Neighborhood First Policy – Significance & Challenges – Explained Pointwise

India’s “Neighbourhood First Policy” is a central pillar of its foreign policy, aimed at strengthening ties and advancing peace, connectivity, and prosperity in South Asia and the Indian Ocean Region. The NFP accords primacy to nations in periphery with focus on encouraging trade, connectivity and people-to-people contact.

Introduction:

• Formally conceptualized in 2008 and prioritized since 2014, the policy aims to enhance India’s diplomatic, economic, and strategic relations with its immediate neighbours: Afghanistan, Bangladesh, Bhutan, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka.
• Principles: Guided by the “5S” framework— Samman (Respect), Samvad (Dialogue), Shanti (Peace), Samriddhi (Prosperity), Sanskriti (Culture).

Salient features of India’s Neighbourhood First’ policy:

1. Immediate priority to neighbours: Priority is to improve the relations with immediate neighbours as peace and tranquility in South Asia is essential for realizing development agenda. The neighbourhood first policy actively focuses on improving ties with India’s immediate neighbours.
2. Dialogue: It focuses on vigorous regional diplomacy by engaging with neighbouring nations and building political connectivity through dialogue. First initiative in this direction was extending an invitation to all heads of government of SAARC countries for the oath taking ceremony of the Prime Minister in 2014.
3. Resolving bilateral issues: Focus is on resolving bilateral issues through mutual agreement. For instance, India and Bangladesh have signed a pact to operationalise the historic Land Boundary Agreement (LBA).
4. Connectivity & Integration: The primary goal is to physically and digitally integrate South Asia, making India the central hub for trade, transit, and people-to-people exchange:
   • Physical Connectivity: Focus on rapid development of infrastructure projects like roads, railways, and ports to facilitate trade. Key projects include the Kaladan Multimodal Transit Transport Project (connecting India to Myanmar) and railway links to Nepal and Bangladesh.
   • Digital Connectivity: Extending internet and communication services, such as setting up communication lines or offering digital expertise, to partner nations.
   • Energy Connectivity: Establishing regional power grids to allow countries to trade electricity, benefiting nations like Nepal, Bhutan, and Bangladesh.
5. Economic Cooperation: It focuses on enhancing trade ties with neighbours. India has participated and invested in SAARC as a vehicle for development in the region. One such example is the Bangladesh-Bhutan-India-Nepal (BBIN) grouping for energy development i.e. motor vehicles, waterpower management and inter-grid connectivity.
6. Technical Cooperation: The policy put emphasis on technical cooperation. For e.g. a dedicated SAARC satellite was developed to share the fruits of the technology like tele-medicine, e-learning etc. with the people across South Asia.
7. Disaster management:  India positions itself as the first responder during regional crises (e.g., the 2015 Nepal earthquake, humanitarian aid during the Sri Lanka economic crisis). This enhances goodwill and trust.
8. Military and defence cooperation: India is also focusing on deepening security in the region through military cooperation. Various exercises like Surya Kiran with Nepal, Sampriti with Bangladesh aim to strengthen defence relations.

Significance of NFP:

1. Security & Strategic Significance:
   • The policy ensures stable borders and regional peace by proactively engaging with Bangladesh, Nepal, Bhutan, Myanmar, Sri Lanka, Maldives, Afghanistan, and Pakistan.
   • It is critical for combating transnational threats like terrorism, smuggling, cybercrime, and illegal migration by establishing frameworks for security cooperation and intelligence sharing.
   • India’s engagement acts as a counterbalance to external powers—most notably China—in the region, reinforcing India’s leadership and influence in South Asia and the Indian Ocean.
2. Economic Development & Integration:
   • It promotes cross-border trade, energy cooperation, and infrastructure development—vital for economic growth and regional integration.
   • Initiatives like the BBIN Motor Vehicle Agreement, transnational electricity grids, and trilateral highways accelerate development and link India’s Northeast with neighbours.
   • India’s development aid and capacity-building projects foster economic stability and human development in neighbouring countries.
3. People-to-People Ties (Soft Power):
   • Enhances people-to-people links, cultural exchanges, medical aid, scholarships, and disaster response across the region, building goodwill and mutual trust.
   • Fosters regional solidarity and helps resolve disputes through dialogue and diplomacy rather than confrontation.
4. Managing Migration and Refugees: A stable and economically prosperous neighbourhood reduces the risk of large-scale, unplanned refugee influxes or illegal migration, allowing India to better manage its resources and demographics.
5. Establishing India as a Net Security provider: As a regional power, India must be seen as the primary net security provider in the Indian Ocean Region (IOR). By actively assisting nations like Sri Lanka and Maldives with maritime security, disaster relief, and economic stability, the NFP reinforces India’s natural position as the first port of call during a crisis.
6. Improves India’s Global Standing:
   • It positions India as a responsible regional power committed to peaceful coexistence, prosperity, and cooperation.
   • Underpins India’s ambitions for global leadership and a constructive role in forums like SAARC, BIMSTEC, and the Indian Ocean Rim Association.

