Author:
Luke Rimmo Lego
India has long dominated South Asia economically, politically, and strategically. Traditionally, India has shaped South Asian order—most notably in 1971 with Bangladesh’s birth—and long assumed that dominance was uncontested. The past few years have shattered that assumption. India’s hold over South Asia is weakening—not only because of China’s aggressive encroachment but also, more fundamentally, because of a deeper structural transformation in the regional politics of the subcontinent. Today, its influence is actively challenged by shifting allegiances, growing economic dependence on Beijing, and rising nationalism across the subcontinent. Events such as the fall of the pro-India government of Sheikh Hasina in Bangladesh (Rejwan, n.d), Bhutan’s reconsideration of diplomatic relations with China (Ethirajan, 2023; Mehta, 2024), Unless it revises its foreign policy, India risks being permanently outpaced in its backyard. It thus makes sense that this essay explores whether this is just an ephemeral dip in diplomacy or a truly irreversible reordering of South Asia. Has the balance irretrievably shifted towards multipolarity, or is New Delhi still the dominant regional power?
Is India Losing Its Regional Order?
A helpful answer to the question would be relative to the Hegemonic Stability Theory. This posits that regional order requires a single leading power. (Kindleberger, 1973; Goldstein, 2005). This hegemon provides economic stability, security guarantees, and institutional leadership that preclude smaller states from seeking alternative alliances. India has been such a power in South Asia throughout history (Chohen, 2008). During the Cold War, India restrained regional conflicts and limited outside interference. The 1971 war that resulted in the emerge. Even in the early 2000s, its rapid economic rise had to have ensured that its neighbors remained dependent on its trade, market access, and security umbrella.
First, China has overtaken India as the top trading partner of Pakistan, Bangladesh, Nepal, and Sri Lanka (McBride, 2023).
Second, India’s naval dominance is challenged by China’s growing Indian Ocean footprint and its Islamabad alliance. While historically the dominant power in the region, the Kalapani–Lipulekh border dispute between India and Nepal shows even close partners now push back against New Delhi. (Xavier, 2020)
Third, India’s last strongholds, Bhutan and Nepal, are courting Beijing. (Mehta, 2024).
Fourth, smaller South Asian states now see China as a more generous and less intrusive alternative to India. In a dramatic diplomatic rupture, President Mohamed Muizzu had expelled Indian military personnel from the Maldives (Reuters, 2023). While China’s economic investments do come with a debt trap risk, as seen in Sri Lanka’s financial crisis and the contentious Hambantota Port lease, Beijing still presents a more attractive option for many South Asian nations compared to India (Jones, 2020). A key reason for this lies in the nature of the engagement: China offers fast, large‑scale infrastructure financing, whereas India’s aid—hampered by bureaucratic red tape and political conditions—often arrives too slowly to compete. For instance, while India is concerned with sovereignty issues and democratic principles, its economic aid is usually meager, slow, and laced with implicit political demands for loyalty—witness its relations with Nepal and Bangladesh (Yasmin, 2023). China’s lending is riskier but enables governments to undertake projects that would not otherwise have been feasible. Countries such as the Maldives and Nepal still turn to Beijing for assistance despite the realisation of the risks of excessive Chinese debt because India’s alternative is often inadequate, late, or with too much micromanagement (Pal, 2021). In the case of Sri Lanka, while the Hambantota Port lease is an oft-repeated cautionary tale, it also reflects that India failed to offer a competitive alternative. The port was first offered to India, which turned down the investment, and China stepped in to fill the breach with a better deal (Abi-Habib, 2018). A similar pattern is visible in Nepal, where Chinese-built highways and hydropower projects have moved much ahead of the ones backed by India. Thus, while China’s investments are replete with long-term risks, they also bring immediate, tangible benefits—something India isn’t able to match because of its cautious bureaucratic approach, interventionist diplomacy, and internal economic constraints. Unless it rethinks its engagement strategy, India’s neighbors will continue to see China as the more pragmatic and rewarding partner, even if there are long-term dangers of dependence on it.
Fifth, India’s vocal support for Sheikh Hasina amid human‑rights concerns has eroded New Delhi’s credibility in Bangladesh (Rejwan, n.d).
Each of these factors reveals that India is no longer considered the indispensable leader of South Asia. Rather, the smaller states are diversifying their alliances in an effort to bring about a multipolar South Asia where India will be one among many influential players, not the dominant force.
The Rise of a New Order
Regional Security Complex Theory argues that South Asian security is deeply interlinked. For a long time, India was the sole guarantor of security in South Asia (Buzan, 2003). That role is now being challenged.
China has not only emerged as an economic counterweight to India but also as a security actor in the region.
