India Risk Outlook 2025
The year gone by was marked with geopolitical changes and turbulence of a high order. The events in Syria, Lebanon, Ukraine and closer home in Bangladesh, Myanmar and surrounding geographies will cast a telling shadow on the events of 2025. A multitude of elections across the globe and in India, have thrown up diverse results which challenge the old order. While the Narendra Modi-led Bharatiya Janata Party (BJP) emerged from the 2024 General Elections weakened, Donald Trump in the United States of America (USA) came out much stronger and with an agenda which threatens to challenge and reshape the world order. The year ahead is likely to be challenging for India both domestically and in the geostrategic domain. Conversely it would also be a year of multidimensional opportunities which will not only demand deft handling but may also result in new alignments and need for course correction.Economic paradigms may need a fresh approach should President-elect Trump go ahead with his policies of punitive/ reciprocal tariffs and mass deportation of illegal migrants. On the geostrategic front, a more muscular QUAD is at odds with an expanding BRICS and the two may be on a collision trajectory.With the QUAD leaders’ summit planned in 2025 in India, strong anti-China posturing may strain India’s prominence both in SCO and BRICS. The geopolitical tightrope that India has to walk can be gauged by the likely visit of Vladimir Putin to India in first quarter of 2025, followed by PM Modi traveling to China for the SCO summit and hosting the QUAD leaders in October 2025. One misstep or a belligerent statement can derail or alter the outcome of these significant events. In a similar vein India’s image abroad was dented by accusations of targeted killings/attempted murder by alleged government agencies, coupled with bribery allegations against the biggest business house of India.On the domestic front, peaceful elections in J&K and a smooth transition to power of an opposition led government bodes well for the overall security dynamics of the sensitive region and its continued progress in 2025 would be a big boost to stability. The vigorous efforts taken by the BJP-led government to root out Left-Wing Extremism (LWE) would continue in 2025 and may result in weakening this antinational movement significantly.The overthrow of the Sheikh Hasina government has been a big setback as India had backed her government fully. The relations currently are rather fragile with a widening trust deficit on the back of reports of attacks on minorities, and their places of worship. The recent visit of the Foreign Secretary of India has smoothened some issues but more needs to be done in 2025 to bring the relations back to a semblance of normalcy. However, tense relations between the two neighbours in 2025 are likely to continue. On the more complex Indo-China front the disengagement and pull back by both armies from Ladakh has been a very positive development. The recent visit of the National Security Advisor (NSA) to China has given further momentum to an improvement in ties. No dramatic development or normalisation of relations are likely in 2025 and few baby steps to rebuild trust can at best be expected.On the internal front, the BJP-led government is weaker, and despite all odds the opposition INDI alliance has posed significant challenges to the government. This has led to further polarization and widening of communal fault lines. If this remains unchecked, it may lead to social unrest in some historically sensitive areas. The farmers protest continues and will not give much room to the government in 2025 to address the much-needed agricultural reforms.Despite all this 2025 will be a pivotal year for India as it will become the fourth largest economy growing at a rate of 6.5-7 percent in the coming years. Artificial Intelligence (AI) and quantum-based technologies and semi conductor manufacturing will play a big part in the economic resurgence of India, the problems of wealth distribution, population, climate risks and inflation will continue to pose challenges. Overall, a year of stability, steady growth, some geopolitical risks mixed with opportunities is forecast for 2025. Executive Summary The year 2024 was characterized by elections in more than 70 countries and persistence of several geopolitical conflicts. With the series of elections that too k place, the discussion on the spirit and quality of democracy took center stage as leaderships in these countries either used elections to tighten grip on power, gain legitimacy or display illiberal tendencies. The Russia-Ukraine and Israel-Palestine conflicts continued to worsen and have spillover effects in other states, impeding any global efforts towards restoring peace. The Global economy is riddled with stagnant major economies and growing global debt which is already at a record level due to the COVID-19 pandemic. Several governments are offering increased spending and tax cuts as a part of political campaigns, which will only add on to the global debt. There are alarming trends of increasing cost of living, increasing defense expenditure, backsliding on international commitments, and increasing vulnerability to climate variability. Against the backdrop of global disorder, multiplying geopolitical complications and internal challenges, India successfully conducted its general elections. India took strategic measures to protect its integrity, propel its regional influence and maintain a considerable global presence while facing new risks and threats. On the geopolitical front, the diplomatic friction between India and Canada has heightened after the Canadian government accused the Indian High Commissioner and five other diplomats of being ‘persons of interest’ in the murder case of Hardeep Singh Nijjar, a Canadian citizen allegedly involved in Khalistani activities. India responded by recalling its diplomats and by expelling the Canadian High Commission in India, citing its interference in internal affairs as the reason. There are speculations that this diplomatic fallout between the two nations could have spillover effects in other domains, particularly in trade. In late October, India and China established a temporary truce regarding the ongoing conflict along the Line of Actual Control (LAC), with a border disengagement agreement. There will be pulling back of…