India is heading into a pivotal year in which foreign policy pressures, domestic politics, and economic risks are set to collide, challenging Prime Minister Narendra Modi’s ability to offset diplomatic setbacks with internal successes, according to a new analysis by Chatham House, according to The Express Tribune.
The think tank argues that the strains became visible in 2025, a turbulent year marked by a brief but intense conflict with Pakistan and a sharp downturn in relations with the United States. Tensions with Washington escalated after the Trump administration imposed steep tariffs on Indian exports over New Delhi’s continued purchases of Russian crude and the failure to finalize a trade deal. Compounding India’s unease, the U.S. simultaneously intensified diplomatic outreach to Pakistan.
Instability in India’s immediate neighborhood added to the strain. Political unrest in Nepal and a deterioration in ties with Bangladesh, following the ouster of former prime minister Sheikh Hasina, who fled to India in 2024, have complicated New Delhi’s regional calculus.
At home, the Modi government has sought to blunt the impact of these challenges by highlighting domestic achievements. The ruling Bharatiya Janata Party secured key state-level electoral victories, advanced tax and labor reforms, and concluded free trade agreements with the United Kingdom, Oman, and New Zealand. India also remained the world’s fastest-growing major economy in 2025, posting growth of more than 8 percent in the July September quarter, buoyed by its vast domestic market.
Yet Chatham House warns that this resilience may be tested in 2026 as the full effects of U.S. tariffs are felt. Prolonged trade restrictions and the possibility of additional American sanctions on countries doing business with Russia could weigh on growth and carry political consequences, particularly with elections due next year in several Indian states.
New Delhi is betting that trade diversion and new agreements will ease the pressure, with renewed focus on a long-delayed trade pact with the European Union. India is also preparing to host a series of high-profile summits, including BRICS and possibly the Quad, as well as welcoming visits from global leaders moves the government is likely to present as proof of its multi aligned diplomacy.
Still, the report suggests cracks are emerging in India’s long cherished strategic autonomy. Its exclusion from a major U.S. led technology initiative and its cautious, often muted responses to global crises, from Venezuela to Gaza and Ukraine, have fueled perceptions of diplomatic aloofness.
As India seeks to champion the Global South during its BRICS chairmanship, analysts warn that maintaining balance amid rising geopolitical friction, regional instability, and domestic political pressures will be increasingly difficult in the year ahead.
