Distinguished Lectures Distinguished Lectures

Challenges in India's Neighbourhood Policy

  • Amb (Retd) V.P. Haran

    By: Amb (Retd) V.P. Haran
    Venue: Central University of Tamil Nadu
    Date: July 14, 2017

Prof. T. Sengadir, Acting Vice Chancellor of Central University of Tamil Nadu, Members of faculty and students of the University, other distinguished guests, Ladies and Gentlemen, a very good morning to all of you.

It is an honour for me to visit Thiruvarur, the birth place of the trinity of Carnatic music. It is sweet music to my ears that the birth place of the Trinity is now an important centre for higher education. Saint Thyagaraja, one among the trinity was a genius in music and a prolific composer of Carnatic music. Focus of Thyagaraja’s music was less on technicalities and more on devotion to God. There is a subtle lesson in this for neighborhood diplomacy, the topic of today’s lecture. Don’t focus just on principles, but more on the ultimate objectives. It is convenient to talk about principles of diplomacy when dealing with countries that are far away, but when it comes to relations with neighboring countries, a practical approach to safeguard and further our national interest is the overwhelming determinant of policy.

Policy of Govt of India towards neighbors is encapsulated in the phrase, ‘Neighbors First’. This policy priority holds true for almost every country in the world. For, anything that happens in one country will affect the other countries in the neighborhood. Former PM Dr. Manmohan Singh once said, ‘the real test of foreign policy is in the handling of neighbors’. We often hear political leaders say that India wants a peaceful, prosperous and stable neighborhood. Reason is simple. This means less trouble for us and will enable us to focus on development, without distraction. Neighborhood diplomacy is challenging and difficult but one that is satisfying at the end.

In accordance with its policy of ‘Neighbors First’, the NDA Govt. invited Heads of State / Government from South Asia for the swearing in ceremony of the new Govt, in May 2014 which reassured our neighbors that India will continue to accord priority to relations with them. PM Modi chose Bhutan as the destination for his first foreign visit after taking over as PM. Since then he has visited all the neighboring countries excepting Maldives. A planned visit to Maldives was called off due to internal political developments in that country. Cooperation with neighbors has been reenergized. In the first part of my lecture, I will focus on the factors that pose challenges in dealing with neighbors. In the later part I will touch upon important specific issues that we have with each of our neighbors.

The size of India is an important factor in the way our neighbors view India and its policies. We account for over 75% of the land area, population, economic activity, resources, etc., of South Asia. We need to be conscious of our neighbor’s discomfort of having to deal with a big neighbor. Most of our neighbors are highly sensitive and we have to bear this in view while dealing with them. It is a continuous process. One small thoughtless act could undo years of hard work and careful nurturing.

Demarcation of our external boundaries is yet to be completed, partly due to historical reasons. In respect of land boundary, apart from political problems, there is difficulty in transcribing what is there on maps to the ground. All of you are aware of the reasons for the external boundary around Jammu and Kashmir not having been demarcated. It has also not been possible to agree on the border with China since China is laying unreasonable claims on territories that have historically been India. The unsettled boundaries pose major problems.

Demarcation of two short segments of our boundary with Nepal – Kala Pani and Susta – is yet to be completed. Of these, Kala Pani is strategically important, since it will determine the tri-junction between India, Nepal and China. Eastern and Western extremities of our boundary with Bhutan have not been agreed upon since the location of the tri-junction with China is yet to be fixed. We, however don’t have any major problem with either Nepal or Bhutan on account of non completion of boundary demarcation. Demarcation of our land and maritime boundary with Bangladesh was completed about 2 years back, after many years of delay. Maritime boundary with Sri Lanka was agreed upon several decades back, though questions have been raised in Tamil Nadu on the same.

With Nepal and Bhutan India has open border. This is both a boon and a problematic arrangement. It facilities free movement of people and promotes people to people contact. But, this is also taken advantage of by anti social elements and terrorists. An important challenge is to make sure that territories of our neighbors do not become safe havens for anti India elements. To work towards this we have institutional mechanisms that facilitate interaction and coordination between the border forces and police on both sides of the border.

