India’s Foreign Policy in 2025: From High Expectations to Strategic Headwinds

The year 2025 opened with rare optimism for India’s foreign policy. After a domestically focused 2024 election cycle, New Delhi appeared ready to reassert itself diplomatically — with trade deals in sight, regional ties being repaired, and major power relationships seemingly stabilising. Yet by the year’s end, that promise had largely evaporated. Instead, Indian policymakers were confronted with mounting pressures across economic security, energy flows, global strategic uncertainty, and a volatile neighbourhood.

A year that began with diplomatic confidence

Prime Minister Narendra Modi entered 2025 expecting a return to active diplomacy. Engagements were lined up across regions, including a reset with Washington under the second Trump administration led by Donald Trump. Trade negotiations with the United States, the United Kingdom, Australia, New Zealand and the European Union were expected to culminate in long-awaited bilateral agreements.

There were also signs of cautious thawing with China after years of military stand-off along the Line of Actual Control (LAC), alongside robust economic ties with Russia, particularly in energy imports. Regionally, India reached out to neighbours and difficult interlocutors alike — Bangladesh’s interim leadership, Pakistan, the Taliban, and South Asian partners — projecting confidence five years after the Balakot strikes and the reorganisation of Jammu and Kashmir.

Economic and energy security take a hit

Instead of a reset, India–U.S. relations deteriorated sharply. Tariff actions by Washington proved especially damaging. A 25% reciprocal tariff on Indian exports hit labour-intensive sectors such as apparel, gems and jewellery, and seafood, reversing years of trade integration. This was followed by a surcharge on Indian imports of Russian oil, effectively singling India out among major trading partners.

Even if a future Bilateral Trade Agreement cushions the blow, contracts lost in 2025 have already translated into factory closures and job losses. Immigration curbs, especially on H-1B visas, further weakened remittance inflows — a vital source of foreign exchange.

While India did conclude free trade agreements with the UK, Oman and New Zealand, the bigger promised deals with the U.S. and the EU remain elusive. Energy ties with Russia, once seen as a strategic hedge, also came under renewed U.S. sanctions pressure, reviving fears of forced compliance similar to India’s earlier withdrawal from Iranian and Venezuelan oil.

Managing ties with China and Russia proves harder than optics suggest

Despite high-profile optics — including photographs of Mr. Modi with Xi Jinping and Vladimir Putin at the Shanghai Cooperation Organisation summit — substantive progress remained limited.

India restored some functional links with China, including flights and visas, but failed to secure lasting security guarantees along the LAC or ease investment restrictions. Incidents such as the detention of an Indian passenger from Arunachal Pradesh in Shanghai reinforced underlying mistrust.

Similarly, a much-anticipated India–Russia summit concluded without major breakthroughs in defence, nuclear, energy or space cooperation, highlighting the gap between symbolism and strategic delivery.

A shifting global order and uncertain alliances

One of the most unsettling developments for Indian strategists was the change in Washington’s worldview. The 2025 U.S. National Security Strategy softened its language on China and Russia compared to earlier versions, while offering only a limited articulation of India’s role.

This ambiguity, combined with Mr. Trump’s public musings about a possible U.S.–China “G-2”, raised concerns about India’s place in the Asian balance of power. Globally, acceptance of controversial peace proposals on Gaza and Ukraine signalled further erosion of the rules-based international order, even as China promoted alternative frameworks for “global governance”.

For India, this sharpened an unresolved question: what vision of global order does New Delhi itself seek to champion as multilateral institutions falter?

Regional security: deterrence without reassurance

India’s immediate neighbourhood became increasingly unstable as 2025 progressed. The terror attack in Pahalgam in April underlined persistent vulnerabilities in Jammu and Kashmir, despite years of counterterrorism operations. India’s retaliatory Operation Sindoor demonstrated military capability, but diplomatic support for cross-border action remained muted.

Ambiguity over reports of aircraft losses and claims of external support for Pakistan diluted India’s narrative. Relations with Türkiye and Azerbaijan worsened, while a Saudi–Pakistan defence pact complicated New Delhi’s regional calculations. Concerns over escalation grew after India declared a “new normal” in its response doctrine.

Political churn in Bangladesh and Nepal, and elections in Myanmar conducted under junta control, further reduced predictability in India’s periphery, leaving New Delhi with limited leverage and few reliable partners.

What 2025 reveals about India’s diplomatic limits

Several lessons stand out. Performative diplomacy — summit theatrics, symbolic gestures, and personalised optics — cannot substitute for durable outcomes. Nor does rhetorical assertiveness translate into influence unless others align with India’s position.

Equally, India’s credibility suffers when principles appear selectively applied. Advocacy for minority rights, democracy, or regional stability resonates internationally only if mirrored at home and applied consistently abroad. In a world growing more transactional, India’s challenge in 2026 will be to balance pragmatism with coherence — aligning its strategic ambitions, domestic conduct, and diplomatic messaging more tightly than it managed in a difficult and sobering 2025.