Neighbourhood-first policy boosts India's regional outreach efforts

From energy assistance and economic packages to sustained diplomatic engagement, India has stepped up efforts to strengthen ties with neighbouring countries amid evolving regional challenges

Over the last couple of days, New Delhi hosted Myanmar President U Min Aung Hlaing on his first overseas visit since being sworn in as his country's president in April. Rabi Lamichhane, chairman of Nepal's ruling Rastriya Swatantra Party (RSP), is also in the national capital at the invitation of Bharatiya Janata Party (BJP) National President Nitin Nabin.

 

The visits highlight the Indian government’s continued focus on resetting its ties with nations in the neighbourhood. Since February 28, when the conflict in West Asia erupted, resulting in the blockage of the Strait of Hormuz and disrupted energy supplies to the South Asian region, India has fulfilled its commitments to its smaller neighbours on the supply of oil.

 

Sri Lanka, Bangladesh, Nepal and the Maldives requested India to help meet their respective energy needs, which New Delhi delivered on. India delivered 38,000 metric tonnes (MT) of petrol and diesel to Sri Lanka in the last week of March. It has sent additional supplies of diesel to Bangladesh.

How have India-Bangladesh ties improved under the new government?

In an effort to overcome the stress that bilateral ties suffered during the tenure of the interim government led by Muhammad Yunus, New Delhi and Dhaka have tried to reset ties under Prime Minister Tarique Rahman. Prime Minister Narendra Modi was the first world leader to phone Rahman to congratulate him on the Bangladesh Nationalist Party’s win in the Bangladesh parliamentary election in February earlier this year, and conveyed “India’s continued commitment to the peace, progress, and prosperity of both our peoples”. The Bangladesh foreign minister visited India shortly afterwards in April.

 

Barring Pakistan, India’s relations with its neighbours in its immediate and extended neighbourhood have steadily improved over the past several months under New Delhi’s policy of ‘neighbourhood first’ and its principle of ‘non-reciprocity’ with its smaller neighbours.

 

There have been visits to India by key ministers, or by top Indian leadership, in the last 12 months to Sri Lanka, Bhutan, Afghanistan, the Maldives, Mauritius and Seychelles.

What progress has India made in regional diplomatic engagement?

Relations with China are also on an even keel. The 35th meeting of the Working Mechanism for Consultation and Coordination on India-China Border Affairs (WMCC) was held on May 27 in Beijing. The Ministry of External Affairs (MEA) said the discussions were constructive and forward-looking.

 

The two sides expressed satisfaction with the progress made in maintaining peace and tranquillity in the border areas, which has enabled progress towards the gradual normalisation of bilateral relations, the MEA said.

 

India’s assistance to its smaller neighbours in its immediate and extended neighbourhood has also been significant.

 

On February 9, 2026, India announced a special economic package of $175 million for Seychelles during the island nation’s President Patrick Herminie’s visit to India. Seychelles is a key maritime neighbour for India in the Indian Ocean region.

 

In September 2025, during the visit of Mauritius Prime Minister Navinchandra Ramgoolam to India, New Delhi pledged a $680 million economic package, including $25 million in budgetary assistance for the current financial year. The FY27 Budget, though, decreased India’s aid to Mauritius from Rs 824 crore to Rs 550 crore.

How has India increased assistance to neighbouring countries?

For Sri Lanka, India announced a $450 million reconstruction package in December 2025 to help the island nation recover from the devastating impact of Cyclone Ditwah. The FY27 Budget also increased India’s aid to Sri Lanka from Rs 300 crore (Revised Estimate [RE]-FY26) to Rs 400 crore (Budget Estimate [BE]-FY27).

 

During the Prime Minister’s visit to Bhutan in November, New Delhi committed to providing Rs 4,000 crore for its energy sector. The FY27 Budget increased India’s assistance to Bhutan from Rs 1,950 crore (RE-FY26) to Rs 2,288.56 crore (BE-FY27).

 

The FY27 Budget increased India’s assistance to Afghanistan from Rs 100 crore (RE-FY26) to Rs 150 crore (BE-FY27).

 

With the Maldives, too, bilateral relations have improved over the past year. Maldivian President Mohamed Muizzu was on a state visit to India in October 2024, and Prime Minister Modi visited Male in July 2025, where India announced a $565 million line of credit for projects in the Maldives. However, the FY27 Budget decreased India’s aid to the Maldives from Rs 625 crore (RE-FY26) to Rs 550 crore (BE-FY27).

 

For Bangladesh, the FY27 Budget increased India’s aid from Rs 34.38 crore (RE-FY26) to Rs 60 crore (BE-FY27), while for Nepal, the FY27 Budget decreased India’s aid from Rs 830 crore (RE-FY26) to Rs 800 crore (BE-FY27). The FY27 Budget increased India’s aid to Myanmar from Rs 200 crore to Rs 300 crore.