India under Prime Minister Modi has been a bright spot for major investment, stability, and economic growth throughout 2024, a trend that will likely continue into 2025.
The country has begun to flex its diplomatic muscle, impressively maintaining robust ties with both Russia, and the West simultaneously despite them being at war with each other. New Labour Foreign Secretary David Lammy made India (which he described as a “superpower”) one of his first destinations to visit after taking office in July 2024, underscoring Delhi’s importance. UK PM Sir Keir Starmer announced the relaunching of free trade negotiations to boost the £42bn trading relationship with India next year, following a bilateral meeting with PM Modi at the G20 Summit in Brazil. There is bipartisan consensus in British politics that India is a pivotal trading and strategic partner, albeit tinged with concern at continued Indian ties with Russia, which is seen as a major security threat by the British Establishment.
India has other key partners in Europe with France and Germany also trying to build robust partnerships with it. Embattled French President Emmanuel Macron was chief guest at India’s Republic Day Parade on January 26, 2024, striving to win more contracts for French fighter jets, while German Chancellor Olaf Scholz paid an official visit to India in October for much the same reason, to sell German defence hardware. Like Britain, Paris and Berlin are intensifying pressure on India to pare back its long-standing Russia ties.
Russia, BRICS and the West
Resisting Western pressure to downgrade diplomatic and trade ties with Moscow amidst the Ukraine crisis, India has stayed firm in its neutrality. It has bought both oil at discounted prices from Russia, and high-tech weapons from the US.
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India has invited Vladimir Putin to visit in early 2025, demonstrating a willingness to defy Western-backed institutions such as the International Criminal Court, which put out arrest warrants in March 2023 for President Putin over his role in the Russian invasion of Ukraine. Indian Defence Minister recently described Delhi’s friendship with Moscow on his December 2024 visit there as ‘higher than the highest mountain and deeper than the deepest ocean', flowery language with a pointed message for the West.
Notably, India has also played a key role as a member of the BRICS grouping (Brazil, Russia, India, China and South Africa together with other non-aligned countries), attending the BRICS summit in Kazan, Russia in October 2024. Russia continues to push for BRICS to replace Western-led institutions such as the World Bank, to the chagrin of Western policymakers, and India could have a role to play in this.
India-Canada/US relations
It has not been plain sailing for India’s relations with the West, despite growing convergences on trade. Canada under PM Justin Trudeau has been quite frosty in its attitude to India recently, blaming Delhi for the murder of Khalistani extremist Hardeep Nijjar on Canadian soil, despite being unable to present any evidence of this. In October, the two countries expelled each other’s diplomats, with Trudeau lambasting India’s alleged ‘horrific mistake’ in supposedly conducting the killing on Canadian territory. It is likely that Indo-Canadian relations will be in deep freeze as long as the Trudeau Premiership lasts. Nonetheless, polling shows it is likely that Trudeau will lose power in the upcoming Canadian General Election, due in October 2025 at the latest. With this in mind, India may wish to begin repairing ties with Canada’s Opposition Leader Pierre Poilievre, especially as the large Indian diaspora in Canada will need a return to normal working ties and consular services soon.
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Indian ties with the United States have also seen a big challenge, with the US Department of Justice alleging that India tried unsuccessfully to assassinate a Khalistani extremist, Gurpatwant Singh Pannun on US soil. It charged an Indian intelligence agent, Vikas Yadav, with the attempted hit on Pannun in October 2024. Extradition of Mr Yadav to the United States by India appears to be unlikely for the time being. In any case, India will have to wait to see how the incoming Trump administration deals with the issue.
Encouragingly for India, Trump has selected a top team that is very India-friendly, including Hindus Tulsi Gabbard and Kash Patel as heads of National Intelligence and FBI, respectively. Given that both Pannun and the deceased Nijjar were known for extremist activity, it is possible that Trump will opt to quietly bury the Khalistani extremist issue altogether, as India remains a key alternative market to China. India-US ties have in fact grown despite this apparent criminal case, as evidenced by both President Biden and the US Congress authorising the sale of armed drones to target terrorists with to India, with that deal being signed in October 2024.
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Instability in Bangladesh
The biggest challenges India faces in 2025 appear to be regional. A regime change in Bangladesh, with former Prime Minister Sheikh Hasina being ousted from power on August 5 this year has brought to power an interim administration headed by ‘Chief Adviser’ Mohammed Yunus. The change of Bangladeshi government has indirectly increased instability at India’s border, with minority Hindus there coming under attack by religious extremists.
Even President-elect Trump has raised concerns about this issue. It remains to be seen how India will deal with this new challenge in the long run. As a vast economic market, India retains substantial leverage over Bangladesh, and it is likely that any sustained assault on the religious freedoms of Bangladeshi Hindus will increase Indian willingness to close off that market to the Bangladeshis. The reality of running an economy that needs Indian trade and investment may begin to hit home for the new Bangladeshi regime then.
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Celebrations in the New Year
The New Year will start with a celebration in the form of the Pravasi Bharatiya Divas on 9 January 2025, which honours India’s vast diaspora contribution. The diaspora remitted $107.5bn in 2023, according to RBI Governor Shaktikanta Das, contributing to India’s upliftment to middle income status and further increasing India’s attractiveness as an investment destination. Notably, Indian Foreign Direct Investment (FDI) soared to a stratospheric trillion dollars in December 2024, underlining the country’s reputation as one of the major places to invest.
The year 2025 may see India’s economic and diplomatic status rise higher, as it hosts key summits such as the Quad meet and possibly also attempt diplomacy to end the long-running Russia-Ukraine conflict. Suffice to say, exciting times ahead for India on all fronts!
Jeevan Vipinachandran is a UK-based writer and political analyst specialising in political conflict and counter-terrorism. With a Masters in Comparative Politics: Conflict Studies from the London School of Economics (LSE), his core interest is in international relations with a special focus on the rise of India and its impact on the world stage.