The year 2025 began with unusual confidence in India’s foreign policy. After a domestically focused election year in 2024, New Delhi appeared ready to re-engage the world—seeking trade agreements, repairing regional ties, and stabilising relationships with major powers. By the end of the year, however, that optimism had given way to strategic unease. Economic pressures, energy insecurity, shifting global alignments, and an unstable neighbourhood exposed the limits of India’s current diplomatic approach.
A Confident Start After Electoral Consolidation
With political continuity secured at home, India entered 2025 expecting diplomatic momentum. Engagements were planned across major capitals, including renewed outreach to Washington under a second Donald Trump presidency. Negotiations with the United States, the United Kingdom, the European Union, Australia, and New Zealand were expected to yield long-pending trade agreements.
At the same time, New Delhi explored stabilisation with China after years of military tension along the Line of Actual Control, while maintaining strong economic links with Russia, especially in energy imports. Regionally, India reopened channels with neighbours and difficult actors alike, projecting confidence five years after the Balakot airstrikes and the constitutional changes in Jammu and Kashmir.
Economic and Energy Security Under Strain
Instead of consolidation, India faced serious economic headwinds. Relations with the United States deteriorated sharply due to trade actions. Reciprocal tariffs imposed by Washington hit labour-intensive Indian exports such as textiles, gems and jewellery, and seafood, leading to factory closures and job losses.
More damaging was the surcharge placed on Indian imports of Russian oil, effectively penalising India’s energy strategy. Immigration restrictions, particularly on skilled worker visas, weakened remittance flows—an important source of foreign exchange.
Although India finalised free trade agreements with the UK, Oman, and New Zealand, the most consequential deals with the U.S. and the EU remained unresolved. Renewed sanctions pressure on Russian energy raised fears of a repeat of earlier forced withdrawals from Iranian and Venezuelan oil markets.
Managing China and Russia: Optics Without Breakthroughs
High-profile engagements with China and Russia created an impression of stability, but substantive progress remained limited. With China, India restored limited functional links such as flights and visas, yet failed to secure lasting security assurances along the LAC or meaningful relaxation of investment restrictions. Isolated incidents involving Indian citizens underscored persistent distrust.
Similarly, an anticipated India–Russia summit produced few tangible outcomes in defence, nuclear cooperation, or advanced technology. The gap between symbolic diplomacy and strategic delivery became increasingly evident.
A Shifting Global Order and Strategic Ambiguity
Perhaps the most unsettling development was the evolving posture of the United States. The 2025 U.S. National Security Strategy adopted a softer tone toward China and Russia, while offering limited clarity on India’s role in Asia. Speculation about a possible U.S.–China accommodation raised concerns about India’s strategic relevance.
Globally, weakening support for a rules-based order became visible through controversial peace initiatives in Ukraine and Gaza. China simultaneously advanced alternative governance frameworks, challenging existing institutions. For India, this sharpened a long-standing question: what coherent vision of global order does it seek to lead as multilateralism weakens?
Neighbourhood Pressures and Fragile Deterrence
India’s immediate neighbourhood grew more volatile. A major terror attack in Jammu and Kashmir reaffirmed persistent security risks. India’s military response demonstrated capability, but diplomatic backing for cross-border action remained limited.
Uncertainty over operational claims
Month: Current Affairs - December 28, 2025
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