Though foreign policy comes under the domain of the central government, on many matters concerning neighboring countries, there is need to consult and take on board the views of the state governments on our side of the border. This is because of contacts between the people on both sides of the border for centuries and their mutual concerns, the effect of policy on the states concerned, presence of people of Indian origin in the neighboring country etc. For example, in the 1980es when Tamils of Sri Lanka were facing serious problems, Tamil Nadu Government was constantly consulted by Government of India and kept informed of the developments. Similarly Government of West Bengal was consulted on sharing of waters of Ganges and Teesta with Bangladesh as also on border related issues. Our policy towards Nepal is of keen interest to UP and Bihar. It is necessary to get the state governments on board; this will facilitate smooth implementation of the policy.

A serious practical problem faced by the foreign policy establishment in relations with neighbors is the existence of multiple channels of communication between the two countries. Contacts are there between political parties and their leaders, community and religious leaders, relatives etc., on both sides of the border, apart from people to people contacts. Often contrary signals emanate from these sources, making policy formulation difficult. Also it is often seen that neighbor’s policy towards India is more the policy of the party in power or sometimes even of the leader, than a well laid out national policy. This leads to drastic changes in policy when there is a change of Government, making it difficult for us to plan our long term approach.

Relations with neighbors need constant attention and nurturing. There are institutional mechanisms to achieve this, but these cannot be a substitute for frequent contacts at highest political levels. Apart from meetings on the sidelines of multilateral summits, it is necessary to have frequent exchange of visits, even if short, as such visits give momentum to relations and help in addressing outstanding contentious issues.

In several regions of the world, economic integration has helped countries to overcome their political differences by creating economic interdependencies. Scope for this in the South Asian context is limited, the reason being that these are parallel economies producing and exporting similar products. To overcome this, we need to focus on creating manufacturing chains across the region as has been done in South East Asia. One area which offers immense potential for mutually beneficial cooperation is hydropower. Nepal and Bhutan have vast potential for hydropower, which if tapped could be exported to other countries in the region. Twenty years back Sri Lanka evinced interest in importing power from India. With the advancement of technology this could become feasible in the not too distant future.

We have free trade arrangement with both Nepal and Bhutan since independence. This has boosted their trade with India. The FTA with Sri Lanka signed in 1999 has helped in expanding bilateral trade at a fast pace. However, SAFTA, the free trade arrangement among SAARC countries has not delivered expected results. SAFTA, one thought, would underpin SAARC, but it has gone the SAARC way. Primary reason is many member nations have protected their domestic industry by including many of their products in the negative list on which duty concession would not be applicable. Like SAARC, the success of SAFTA would depend on political will, which is sadly lacking till now. The recently formed BBIN grouping consisting of Bangladesh, Bhutan, India and Nepal has a much better chance of success since there is political willingness to cooperate in the identified areas, like energy, water, trade, and trade facilitation.

Infrastructure at the land customs points is very poor. India is more guilty on this than the others. Attention is being paid to this now. Integrated check posts are being established on a priority basis. This should facilitate smooth and faster movement of people and goods across the border. Simultaneously attention needs to be paid to development of infrastructure near the ICPs and upgradation of roads leading to the check posts.

Sharing what you have with others is also an important instrument of diplomacy. Within the constraints of our limited resources, we have been extending assistance to neighbors in various fields. Our contribution to human resources development in the region is widely appreciated. Our economic cooperation programme has not delivered expected results as many of the projects suffer from procedural delays and don’t get implemented for years. Over a decade back we started the small development projects scheme, which has been operating successfully in Nepal, Bhutan, Afghanistan and Sri Lanka. Procedures for these projects have been simplified. Projects whose cost is less than 3 crores were taken up under this scheme. The limit has been increased to 5 crores now. The areas of focus under this scheme are: education, primary health, rural roads, infrastructure etc. These projects have benefited the targeted people and have generated tremendous goodwill for India in these countries. We need to build on it.

Over the past 2 decades, media has come to play an important role in society. The process got accelerated after private electronic media was permitted. Government policy, including foreign policy has been an important focus area for media. Thanks to media the younger generation is well informed and has its own views on international affairs, which is a welcome development. But electronic media and social media have made the task of a diplomat somewhat difficult. Often it is best to deal with neighbors on sensitive issues quietly, but this is becoming impossible thanks to the overactive media. Many a times, media does not factor in the sensitivities of the other country.

