2025 proves to be 'year of failures and setbacks' for India, says report

India faced a year marked by military setbacks, economic decline, and failed diplomatic efforts, according to a 2025 annual review by The Financial Times. The report highlighted a historic military defeat against Pakistan, the failure of key trade agreements, and a weakening currency.

A key focus of the review was India's struggle with strategic autonomy, which compelled it to maintain complex relationships with the United States, China, and Russia simultaneously. The US-India trade deal, which had been expected after the election of President Trump, was delayed multiple times, and the imposition of US tariffs added further economic pressure on New Delhi.

The report also noted that India's economic growth was hindered by the slow pace of Goods and Services Tax (GST) reforms, and the Indian rupee touched an all-time low of 91.14 against the US dollar, marking a 6% decline in 2025.

A significant portion of the report focused on the military confrontation between India and Pakistan earlier in the year. The conflict, sparked by an attack on tourists in the Pahalgam area of Indian-administered Jammu and Kashmir (IIOJK), escalated into a four-day military exchange. Pakistan downed seven Indian fighter jets, including three Rafale jets, in a historic victory. The war ended with a ceasefire brokered by the US, marking a pivotal moment in the relationship between Islamabad and Washington.

Following the ceasefire, US President Donald Trump’s growing relationship with Pakistan's military leadership further antagonized India, with Trump taunting India over his newfound ties with Pakistan’s Chief of Defence Forces and Army Chief, Field Marshal Asim Munir.

The anticipated US-India trade deal also faltered. After initial optimism, talks stalled throughout the year. By August, the US had imposed retaliatory tariffs on India, further complicating the trade relationship. Modi's government shifted its focus to domestic economic growth, but the rupee's depreciation continued to cause concern.

Relations with China also remained tense. Despite Modi’s visit to China—the first in seven years—the countries’ mutual distrust remained. India continued to accuse China of supporting Pakistan during the recent conflict, further straining ties.

Additionally, relations with Bangladesh soured after the political upheaval that saw former Prime Minister Sheikh Hasina flee to India, complicating India's diplomatic efforts in the region.