{"id":35538,"date":"2026-01-11T12:08:19","date_gmt":"2026-01-11T12:08:19","guid":{"rendered":"https:\/\/ipp-news.com\/?p=35538"},"modified":"2026-01-11T12:08:19","modified_gmt":"2026-01-11T12:08:19","slug":"indias-foreign-policy-politics-and-economy-to-collide-in-2026-analysts-warn","status":"publish","type":"post","link":"https:\/\/ipp-news.com\/?p=35538","title":{"rendered":"India\u2019s foreign policy, politics and economy to collide in 2026, analysts warn"},"content":{"rendered":"
India is likely to face a year in which the lines between foreign policy, domestic politics and the economy become increasingly blurred, making it harder for Prime Minister Narendra Modi\u2019s government to offset diplomatic setbacks with domestic successes, according to an analysis by Chatham House.<\/p>\n

The report said 2025 was anging foreign policy year, marked by a four-day conflict with Pakistan in May and a surguably India\u2019s most challebsequent downturn in relations with the United States.<\/p>\n

The Trump administration imposed 50% tariffs on India over its purchase of Russian crude and the failure to conclude a trade deal by an agreed deadline. Adding to New Delhi\u2019s concerns, Washington also stepped up its outreach to Islamabad.<\/p>\n

India also faced instability in its neighbourhood, including so-called Gen Z protests in Nepal and a deterioration in relations with Bangladesh after former prime minister Sheikh Hasina was removed from power and fled to India in 2024.<\/p>\n

According to the Chatham House article, the Modi government sought to play down these setbacks by highlighting domestic achievements, including electoral wins for the Bharatiya Janata Party in state polls, economic reforms such as changes to the goods and services tax and new labour codes, and free trade agreements with the United Kingdom, Oman and New Zealand.<\/p>\n

Read: India’s double game with US<\/p>\n

Despite the impact of US tariffs, India remained the world\u2019s fastest-growing major economy in 2025, posting growth of 8.2% between July and September, supported by its large domestic market.<\/p>\n

However, the report said the latest growth data came before the full force of US tariffs took effect, warning that the longer they remain in place, the more sustained their impact on the economy is likely to be in 2026.<\/p>\n

Washington is also considering additional sanctions on countries doing business with Russia, a move that could further affect India\u2019s economy. Analysts said this could have political consequences, as India is due to hold elections in four states and one Union Territory in 2026.<\/p>\n

The Modi government is hoping trade diversion and new agreements will ease some of the pressure, with a key focus on concluding a long-pending trade deal with the European Union, India\u2019s largest trade partner. Negotiations, however, have been on and off since 2007, and a deadline to finalise the deal by the end of last year was missed. Both sides are now aiming to make progress ahead of European Commission President Ursula von der Leyen\u2019s visit to India later this month.<\/p>\n

India is also set to host a series of high-profile summits in 2026, including the AI Impact Summit in February, the BRICS summit and possibly the Quad summit, which was postponed last year amid strained India-US relations.<\/p>\n

Several world leaders are expected to visit India. Following Russian President Vladimir Putin\u2019s visit in December, Ursula von der Leyen and European Council President Ant\u00f3nio Costa will be chief guests at India\u2019s Republic Day parade later this month. Chinese President Xi Jinping may also attend the BRICS summit, while US President Donald Trump could visit if the Quad summit goes ahead and bilateral differences are resolved.<\/p>\n

Read More: Bangladesh-India ties hit new low<\/p>\n

While New Delhi is likely to present these developments as proof of its multi-aligned foreign policy, the Chatham House analysis said cracks are emerging in India\u2019s long-standing commitment to strategic autonomy.<\/p>\n

India\u2019s exclusion from the inaugural summit of the Trump administration\u2019s Pax Silica initiative in December was cited as a key signal. Although India has often been portrayed as a beneficiary of efforts to diversify supply chains away from China, its absence from a major initiative on critical and emerging technologies suggested a weakening of that narrative.<\/p>\n

The report said India is increasingly being seen as a secondary player in some advanced technology sectors. While US tech giants such as Google, Amazon and Microsoft have announced investments in India, much of this has focused on data centres rather than advanced manufacturing.<\/p>\n

India\u2019s ambitions in semiconductor manufacturing also face constraints. While Modi announced last year that India would produce its first domestically made chips, these are expected to be less advanced, trailing-edge chips. Analysts pointed to shortages of water and electricity as key challenges.<\/p>\n

The report said India\u2019s careful balancing act was also evident in its muted response to global crises, including the US attack on Venezuela. Among BRICS members, India issued only a brief statement expressing \u201cdeep concern\u201d, while focusing on the safety of Indian nationals.<\/p>\n

Similar restraint has been seen in New Delhi\u2019s responses to conflicts in Gaza and Ukraine, reflecting a desire to maintain relations with Israel, Russia and the United States.<\/p>\n

Read Also: India and the United States<\/p>\n

As a result, Indian foreign policy often appears aloof, the report said, noting a gap between its stated support for a rules-based international order and its reluctance to speak out forcefully during major crises.<\/p>\n

In 2026, India will seek to bolster its Global South credentials during its BRICS chairmanship by promoting a non-Western, but not overtly anti-Western, worldview. This may involve softening contentious proposals such as de-dollarisation by reframing them as efforts to settle trade in national currencies.<\/p>\n

Closer to home, India will aim to reset ties with Nepal and Bangladesh after elections in both countries early next year. Relations with Pakistan, however, are expected to remain fragile.<\/p>\n

While both sides have shown restraint in recent months, analysts warned that hyper-nationalist rhetoric, the risk posed by non-state armed groups and the possibility of another high-profile attack mean the danger of accidental escalation will remain high in 2026.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

India is likely to face a year in which the lines between foreign policy, domestic politics and the economy become increasingly blurred, making it harder for Prime Minister Narendra Modi\u2019s government to offset diplomatic setbacks with domestic successes, according to an analysis by Chatham House. The report said 2025 was anging foreign policy year, marked […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-35538","post","type-post","status-publish","format-standard","hentry","category-english-news"],"_links":{"self":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts\/35538","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35538"}],"version-history":[{"count":0,"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts\/35538\/revisions"}],"wp:attachment":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}