The above general points are relevant for all our neighbors. Against this background I will move on to examining important specific issues with our neighbors. I will start with Sri Lanka, which is the closest neighbor from Tiruvarur.

Sri Lanka:

The genesis of the ethnic problem in Sri Lanka can be traced back to 1948, when Sri Lanka became independent. It is a subject in which India takes a keen interest, for, its reverberations are felt in Tamil Nadu. A quarter of Sri Lanka’s population are Tamils and many of them retain some link with Tamil Nadu. When violence broke out in Sri Lanka in the 1980es, many Tamils fled to India. Since then, Tamil Nadu has played host to tens of thousands of Sri Lankan Tamil refugees. In the 1980es, India made a sincere effort to assist in finding a peaceful solution to the ethnic issue, but succeeded only partially. India will support any effort in finding a negotiated peaceful solution that addresses the legitimate grievances of the Tamil population and provides for implementation of what has been agreed upon already and incorporated in the Constitution.

While the concerns and complaints of the Tamils of the North East has attracted wide spread attention in India, the miserable plight of Tamils of recent Indian origin, who were taken by the British in the nineteenth century to work in their tea plantations hardly attracts attention here. India has been helping in their education and training, but the primary responsibility for their welfare and upliftment is that of the Sri Lankan Govt. Sadly Sri Lankan Govt doesn’t do much for them. It is gratifying that during our PM’s visit to Sri Lanka in May 2017, he visited the upcountry area, where most of the Tamils of recent indian origin live, to inaugurate a multi specialty hospital set up with our assistance.

A thorny issue we have with Sri Lanka is the frequent arrest of Indian fishermen by that country. Sri Lanka alleges that our fishermen cast their net in their waters. This allegation may be partly correct. Because of depletion of fish stock near our coast our fishermen go further out and enter Sri Lankan waters. In the dialogue at highest levels we stress on the need for continued cooperation on this humanitarian issue. Force should not be resorted to against straying fishermen. Joint Working Group on Fisheries is discussing the issue. In the mean time, India has been encouraging fishermen to take to deep sea fishing so that they don’t need to fish in Sri Lankan waters. An alternate solution could be licensed and regulated fishing in each others waters. Sri Lankan fishermen on the western coast are interested in fishing in the Arabian Sea off our western coast. Any such solution should ensure that the livelihood of fishermen of Kerala is not adversely affected.

Activities of China in Sri Lanka are a matter of concern to us and are discussed at the highest levels. Huge investments in unviable projects like the Hambantota port probably have other reasons. With Sri Lanka unable to service the loan for this unviable project, it has been taken over by the Chinese, which is a cause for concern to us. We signed a free trade agreement with Sri Lanka in December 1999. Bilateral trade has grown exponentially since then and both countries have benefitted from the agreement and are keen on vastly expanding the scope of this agreement.


The strategic location of Maldives on Indian Ocean sea lanes makes this country important to us. The internal political problems inevitably drags us in, but we have rightly chosen not to adopt a prescriptive approach, but to counsel the different sides. There are reports on activities of religious extremists in the island. This is of concern to us and we have flagged this to the attention of the Govt of Maldives. A major problem arose when Maldives cancelled the contract of an Indian company for the airport project. The arbitration award has gone in favour of the Indian company. Hopefully the issue will be resolved amicably.


India – Bhutan relations are based on mutual trust, confidence and respect for each other’s national interests. The importance of this Himalayan Kingdom arises from its strategic location between India and China. It is the country where the concept of Gross National Happiness took shape. Its electoral system has many aspects which are worthy of replication in India. Its commitment to environmental preservation is worthy of adulation. It is the sole neighbor with which we have had trouble free and friendly relations since our Independence. ‘Bhutan and India share a very special relationship that has stood the test of time,’ said PM Modi in Bhutan. He chose Bhutan as the first foreign country he would visit after becoming PM.

When Bhutan wanted some changes in the bilateral Treaty, we agreed readily for dialogue on the issue and a new Treaty that addressed the concerns of Bhutan was agreed upon. The new Treaty provides that neither country shall allow use of its territory for activities harmful to the national security and interest of the other. Our security cooperation has been progressing smoothly to the benefit of both the countries. We have been Bhutan’s primary economic and development cooperation partner. In the case of bhutan, the model of cooperation is different from the general one, which facilitates timely implementation of the projects.

