesh Regime Change 

For decades, India and Bangladesh enjoyed close, cordial relations that flourished under the leadership of Indian Prime Minister Narendra Modi and his Bangladeshi counterpart, Sheikh Hasina. However, in August 2024, Hasina was hastily thrown out of power in a coordinated uprising and fled the country. Since then, the so-called caretaker government has been openly hostile to India. It believes that India played a pivotal role in supporting Hasina's government. 

Increasing attacks on minorities, particularly Hindus in Bangladesh, further soured the bilateral relationship. The new Bangladeshi government, at the behest of Islamists, has sought to rekindle relations with Pakistan, particularly their security apparatus, which could have huge national security implications for India.

New Government in Sri Lanka

Sri Lanka is one of India's closest neighbors. Nevertheless, the relationship has turned rocky in recent times, particularly as Chinese influence grows. For example, Chinese spy ships and warships now use Sri Lankan ports. 

In September 2024, in a landslide victory, Sri Lanka elected Anura Kumara Dissanayake as its president. He is a Communist from the Janatha Vimukthi Peramuna ("People's Liberation Front" or JVP), a traditionally anti-India party (JVP). Although Dissanayake has pledged that he will not let any third country use Sri Lankan territory for activities detrimental to India's national security, it remains to be seen how steadfast he will remain in delivering that promise. 

Dissanayake has already canceled a wind power project by the Adani group of India, a corporate group considered close to Modi. And in late January, the Sri Lankan navy opened fire on unarmed Indian fishermen, drawing sharp condemnation from the Ministry of External Affairs of India. 

Dissanayake chose India as his first overseas trip after becoming president. However, soon after, he went to China for a bilateral meeting with Xi Jinping. His stance on Sri Lanka's debt restructuring and vehement opposition to the International Monetary Fund's interventions are a problem for India.

The Himalayan States Challenge 

Traditionally, India has considered Nepal as its closest partner in the region. But recently, several issues have created a divide, including an economic blockade and growing anti-India sentiment within the general population of Nepal. Also, very recently, an Indian educational institute mishandled the tragic suicide of a Nepali student in the Indian state of Odisha, which drew a sharp response from Nepali Prime Minister KP Sharma Oli. 

In a stark departure from the age-old tradition of newly elected Nepali prime ministers choosing India as their first overseas destination, Oli chose China instead. He has yet to visit India. 

This departure from tradition wasn't merely symbolic. In a joint statement with China, Nepal made clear its intent to establish a strategically sensitive high-altitude railway link. Nepal has also embraced the Chinese Belt and Road Initiative. In contrast, India considers the BRI a debt trap that violates Indian sovereignty. 

Similarly, China is quietly making inroads in Bhutan. Unlike the other neighboring countries, India still enjoys extremely friendly, warm and cordial relations with Bhutan. However, China is building up pressure to address the border disputes it has with Bhutan bilaterally. 

It is pertinent to note that China and Bhutan do not share formal diplomatic relations. Nevertheless, much to India's discomfort, China is trying to change that with mounting military pressure on the disputed border areas of Bhutan. 

Why Should Japan Be Concerned?

India and Japan share extensive, multifaceted special strategic relations that have blossomed in recent years. As a part of their growing collaboration, they are jointly working on developmental and infrastructure projects in third countries in India's immediate neighborhood. 

The Matarbari Port project is the first deep sea port in Bangladesh. It has secured over $17 million USD in financial assistance from the Japan International Cooperation Agency (JICA). There is also a joint LNG terminal development project in Sri Lanka (estimated investment of $300 million) in the pipeline. 

Several other areas of possible cooperation are under consideration at the highest levels of Indo-Japanese leadership. However, the rapid and tectonic changes in political landscapes can make them challenging. 

According to Dr Debendra Sahu, an assistant professor of Japanese Studies at the Jindal School of International Affairs, India-Japan-Bangladesh trilateral cooperation which was "once robust" under the Hasina regime, "has faltered after her unceremonious exit." 

Dr Sahu points out, "While for Japan there are no specific irritants at the moment, the new regime's handling of attacks on Hindu minority will be significant concern for India. So, the strategic future of ongoing infrastructure projects will require Japan to play a larger role in rebuilding trust and cooperation between India and Bangladesh. Ultimately, much will depend on how India-Bangladesh relations evolve in the coming years."   

Calculating the Costs and New Risks in the Region

In India's southern neighborhood, India's Adani group recently withdraw from a wind power project. President Dissanayake and his party had objected to it and promised its cancellation in their pre-election campaign. The Adani group's chairman, Mr Gautam Adani, is widely reported to be someone close to Indian PM Modi.    

The earlier Sri Lankan government worked closely with India and Japan to work towards debt reconstruction and generating more investments for infrastructure development and connectivity projects in Sri Lanka without accruing crushing debt. In context of the India-Japan-Sri Lanka trilateral cooperation, Dr Sahu strikes an optimistic note. He observes, 

"In the case of Sri Lanka, the situation is slightly different. Unlike in Bangladesh, where India was solely standing on the boat sailed by Hasina, MEA ensured to keep relations with all stakeholders in Sri Lanka. India also gained significant goodwill with the financial aid during Sri Lanka's economic crisis. 

"Furthermore, Dissanayake, despite his Left leaning ideology, is pragmatic enough to know that his country needs foreign investment, and faster. He understands the importance of India as a key player in the geopolitical context and has publicly mentioned this as well. So, I think the trilateral cooperation in Sri Lanka might take a different trajectory than Bangladesh in the current scenario."

Facing the Future

India–Japan relations have shown immense growth potential. The joint development projects in third countries are a hallmark of the bilateral relationship. These projects provide an alternative path of infrastructure development in countries that can fall into debt trap. Within this context, Dr Sahu notes, "India and Japan must jointly offer compelling alternatives and ensure that the projects they develop are mutually beneficial for the host country ー whether Bangladesh, Sri Lanka, or beyond."   

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Author: Devadeep Chowdhury, New Delhi Correspondent for The Sankei Shimbun