India’s regional connectivity strategy is at a crossroads despite it being a policy priority for New Delhi. Notwithstanding its vast economic potential, South Asia remains one of the least connected regions globally, with intra-regional trade languishing at just 5%—a stark contrast to 22% in sub-Saharan Africa and 25% in Southeast Asia, as reported by The World Bank. The ‘Neighbourhood First’ policy announced in 2014 marked a renewed push for New Delhi to deepen ties through ‘connectivity, commerce, and contact.’ However, geopolitical shifts and intensifying challenges in the region, including the increasing presence of China in infrastructure projects and the recent suspension of U.S. aid, have necessitated a rethink on connectivity. The question is: What steps should India take in the next decade to transform its neighbourhood into a thriving, integrated economic zone, and what should be the core elements of its connectivity strategy?
Hits and Misses: A Decade of Regional Connectivity
Since 2014, Prime Minister Narendra Modi has visited India’s neighbourhood approximately twenty times—a record compared to his predecessors—including five visits to Nepal and three each to Sri Lanka and Bhutan. Notably, 2016 marked the first-ever visit of an Indian Defence Minister (by Manohar Parrikar) to Bangladesh. These high-level engagements have often led to new connectivity announcements. Yet, a decade after India’s regional connectivity record remains a mix of notable achievements and persistent challenges.
On the positive side, India has operationalised 12 Integrated Check Posts (ICPs) along its land borders since 2012 with Bangladesh, Myanmar, Nepal and Pakistan, inaugurated the first cross-border passenger railway link with Nepal, completed six out of seven historical railway links, and launched inland waterways with Bangladesh. The Sittwe Port in Myanmar – constructed by India, has been activated, and air and ferry services with Sri Lanka have restarted. Two cross-border pipelines with Nepal and Bangladesh have been completed, and India has recently supported the first sub-regional trilateral power transmission line linking Nepal to Bangladesh via India. These milestones, among others, reflect significant momentum in enhancing cross-border connectivity.
On the other hand, despite more rail links today, cross-border freight movement by rail accounts for less than 4% of total trade. The Bangladesh-Bhutan-India-Nepal Motor Vehicles Agreement (BBIN-MVA), even without Bhutan, is still awaiting operationalisation. Coastal shipping between India and Bangladesh, despite an agreement, continues to lag. Ground-level issues like inconsistent standard operating procedures in freight and passenger movement, and customs inefficiencies hamper seamless trade. Non-tariff barriers persist, undermining the reduction of cost and time of doing trade through the new infrastructure. Moreover, institutional mechanisms—both bilateral and regional levels, such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) —often lack the capacity or political will to fully implement connectivity initiatives.
The past decade laid a strong foundation, but addressing these challenges is essential for India to turn its regional connectivity ambitions into sustained success. This is increasingly important as the region is witnessing political and geostrategic shifts. Bangladesh’s regime change in 2024 introduced uncertainties and complicated bilateral projects. Strained ties with Nepal’s Prime Minister K.P. Sharma Oli, who prioritised China over India for his first visit abroad, signalled shifting dynamics. Myanmar’s state dysfunction continues to hinder India’s land connectivity to Southeast Asia. Meanwhile, relations with Sri Lanka and the Maldives progressed through normalisation efforts and expanded development cooperation. These shifts highlight the urgency for a more adaptive and strategic regional connectivity approach.
