India’s Neighborhood First Policy and Strategic Competition with China in South Asia

Background: India's renewed emphasis on its Neighborhood First Policy since 2021 reflects growing concern over Chinese influence in South Asian states through infrastructure investment, defense cooperation, and port development under the Belt and Road framework. This shifting balance of regional influence has prompted reassessment of India's traditional diplomatic primacy. Aims/objectives: The study aims to assess how India recalibrates its diplomatic and economic engagement with Nepal, Sri Lanka, and Bangladesh in response to expanding Chinese strategic footprint in the wider South Asian neighborhood. Method: A qualitative content analysis of bilateral agreements, official statements, and regional media coverage was conducted alongside expert interviews with South Asian foreign policy analysts and former diplomats. Results: Findings demonstrate that India has shifted toward connectivity-based diplomacy, including cross-border energy grids and digital payment systems, to counterbalance Chinese loans and port investments in the region. However, persistent trust deficits rooted in historical disputes and asymmetric power relations limit the depth of India's regional leverage, allowing smaller states to pursue hedging strategies between both powers for maximum strategic benefit. Conclusion: The research concludes that India's neighborhood diplomacy remains constrained by structural asymmetries and reactive policymaking rather than proactive regional integration. Sustained success requires long-term institutional commitments, greater economic concessions, and multilateral frameworks such as BIMSTEC to reduce dependency on bilateral competition with China for regional influence.

Keywords: Neighborhood First Policy, South Asia, India-China rivalry, regional diplomacy, strategic hedging