Global Economy

How India Lost the Neighborhood

Carnegie Endowment
Carnegie Endowment•Feb 11, 2026

Why It Matters

India’s drift toward illiberal regional hegemony threatens its strategic influence and opens the door for China, reshaping investment and security calculations for businesses operating in South Asia.

Key Takeaways

  • •India's support for autocratic neighbors fuels regional instability
  • •U.S. deference to India limits accountability in South Asia
  • •Bangladesh's 2014 election marked turning point in India’s strategy
  • •China exploits gaps left by India's illiberal regional approach
  • •Long‑term influence requires inclusive partnerships, not regime‑centric ties

Summary

The episode examines Muhib Ramman's essay “The Folly of India’s Illiberal Hegemony,” arguing that New Delhi’s backing of autocratic regimes has destabilized South Asia.

While protests in Bangladesh, Nepal, Sri Lanka, and the Maldives stem from corruption, inflation and democratic backsliding, Ramman contends that India’s preferential support for ruling elites amplifies those grievances. He cites $7.5 billion siphoned from Bangladesh’s banking sector and repeated Indian diplomatic shielding of Sheikh Hasina’s contested elections.

A striking example is the 2014 Bangladeshi vote, which India praised for “stability” despite widespread criticism, and the United States’ reluctance to press New Delhi on human‑rights concerns. Ramman warns that such illiberal patronage creates openings for Chinese investment and political influence.

The analysis suggests India’s short‑term security gains are eroding its long‑term strategic leverage, prompting a shift in regional power dynamics that could affect trade routes, infrastructure projects, and foreign‑direct investment across South Asia.

Original Description

Over the past few years, South Asia has witnessed a striking wave of mass protests toppling governments and upending long-standing political arrangements in countries ranging from Bangladesh to Nepal and Sri Lanka. These upheavals are often explained in terms of domestic factors—such as corruption, economic mismanagement, and democratic backsliding.
But in a recent Foreign Affairs essay titled “The Folly of India’s Illiberal Hegemony,” the scholar Muhib Rahman argues that there is a larger regional story at play—one that implicates not just local leaders, but also India and the United States. The essay challenges the assumption that India’s regional leadership has been a stabilizing force and asks whether New Delhi’s choices have instead helped create openings for China across South Asia.
To talk more about the essay, Muhib joins Milan on the show this week. Muhib is a Perry World House Postdoctoral Fellow at the University of Pennsylvania. His research sits at the intersection of international security, emerging technologies, and the politics of the Global South. He has served as a Postdoctoral Associate at Cornell University and holds a Ph.D. in Government from the University of Texas-Austin.
Muhib and Milan discuss India’s illiberal hegemony in its neighborhood, the downturn in Bangladesh-India ties, and the enabling role of the United States. Plus, the two discuss the drivers of the “India Out” phenomenon in countries ranging from Nepal to the Maldives and how China is positioning itself to take advantage.
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