Hydro power is the most important area of economic cooperation with Bhutan. During his visit, PM said, hydropower cooperation with Bhutan ‘is a classic example of win-win cooperation and a model for the entire region’. Three India assisted Projects – Chukha, Kurichu and Tala - with a total generating capacity of 1416 MW are presently operational. They account for 13% of Bhutan’s GDP and a third of its exports. They have contributed enormously to the development of Bhutan. India buys all the surplus power from these projects. Four other projects with a total capacity of 3540 MW are under implementation. These projects are part of the 10,000 MW that we have agreed to put up in Bhutan by 2020. The deadline is going to be missed, but India is committed to implementing the projects.

It is not as though we do not have any problems, but these are not serious and are handled outside the glare of media and both sides resolve them in a mutually accommodative spirit.


Relations with Bangladesh have witnessed a marked upswing since the return to power of PM Sheikh Hasina in January 2009. There is now, wide ranging bilateral cooperation including in areas like defence, energy, activities of Indian insurgent groups, transit etc. Following ratification of the 1974 Land Boundary Agreement in 2015, long pending issue of boundary demarcation is out of the way. Enclaves in each other’s territory have been exchanged. Maritime boundary is also more or less settled. There is increasing willingness on the part of Bangladesh to crack down on the activities of Indian insurgent groups operating from Bangladeshi soil. Some top rebel leaders have been handed over to India, sending a clear message to the groups that they can no longer use the territory of Bangladesh for anti India operations.

During PM Sheikh Hasina’s visit to India in April ’17, several important decisions were taken. India will extend assistance for rebuilding old railway lines and roads and for reviving inland waterways. In due course this will help in improving connectivity to the North East, building on direct Kolkata - Agartala bus service launched 2 years back. Improving the transportation network in Bangladesh has the potential to increase connectivity among BBIN countries.

India is presently supplying 600 MW of power to Bangladesh, including 100 MW from Tripura. Additional 500 MW will be supplied once the transmission network is strengthened. From Tripura additional 60 MW will be supplied. A trilateral MOU on hydroelectric power has been worked out and will be signed soon by Bhutan, Bangladesh and India. This should facilitate implementation of Bangladeshi proposal to put up a hydroelectric project upstream of Kurichu in Eastern Bhutan with the aim of importing power through Indian Territory.

Sharing of river waters is a major issue in bilateral relations. The 1996 agreement on sharing of waters at Farakka was possible because of the enormous support extended by PM Sheikh Hasina. Arrangement for sharing of Teesta waters was worked out in 2011, but it has not been possible to move forward on it because of serious reservations of West Bengal which has now offered to share waters of other rivers, in stead. This is a sensitive and critical issue for which we need to find an early solution, before it becomes a major irritant.

India has announced additional line of credit of $ 5 billion, including $ 500 million for defence related supplies. Together with the existing LoCs, India has offered a total of $ 8 billion in credit over the last 6 years. Greater economic interaction that this will bring about will be in the interest of both the countries. It was clear during PM Sheikh Hasina’s visit that Bangladesh is willing to move forward on defence cooperation.

An immediate challenge for India is increasing efforts by China to rope in Bangladesh into its scheme of things on BRI initiative. Bangladesh has been made aware of our reservations and given our strengthening relations would hopefully not agree to anything that will seriously affect our interests. Another challenge is that while on the Indian side there is bipartisan approach on relations with Bangladesh, it does not appear so in Bangladesh. At a future date, when there is change of Government we should be prepared for changes in Bangladesh’s policy towards India. Increasing economic interdependence will help in minimizing Bangladesh’s options for changes in policy towards India. In the meantime, we should move forward fast on delivering on all the promises made, keeping in view that PM Sheikh Hasina has invested enormous political capital in moving forward on relations with India. Another ongoing issue is illegal immigration from Bangladesh. At one level Bangladesh is in a denial mode, but the problem can’t be wished away. Measures taken by India like border fencing haven’t had the desired effect. Issue needs to be pursued vigorously with Bangladesh.


