Barely a few months ago, it was all gloom and doom about India’s neighbourhood policy. Delhi was consumed by hand-wringing about why and how India “lost” the Subcontinent. The downturn in relations with Dhaka after the ouster of Sheikh Hasina sharpened that acute sense of loss. The question now is different. Can India seize the opportunities for a reboot of regional policy triggered by new political developments across the neighbourhood?In Bangladesh, the elections in February handed Tarique Rahman and the Bangladesh Nationalist Party a massive mandate. Rahman’s emphasis on “Bangladesh First” opens the door for a mature, unsentimental, interest-based relationship with Dhaka. Over the last decade, Bangladesh has emerged as India’s most important neighbourhood partner. The deep economic interdependence built over this period appears to have survived the political toxicity of the last 20 months, but the relationship now needs fresh political impetus.AdvertisementNepal’s transition has been equally striking. The sweeping victory of the Rastriya Swatantra Party and the rise of Balendra Shah mark a generational political shift, one that offers an opportunity to move beyond the old cycle of distrust. India must shed the rhetoric of a “special relationship” in favour of one grounded in equality and genuine respect for Nepal’s sovereignty.Sri Lanka had, in fact, begun the positive evolution of the region. Colombo, too, has a new generation in charge since the 2024 elections. It has been moving toward pragmatic engagement with Delhi and breaking free from the historical political animosity that long coloured the ruling party’s relationship with India.Taken together, these transitions present India with a rare opportunity to reimagine its regional policy. The biggest possibilities are in trade.AdvertisementOver the past two years, India has demonstrated a new willingness to negotiate ambitious trade agreements — with the United Kingdom, the European Union, the United States, and others — shedding many past shibboleths of trade policy. That same reforming instinct must now be extended to the neighbourhood.For decades, India’s regional trade policy has been hobbled by self-defeating protectionism. It has taken a peculiarly perverse trade policy in Delhi to defeat India’s natural advantages of geography and economic history. Despite the 4,000-kilometre border with Bangladesh and a narrow Palk Strait separating peninsular India from Sri Lanka, the West remains the main destination for their exports while China is the dominant source of imports. India remains Nepal’s largest trading partner — but barely. Delhi has systematically neutralised the extraordinary legacy of an open border through poor infrastructure and countless non-tariff barriers. The Indian trade negotiators who rail against Western protectionism become its staunchest defenders when it comes to neighbours. Despite ambitious rhetoric on regional cooperation and neighbourhood-first, Delhi’s trade policy towards the region has remained hidebound and out of step with India’s own national interests.India objects to its massive trade deficit with China yet runs substantial surpluses with Bangladesh, Nepal, and Sri Lanka. Delhi finds it difficult to offer its neighbours the very market access it demands from Beijing. The answer is not for India to export less but to import more — and to do so through stronger investment ties, trade facilitation, and modernised border infrastructure. A genuine transformation of connectivity between India, Bangladesh, and Nepal would provide a major boost to South Asia’s poorest parts in the eastern Subcontinent. This transformation will require both unilateral steps by Delhi and negotiated give-and-take. It will involve guardrails, for example, on rules of origin. Trade policy cannot rest on generosity; it must rest on the recognition of shared benefits and political ownership.The rapidly changing international context makes early action on neighbourhood trade urgent. The global trading system that emerged after the Cold War is fragmenting. The return of tariffs, sanctions, and geopolitical competition has made export-led growth more uncertain for smaller economies. This global uncertainty creates a new regional logic. For Bangladesh, Nepal, and Sri Lanka, the Indian market offers scale and proximity that no distant partner can match.Meanwhile, turbulence in the Gulf is beginning to have a deleterious impact across South Asia. As the Subcontinent’s deep energy, economic, and diasporic ties with the Gulf come under stress, India has begun supporting its neighbours with the supply of essential hydrocarbon commodities. This is a moment to consider deeper cooperation on economic and energy security — with Bangladesh, Bhutan, and Nepal in the east, and Sri Lanka and the Maldives in the south. Such engagement would serve as a solid anchor against politically driven instability in bilateral relations. Getting there requires neither the much vaunted revival of SAARC nor elaborate new regional forums — only political will, policy innovation, and institutional agility.you may likeBut none of this can be achieved without a change in mindset. For too long, India’s neighbourhood policy has rested on the implicit assumption that what India offers is a favour, and that smaller neighbours should respond with gratitude and political deference. That assumption has produced precisely the political resentment in the neighbourhood that India seeks to avoid.The new governments in Dhaka, Kathmandu, and Colombo represent electorates that have rejected old forms of dependency and clientelism. They are not looking for patrons; they are looking for partners. Agreements must produce visible, measurable benefits on both sides. Connectivity must improve, markets must open, and economic cooperation must translate into jobs, exports, and growth — for India’s neighbours and for itself.The writer is contributing editor on international affairs for The Indian Express. He is a distinguished professor at the Motwani-Jadeja Institute of American Studies, Jindal Global University and the Korea Foundation Chair on Asian Geopolitics at the Council for Strategic and Defence Research, Delhi