This CPEC in Pakistan transforms Islamabad’s reliance on Beijing from a merely economic one to one representing deep strategic cooperation; indeed, some Gwadar China naval bases that can and probably will build, represent at long term some severe security headaches for India (Ali, 2024). Similarly, in Myanmar, Beijing has entrenched itself by simultaneously backing both the junta and key ethnic rebel groups like the Kachin Independence Organization (KIO), giving it vast leverage over Myanmar’s internal conflicts and long-term strategic control (Irradway, 2024; Myers, 2024; Michaels, 2023). In addition to this, the fall of Sheikh Hasina’s pro-India government in Bangladesh means Dhaka may now seek a more balanced foreign policy, leveraging Chinese economic partnerships to reduce dependence on India.
What Does This Mean for India?
India stands at a critical juncture, where its traditional hegemonic aspirations in South Asia are challenged by an increasingly assertive diplomacy and strategic investments by China. Old strategies of coercion, interventionism, and heavy-handed diplomacy are no longer usable in an increasingly complex geopolitical environment.
First and foremost, India needs to shed the nuanced interventionist mindset that has been the defining feature of much of its diplomatic outreach, more so in South Asia. Historically, Indian foreign policy was anchored in neorealist theory—a worldview that placed primacy on power dynamics, territorial sovereignty, and self-interest. This thinking behind India’s interventionist approach in countries like Sri Lanka and Nepal was an extension of this, where New Delhi wanted to shape the outcomes to its benefit—most often at the cost of the internal dynamics and even sovereignty of its neighbors. But as we see today, such strategies have become counterproductive. A belief in India’s ability to only “dictate terms” to its neighbors is no longer tenable in the age of greater interconnectivity, multiple power centers, and shifting alliances. The alternative stance that would be constructed for India must necessarily be a cooperative, interactive form of diplomacy based on shared values, mutual respect, and acknowledgment of each other’s sovereignty. India needs to change the perception of its neighbors from dependent states to equal partners who have their own political and economic priorities. Only in this way will India be able to build real long-term partnerships, respecting the autonomy of its neighbors and fostering greater regional stability.
The second biggest thing that India needs to do is to give preference to economic cooperation over political control in its foreign engagements. The days of using economic aid as a tool to impose political influence are behind us, and India needs to re-imagine its role as an economic partner rather than a political overlord. That interdependence and economic integration can help consolidate stability and reduce the likelihood of conflict is one of the basic postulates of liberal institutionalist theory. In this regard, India should deepen trade relations, encourage cross-border investment, and foster supply chain linkages within South Asia. Unlike China, which has used BRI projects to create strong economic dependencies, India needs to develop its economic initiatives that will foster greater economic interdependence with its neighbors without the political strings attached. Steps like a South Asian Free Trade Area 2.0, regional energy cooperation, and joint infrastructure development would greatly benefit India’s economic growth and strengthen the region’s ties. Building strong economic structures would also allow India, in turn, to move away from the “aid-diplomacy” approach and construct a more sustainable, mutually rewarding economic order.
Third, it has to re-establish its soft power in South Asia, where it has been increasingly yielding space to China. Soft power, as Joseph Nye’s theory goes, gets influenced by cultural influence, values, and diplomatic appeal rather than coercion or economic leverage. In recent years, rising anti-Indian sentiment in Sri Lanka, Nepal, and the Maldives has served to underline the importance of soft power for India in maintaining its regional dominance. While economic deals and military partnerships are a necessity, they can’t be done in isolation; the growing sense of alienation in the region needs to be countered. Thus, India will have to reinvest in cultural diplomacy, educational exchanges, and people-to-people initiatives aimed at fostering good will and mutual respect. Tapping into its long history of cultural ties, shared heritage, and spiritual influence in countries like Nepal, Sri Lanka, and Bangladesh is something that India needs to do more effectively. Programs on language learning, interfaith dialogue, and collaborative academic research are some of the ways through which India will build strong grassroots connections with its neighbors and improve its image as a friendly regional leader.
Finally, India must reform and lead SAARC: streamline decision‑making, reduce unanimity blocks, and launch joint initiatives on climate, security, and health. The decline of SAARC as a functional regional body has been a major blow to the leadership that India exercises over South Asia. India can ill afford to let SAARC remain moribund or even irrelevant to China’s increasing influence in the region. Instead, the onus falls on India’s shoulders to resume the leadership of SAARC, reforming and making it inclusive, effective, and forward-looking (Moondra, 2024; Sajjanhar, 2014). More importantly, India must use BIMSTEC and BRICS to amplify South Asian voices globally.
The assumption that India can dictate the politics of South Asia is outdated. The region is moving toward a multipolar alignment of other South Asian states, where smaller states have more choices—and they are increasingly choosing China. India’s current trajectory—marked by diplomatic complacency and strategic inertia—must change. Influence is no longer imposed; it has to be earned. Now, the question is whether India will rise to the challenge or continue its slow drift toward irrelevance.
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