Relations with Nepal are friendly, but, divisive politics in Nepal casts its dark shadow on relations with India. There is tremendous potential for mutually beneficial economic cooperation in sectors like hydro power, tourism etc., but Nepal has not found it possible to move forward due to domestic politics surrounding anything to do with India. Over the last 2-3 years there has been forward movement on some hydro projects like Arun III, Upper Karnali and Pancheshwar. A country that has the potential to meet the entire shortfall in power of South Asia is now dependent on import of power from India.

Nepal has been calling for revising the 1950 bilateral Treaty of Peace and Friendship. When we expressed readiness to engage in a dialogue and asked for the specific concerns of Nepal, there was no response. It appears to be a political issue which is whipped up whenever it suits them. In economic terms Nepal gains enormously from the Treaty. They are perhaps concerned that they may end up losing the economic advantages that the Treaty gives them and hence don’t want to engage in a dialogue on Treaty revision. During PM’s visit to Nepal in 2014, it was agreed to ‘review, adjust and update’ the Treaty.

We have an open border with Nepal. It facilitates free movement of people but also of terrorists and smugglers who bring in fake Indian currency. We must guard against misuse of the open border by outside forces. Nepal’s territory has been made use of by Pakistan as a launching pad for anti – India activities. I am sure many of you will remember the IC – 814 hijacking incident. China has been expanding its footprint in Nepal, with the active assistance of some political forces in Nepal. This requires careful monitoring. We need to ensure that Nepal, while engaging with China, takes into account our concerns on Chinese activities in Nepal.

The unsettled domestic political situation in Nepal is a matter of concern to us as it has a fallout effect on the bordering states, because of the close connection between people living on either side of the border. There is an urgent need for Nepal to address the political unrest in the terai region, where Madhesis have been voicing their concerns, many of which are genuine. Madhesis who have familial connection with people of Bihar and UP, have, for long been denied equal rights and are a suppressed lot. The 2007 interim Constitution, addressed many of their concerns, but the Constitution of 2015 rolled many of these provisions back resulting in the current ongoing unrest. For success in its quest for a new democratic identity, Nepal needs to carry along all sections of population.


Our relations with Afghanistan are warm and friendly. This landlocked country is in turmoil for nearly 40 years due to external interference. India has worked with successive Governments during this period, except when Taliban ruled the country. We have extended development assistance aimed at benefiting the people, all through this period, which has generated enormous goodwill for India. President Mohammad Ashraf Ghani was hopeful that he can solve Afghanistan’s problem by reaching out to Pakistan and China and when he didn’t succeed, he realized the importance of engaging with India. We extend assistance to Afghan security forces and there is active cooperation with them. We have extended development assistance of $ 2 billion to Afghanistan. PM visited Afghanistan in December 2015 when the new Parliament building which was built with Indian assistance was inaugurated. PM visited Afghanistan again in 2016 to inaugurate the long delayed Salma Friendship dam and HEP.

Landlocked Afghanistan is heavily dependent on getting most of its supplies through Pakistan. Pakistan uses it as leverage. We need to implement the Chabahar port project in Iran expeditiously. This would provide an alternate route for Afghanistan to get its supplies. In June this year, an air corridor was inaugurated between India and Afghanistan, which will facilitate Afghan exports and enable Afghanistan to get essential and emergency supplies by air. An Afghanistan in turmoil is what Pakistan wants so that it can expand its influence in that country and install its proxies in power. This will not be in India’s interest and will be of serious security concern to us. As the situation evolves, we will be faced with the difficult task of ensuring that Afghanistan doesn’t fall into the hands of Pakistan supported Taliban or some such force.


Now on to the neighbor with whom we have had difficult relations right from the day both the countries were born, namely Pakistan. The difficulty in dealing with Pakistan is that the elected Government is not in control of foreign policy or defence matters. It is the army which has the final say on these subjects. It is not surprising then that whatever is agreed in good faith with the Government falls by the wayside soon. The composite dialogue agreed to in 1997 hasn’t progressed much because army would not like it to progress. Every goodwill gesture by India is reciprocated through army organized terrorist activities against India. Pakistan cannot forget the humiliation of 1971. Army would not want improvement of relations with India as it will lead to questions being raised about its elevated and bloated status. Terrorism is an instrument of state policy of Pakistan. It is this Pak sponsored terrorism that is destabilizing Afghanistan.

