2025 FORECAST: INDIA / GEOPOLITICAL FUTURES

2025 Forecast: India

The international picture is complicating New Delhi’s rise.

By: Geopolitical Futures

India is a rapidly emerging global player with immense potential, but its rise is encumbered by its complex domestic politics and challenging strategic environment. 

The deeply fragmented international order adds another layer of difficulty. 

New Delhi must navigate a shifting United States, an intensifying U.S.-China rivalry, a weakening China and Russia’s long-term decline, accelerated by its full-scale invasion of Ukraine.

Since a debilitating 1991 financial crisis, India has transformed itself into a major geoeconomic force. 

At the time it was the world’s 17th-largest economy by gross domestic product. 

Massive economic liberalization and structural reforms in the ensuing decades put the South Asian nation on a high-growth trajectory. 

By 2022, India had overtaken its former colonial master, the United Kingdom, to become the world’s fifth-largest economy. 

The following year, it surpassed China as the most populous nation. 

While the Chinese economy falters, India’s remains the fastest-growing among the major economies. 

Given Germany’s slowdown, India could claim the title of fourth-largest economy by 2026.

However, India is not without problems of its own. Growth slowed from 8.2 percent in the 2023-24 fiscal year to a projected 6.2 percent. 

Unemployment stands at 8 percent, with youth unemployment in the double digits. 

The rupee has been falling against the dollar. 

And the international situation is treacherous.

Ensuring continued economic growth is paramount. 

The foremost priority for the government of Prime Minister Narendra Modi is ensuring that the economic slump the country suffered toward the end of 2024 is temporary. 

This is all the more critical given the losses his ruling Bharatiya Janata Party incurred in last June’s parliamentary elections. 

Preventing further economic backsliding may prove challenging, however, considering the worsening global situation.

India may be forced to enhance strategic relations with the United States. 

Even as India has developed a closer relationship with the U.S., it has tried to preserve ties with other key powers such as Russia, the source of as much as 60 percent of India’s defense equipment. 

Continuing this balancing act will become increasingly difficult. 

Between the changes the Trump administration is implementing in U.S. foreign policy and India’s need for foreign investment, New Delhi could find itself aligning even closer with Washington.

The U.S.-China rivalry will shape New Delhi’s strategic partnership with Washington. 

Beijing needs to reach an understanding with Washington. 

The extent to which China achieves this goal will determine how closely the U.S. aligns with India. 

U.S.-China tensions present potential economic benefits for India, but a complete breakdown could have dire consequences for regional security.

India must cope with upheaval on both its eastern and western flanks. 

In the east, Bangladesh has aligned more closely with China and Pakistan since protests toppled the previously pro-India government last August. 

In the west, Taliban-ruled Afghanistan is at odds with Pakistan and developing closer ties with India. 

Both developments are worsening tensions between India and Pakistan. 

But the bigger challenge for India will be in the east, where it must contend with growing Chinese influence.