New Delhi: In recent decades, South Asian nations have emerged as pivotal destination points for major infrastructure investments from both India and China. Stretching from the shores of the Indian Ocean to the Himalayan foothills, the growing footprint of these two regional powers is reshaping the landscape of development. While many projects share similar outcomes, they have also raised concerns about their impact on local economies and everyday life. First initiated in 2013, China’s Belt and Road Initiative (BRI) is considered one of the most ambitious international infrastructure endeavours in recent history. Spanning more than 150 nations and involving over USD 1 trillion in investments, the BRI has supported the development of ports, railroads, highways, and energy networks throughout Asia, Africa, and Latin America. As per the Green Finance and Development Center, there has been a revival in BRI financing after the COVID-19 pandemic, largely driven by Chinese policy banks and state-owned companies.
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cording to Global Voices, in Sri Lanka, the BRI has become a cautionary example. The Hambantota Port, built with loans from the Export-Import Bank of China, failed to generate the expected revenue. In 2017, the Sri Lankan government granted a 99-year lease to China Merchants Port Holdings, raising concerns over sovereignty and economic vulnerability. Critics, particularly in Western media, have pointed to this as evidence of what they describe as China’s debt-trap diplomacy – a claim that Chinese officials strongly deny.
However, some scholars argue that the term debt-trap diplomacy is misleading. Deborah Brautigam of Johns Hopkins University argues in her 2020 article that debt crises in countries such as Sri Lanka are mainly caused by domestic mismanagement, aggressive infrastructure spending, and global economic pressures – rather than coercion by China.
In contrast, Maldives President Mohamed Muizzu has described China as one of the Maldives’ closest allies and development partners. He has pledged to de
epen cooperation under the Belt and Road Initiative, focusing on infrastructure development. In January 2025, the China Machinery Engineering Corporation signed a deal with the Maldivian Ministry of Construction, Housing, and Infrastructure to build major infrastructure on Gulhifalhu Island in the Malé Atoll, further expanding China’s footprint in the country.
India’s rise through its Neighbourhood First and Act East policies shows its increasing use of infrastructure as a tool of foreign diplomacy. However, most of India’s South Asian neighbors, except Bhutan, have joined China’s Belt and Road Initiative, leading to a significant rise in Chinese investments across the region. Since 2018, China has invested more than USD 150 billion in the economies of Bangladesh, the Maldives, Myanmar, Nepal, and Sri Lanka.
China’s expanding influence has raised concerns in India, and in response, Prime Minister Narendra Modi has strengthened India’s regional outreach through the Neighbourhood First policy, aimed at deepen
ing ties between South Asian countries. Complementing this is the Act East policy, which focuses on building closer partnerships with Southeast Asia and the broader Asia-Pacific region. Unlike China’s debt-driven mega-projects, India’s approach emphasizes three core principles: transparency, respect for sovereignty, and people-centric development.
India’s infrastructure engagement in Sri Lanka has largely focused on strategic support, including over USD 4 billion in credit lines during the country’s 2022 economic crisis. This assistance covered essential imports such as fuel and food and played a key role in stabilizing the Sri Lankan economy. India has also contributed to energy cooperation, particularly through projects like the Trincomalee Oil Tank Farm and renewable energy initiatives in the north. However, these efforts have drawn criticism regarding transparency and local impact. For instance, a USD 442 million wind energy project awarded to India’s Adani Group without a competitive bidding process spa
rked concerns over environmental oversight and national sovereignty.
India’s flagship initiative in the Maldives – the USD 500 million Greater Malé Connectivity Project – faced backlash from the India Out movement, led by opposition figures in 2022 who claimed the project threatened national sovereignty and enabled a foreign military presence. The protest underscored the fragile balance between development and concerns over external influence. In an effort to rebuild trust, India launched a USD 110 million sanitation project in 2024, covering 28 Maldivian islands. Construction on the GMCP resumed in February 2025 following diplomatic negotiations. As a goodwill gesture, India introduced visa-free travel for Maldivian citizens in March 2025 to help repair bilateral ties.
The Maitree Super Thermal Power Project, a joint venture between India and Bangladesh with equal stakes, currently provides 1,320 MW to Bangladesh’s grid through its coal-fired facility in Rampal, Khulna, financed under India’s special finan
cing program. A number of projects, such as the Bangladesh-India Friendship Pipeline, have been indefinitely suspended due to the August 2024 change of government in Bangladesh.
On April 4, 2025, Modi met with Muhammad Yunus on the sidelines of the BIMSTEC Summit in Bangkok, holding talks for the first time since 2024. The meeting opened up opportunities for reconciliation and restarting the paused projects.
Despite a history of tension, China and India are key players in South Asia, each with different strategies. China focuses on large-scale BRI projects, while India prioritizes connectivity and capacity building. However, there are areas where India’s and China’s interests overlap, which creates room for cooperation. With South Asia’s infrastructure needs reaching into the trillions, both countries’ initiatives are complementing each other, expanding their influence through trade and investment. While India gains from improved connectivity and trade with its neighbors, it will need to strengthen its econ
omic diplomacy to keep pace with China’s growing influence in today’s geopolitical landscape.