Pakistan’s strong and growing defence and nuclear links with our other difficult neighbor is a matter of serious security concern to us. The proposed CPEC, which doesn’t appear to be economically viable will add to these concerns apart from infringing on India’s territorial sovereignty in Jammu and Kashmir. China is actively helping Pakistan in its nuclear and missile programmes, with the aim of causing serious security concern to us. What is inexplicable is the reluctance of the US to take action against or at least restrain Pakistan, despite clear evidence that Pakistan is fomenting trouble in the region and in fact acting against the US and its interests. Perhaps they are hopeful that Pakistan will contribute to stabilizing the situation in Afghanistan.


Over the last 3-4 decades, China’s global profile has changed enormously, thanks to consistently high growth rates, resulting money power and aggressive foreign policy. It has emerged as the second largest economy and has the highest foreign exchange reserves. It is using its economic muscle to invest abroad to further its strategic interests. China is now a confident power that is willing to push forward its interests aggressively. We have to bear these factors in view while dealing with China. While our growing economy should provide incentive for China to engage with us meaningfully, we should be under no illusion that China’s approach on bilateral issues, both political and economic, would change dramatically.

In the 1980es, the two countries decided to put aside contentious issues temporarily and focus on issues that are to mutual advantage. Progress has been achieved on this, in that trade is booming, though it is largely China that is benefiting through increased exports to India. Both countries are members of BRICS and its various initiatives. Our hope that growing economic and cultural links would encourage China to moderate its stand on contentious issues has been belied.

Border violations continue. The explanation that this is due to non demarcation of the border will satisfy only the eternal optimists. Non tariff barriers against import of items from India have been expanding. Dumping of Chinese products has been increasing, affecting Indian manufacturers. Its cooperation with Pakistan on the latter’s nuclear and missile program is a cause for very serious security concern to us. In fact China’s cooperation with Pakistan has reached a stage where, even if the US were to stop assisting Pakistan, China will step in to fill the breach. China is roping in our neighbors to join in its mega BRI initiative. Some of the mega projects that are being planned or have already been executed are not economically viable. It is likely that in due course China will acquire these assets and position itself permanently in our neighborhood. CPEC which cuts across J & K and the reported mega hydro electric project in J&K are of serious concern to us and so are their mega projects on Brahmaputra. There is growing evidence of material Chinese support for North East insurgents.

Given this scenario, we have to look at our options carefully. We need to continue to strengthen economic and trade links, while continuing efforts on getting market access barriers faced by indian exporters lifted. Bilateral dialogue on contentious issues has to continue. We need to strengthen economic and defence links with Japan, South Korea, Vietnam, etc., and continue participating in military exercises with them. We should continue to strengthen our armed forces and also the infrastructure along the border. Our efforts to convince immediate neighbors on the negative effects of Chinese projects should continue quietly.


Return of democracy in Myanmar provides an opportunity to us strengthen links and thus safeguard our interests in that country. This was not possible earlier because of Chinese influence on the military regime. President of Myanmar U Htin Kyaw and State Counselor Aung San Suu Kyi have visited India in the last year and our PM had visited Myanmar earlier. The discussions covered both economic and security related issues. There is agreement to maintain security along the border. Both sides expressed shared commitment to fight against terrorism and insurgent activity. PM said, after his meeting with State Counselor, that it has been agreed that close coordination to ensure security in the areas along the border and sensitivity to each others strategic interests will serve the interests of both the nations. In the context of continuing Chinese support to Indian insurgent groups [ and also Myanmar insurgents], this should be followed up and implemented on ground.

It has been decided to expedite Kaladan multimodal project, which would benefit Mizoram as also rest of the North East, Myanmar and Bangladesh. Trilateral highway to connect with Thailand and provide road access to South East Asia will also be expedited. We are extending assistance in many fields including, education, power, renewable energy, agriculture, health care, oil exploration etc. Total assistance for ongoing projects is around $ 1.75 billion. The challenge lies in leveraging this to get their full cooperation on security related issues. This would be possible only if we are able to deliver on time on what has been agreed upon, on which our record has not met with recipient’s expectations.

Before I conclude, I would like to thank the Public Diplomacy wing of the External Publicity Division of the Ministry of External Affairs for providing me this opportunity to share these thoughts with the younger generation. I would also like to thank the university for the excellent arrangements made for my stay and this event.

I thank all of you for your attention.