2025 proved to be ‘year of failures and setbacks’ for India: report
- India sufferred historic military setback against Pakistan.
- New Delhi failed to strike trade deal with Washington.
- Indian rupee touched all-time low of 91.14 against US dollar.
The past year proved to be a “year of crisis” for India, marked by a historic military setback against Pakistan, a weakening currency, and growing economic uncertainty, The Financial Times reported in its 2025 annual review.
Due to failed strategic autonomy, India was compelled to simultaneously maintain relations with the United States (US), China, and Russia, read the report.
The report adds that the US-India trade agreement was postponed several times, while the imposition of American tariffs placed additional economic pressure on New Delhi.
Similarly, the limited implementation of GST reforms also hindered economic growth. It further said that the Indian rupee continued to depreciate against the US dollar during 2025.
Operation Sindoor backfired as Trump taunts
Earlier this year, Pakistan and Indian engaged in a military showdown, the worst between the old foes in decades, which was sparked by an attack on tourists in IIOJK’s Pahalgam area, which New Delhi alleged was backed by Pakistan.
Islamabad denied involvement in the Pahalgam attack, which killed 26 men and offered to participate in a neutral probe into the deadly incident.
During the clashes, Pakistan downed seven Indian fighter jets, including three Rafale, and dozens of drones. After at least 87 hours, the war between the two nuclear-armed nations ended on May 10 with a ceasefire agreement brokered by the US.
Pakistan’s historic victory in the four-day skirmishes played a significant role in bringing Islamabad and Washington closer.
In the months since the ceasefire, US President Donald Trump has taunted India through his growing friendship with Pakistan’s Chief of Defence Forces (CDF) and Chief of the Army Staff Field Marshal Asim Munir.
US-India trade deal
Few things have attracted more ink than the US-India trade deal that never happened. In the beginning, after Trump’s election victory, there was much jubilation in New Delhi about getting a friendly administration in the White House.
In February, Modi was one of the first foreign leaders to visit Washington. It seemed then that India would be one of the first countries to sign a trade agreement with Trump, too.
A deal was expected in May, then June, then July . . . and then talks began to stall.
In August, Trump’s reciprocal tariffs kicked in, and by the end of the month, he had announced an additional 25% tariff to punish India for buying Russian oil.
Commerce Secretary Rajesh Agarwal said that there was a fair expectation that both countries would be able to agree on a lower reciprocal tariff and that India was “positively engaged” with the US on the deal.
Trump and Modi have spoken to each other in the past fortnight, and both sides have put out warm, fuzzy statements.
By August, when it began to look like a trade deal with the US was not going to be a shoo-in, the Modi government decided it was time to focus on domestic growth.
The Indian rupee, which has been on a downward slide, got a bruising this year. It lost 6% in 2025, touching an all-time low of 91.14 against the US dollar.
Ties with China and Bangladesh
Ties between New Delhi and Dhaka have deteriorated since the ousted prime minister, Sheikh Hasina, fled the pro-democracy uprising and sought refuge in India.
On the other hand, India has failed to improve its ties with China despite recalibrating its foreign policy.
Prime Minister Narendra Modi travelled to China for the first time in seven years and met President Xi Jinping. The two countries reaffirmed their commitment to “co-operation based on mutual respect, mutual interest and mutual sensitivity”.
Both parties, however, are still wary of each other.
India accuses China for providing support to Pakistan during the recent four-day war.