Challenges with NFP:

1. The Pakistan Factor: The persistent hostility and border tensions with Pakistan consume a disproportionate amount of India’s security and diplomatic bandwidth, often diverting focus and resources away from developmental aspects of the NFP with other, more cooperative neighbours.
2. The China Factor: The most significant challenge is China’s expanding economic and strategic footprint in South Asia (via the Belt and Road Initiative – BRI), which offers neighbours large-scale, easy-term loans, potentially drawing them away from India’s orbit.
3. Internal Instability: Political instability or internal crises in countries like Nepal, Bangladesh, Sri Lanka can complicate or halt Indian-funded projects.
4. Asymmetric Power Balance: India’s immense size, economic, and military power can evoke a sense of unease or “Big Brother” syndrome in smaller neighbours like Nepal, Maldives, and Sri Lanka. They often strategically balance their ties with India against China to assert their sovereignty and gain better leverage, slowing down cooperation with New Delhi.
5. Security Concerns: Complex security dynamics, especially with Pakistan, and issues related to cross-border terrorism, refugees, and border disputes often overshadow developmental cooperation efforts.
6. Border Disputes and Water Issues: Unresolved border issues (e.g., with Nepal, Pakistan) and critical disputes over the sharing of trans-boundary rivers (e.g., with Bangladesh and Nepal) create inherent friction that makes high-level cooperation difficult to sustain.
7. Slow Bureaucracy and Delays: Indian-funded projects often face significant delays due to bureaucratic procedures, environmental clearances, internal political changes in India, and slow release of funds. This lack of timely execution can lead to frustration in the partner country and create a negative image of India’s capabilities.

Various initiatives under NFP:

1. BBIN Motor Vehicles Agreement (MVA): India, Bhutan, Bangladesh, and Nepal are working on this framework to allow seamless movement of passenger and cargo vehicles across borders. This is vital for lowering trade costs and increasing efficiency.
2. Coastal Shipping Agreements (Bangladesh): India utilizes ports in Bangladesh (like Chittagong and Mongla) to move goods to its landlocked North-Eastern states, shortening transit times significantly.
3. Agartala-Akhaura Rail Link (Bangladesh): This project, once fully operational, will connect India’s North-East to Bangladesh’s railway network, dramatically reducing travel time from Kolkata to Agartala.
4. Cross-Border Petroleum Pipelines (Nepal/Bangladesh): Initiatives like the Motihari-Amlekhgunj oil pipeline to Nepal ensure reliable and efficient supply of petroleum products, removing logistical bottlenecks.
5. SAGAR (Security and Growth for All in the Region): While broader, SAGAR is the maritime dimension of the NFP. It involves defence cooperation, disaster relief & humanitarian aid.
6. Lines of Credit (LoC): India extends concessional LoCs to finance infrastructure and development projects tailored to the needs of the neighbour. For example, LoCs have financed railway upgrades in Bangladesh and housing reconstruction in Sri Lanka.

Way forward:

1. Dedicated Implementation Cell: Create a specialized, fast-tracked “Neighbourhood Projects Cell” within the Ministry of External Affairs (MEA) that focuses solely on the execution of NFP projects. This cell should be empowered to bypass bureaucratic hurdles, ensuring that all necessary clearances are obtained within strict deadlines.
2. Digital Connectivity Hub: Proactively offer India’s digital public infrastructure (like Aadhaar, UPI, and Digital Health Stack) to interested neighbours (like Sri Lanka, Nepal, and Bhutan) on an open-source, non-proprietary basis. This fosters seamless integration and builds dependency on India’s technology, not just its capital.
3. Focus on Soft Power and Culture: Increase the number of scholarships, fellowships, and cultural exchange programs. Sponsor regional cultural festivals and joint historical research projects. This addresses the “hearts and minds” element, portraying India as a benign, culturally accessible power, contrasting with the often transactional nature of other partnerships.
4. Hybrid Financing Models: Move beyond traditional grants and pure Lines of Credit (LoC). Utilize Public-Private Partnerships (PPPs) and equity investments in neighbouring countries, allowing Indian private firms to invest directly in large-scale infrastructure alongside the host nation’s government.
5. Debt Management Assistance: Instead of directly competing on every loan, India should offer expertise and financial support to neighbours to help them manage and restructure existing unsustainable debts (often from China), positioning India as a responsible and reliable economic counselor.

Conclusion: India’s Neighbourhood First Policy is fundamental for its security, development, and international standing, demanding continued diplomatic engagement and trust-building with regional partners.