India Strategic Review
The ISR features an assessment of key developments, trends, and policies pertaining to India’s immediate and continental neighbourhood and is authored by Lt. Gen. Deependra Singh Hooda (Retd.), Distinguished Fellow for Military Strategy.
The Makkah Joint Defence Agreement between Pakistan, Saudi Arabia and Türkiye faced its first significant test as Yemen’s Houthis seized most of the Red Sea coastline and stepped up attacks on Saudi Arabia. The three military chiefs met in Riyadh on September 25 and reaffirmed their commitment to Saudi security, but there is no indication yet that Pakistan will act directly against the Houthis.
On August 31, the Court of Arbitration at The Hague ruled that India could not unilaterally suspend the Indus Water Treaty. New Delhi has rejected the ruling, saying the Court was illegally constituted. Prime Minister Shehbaz Sharif subsequently warned at the UN General Assembly that any attempt to stop or divert Pakistan’s share of the waters would be treated as an “act of war.” India’s Foreign Minister Dr S Jaishankar responded, stating that Pakistan cannot claim immunity from the consequences of terrorism.
Pakistan-Afghanistan relations deteriorated sharply during September. Following a terror attack in Khyber Pakhtunkhwa that killed 21 people, mostly policemen, Pakistan carried out airstrikes inside Afghanistan on September 21 and 24. This was followed by cross-border fighting and increasingly hostile statements from both governments. Repeated mediations have failed to bridge Pakistan’s demand for action against the TTP and the Taliban's refusal to accept any responsibility.
Around 1.27 million Afghans returned from neighbouring countries during 2026. The collapse in Iran's economy is compelling increasing numbers of Afghan families to leave voluntarily because there is no employment and their savings have lost much of their value. The surge in returnees is placing growing pressure on an already severely underfunded humanitarian response.
Prime Minister Narendra Modi and President Xi Jinping met in New Delhi on September 12 on the sidelines of the BRICS Summit and agreed to sustain the improvement in relations. However, developments along the Line of Actual Control underline that the boundary remains a persistent source of friction. Tensions around Taksing in Arunachal Pradesh led to the first Corps Commander-level talks in the Eastern Sector. India also rejected the establishment of a new China-Pakistan Boundary Joint Commission, saying there is "no boundary" between the two countries.
Sheikh Hasina’s presence in India and the approaching expiry of the Ganges Water Sharing Treaty continue to cast a shadow over India-Bangladesh relations. Dhaka is seeking a new treaty with a guaranteed minimum dry-season flow, but formal negotiations are yet to begin. Nevertheless, economic and functional links have remained resilient. Bangladesh’s imports from India have increased, diesel supplies through the Friendship Pipeline continue, and discussions have begun on restoring cross-border passenger rail services. Meanwhile, Bangladesh’s economy is facing serious pressure from the West Asian energy crisis, with fuel-price increases and gas shortages disrupting the country’s garment industry.
In Nepal, reconstruction after the August Bhotekoshi floods is estimated to cost $4.8 billion, almost 10 per cent of GDP. After Finance Minister Swarnim Wagle visited India on September 17, India approved exporting additional power to Nepal and promised reconstruction assistance. In his address at the United Nations, Prime Minister Balendra Shah proposed a Nepal-India-China Himalayan mechanism on glacier monitoring, early warning, and disaster response.
Sri Lanka’s economic recovery remains broadly on track, with continued growth, stronger reserves and improved fiscal performance. However, higher energy costs, weaker tourism earnings and a widening trade deficit underline the economy’s continuing vulnerability to external shocks. Indian Defence Minister Rajnath Singh’s visit to Colombo from September 8 to 10 further strengthened bilateral defence cooperation, with agreements on air-defence equipment, military education, and cadet exchanges.
To read this Issue please click India Strategic Review, Vol. VII, Issue 9.
