Has India lost a geopolitical edge to Pakistan?

Operation Epic Fury, launched in late February, has been ongoing for more than a month with no clear solution in sight. The conflict has created an unprecedented situation where Pakistan has emerged as a central actor in the ceasefire negotiations, much to New Delhi’s strategic discomfort.

Earlier this week, Islamabad hosted peace talks between Tehran and Washington, with United States Vice President J D Vance himself in attendance for talks which are the highest level of engagement between these two countries in decades.

With Pakistan’s Foreign Minister saying that Islamabad will continue to facilitate talks between the two countries, this raises a critical question for New Delhi. Could India have, at the very least, demonstrated diplomatic intent as a potential mediator in the high-stakes peace negotiations? In essence, the question finds grounding due to India’s macroeconomic position within the conflict. The West Asian crisis may impose a fiscal burden of nearly Rs 2 lakh crore on New Delhi, while fears of rising inflation and a growth slowdown have already been predicted; Goldman Sachs projects a forecast of 5.9% from 6.4% in FY27.

Against this backdrop, India risks becoming a key stakeholder with little diplomatic agency to limit the strategic and economic spillover effects, while Islamabad enjoys an episode of exalted diplomatic visibility in a region of global spotlight. This appears less as restraint and could be interpreted as a gap in its global governance — a red line for a country positioning itself as an emerging superpower.

Pakistan, a neighbour to the conflict-ridden region, becomes central to the ceasefire negotiations less in light of its innate influence and more due to Washington’s strategic preference for engaging Islamabad. The US, a major source of foreign direct investment, has also been a prominent export destination for the “mediator” country. In trade, Pakistan runs a surplus of $1.3 billion, while American investors have emerged as crucial in the past two decades. The implication is clear: Washington retains influence over the negotiation process, as a Pakistan so integrally dependent on the US offers a controlled channel of engagement.

The upside is highly rewarding: The White House preserves its control of the conflict even outside the battlefield while concealing the asymmetry of the negotiations with a “neutral” mediator. While the neutrality might be just for optics, the mutually tolerable profile of Islamabad cannot be ignored. Pakistan is both geographically proximate and diplomatically linked, ensuring both seamless logistics and coordination within both camps. Pakistan uniquely balances maintaining political accessibility with the White House while being sufficiently aloof from an anti-Iran coalition.

The proximity of the Pakistani establishment to Beijing secures a broader international assent for the anticipated resolution of what has become a global crisis, adding a rare strategic value for Washington.

India’s operations at the Chabahar Port are guided by a $370-million investment. The terminal, envisioned to bypass Pakistan and access Central Asia, has handled over eight million tonnes of cargo since its operationalisation, reinforcing its role as a crucial avenue in India’s connectivity aims.

Gwadar, embedded within the China-Pakistan Economic Corridor and anchored by investments of over $50 billion in the Belt and Road Initiative, has gained renewed strategic relevance. Pakistan’s emergence as a diplomatic intermediary emphasises Gwadar’s geographic significance, converting it into a potential bargaining leverage with both Washington and Beijing. Infrastructure, a less visible determinant in ceasefire-brokering, has enhanced Pakistan’s strategic centrality.

Chabahar remains constrained because of sanctions as well as the imminent expiry of the US waivers and a history of tariff threats linked to trade with Iran. The causal logic is clear: While Pakistan retains an edge, New Delhi prefers maintaining a calculated and reversible pause in visibility.

Doctrine of strategic autonomy

The stance taken by India in the conflicts of the past decade has revealed New Delhi’s preference for stability over geopolitical visibility. The question to analyse is whether India can bear the costs of its strategic restraint.

The Indian positionality in West Asia is less episodic and more economically embedded. Around 45% of crude imports originate from West Asia, out of which 50% transit through the Strait of Hormuz, while bilateral trade with the GCC economies had reached $178.6 billion in FY2025.

This exposes India’s delicate macroeconomic position in relation to West Asia. It is estimated that every $10-per barrel increase in crude prices can widen India’s current account deficit by 30-40 basis points and raise inflation by 55-60 basis points. The macroeconomic expense of this conflict for India has extended to the rupee depreciating to an all-time low of 94.84 per dollar and foreign investors selling Indian shares worth a net $12.14 billion.

Despite these costs, India prefers low-visibility diplomacy and not without reason. India simultaneously maintains defence ties with the US, security cooperation with Israel, and connectivity investments with Iran – relationships that cannot be reconciled in moments of crisis.

New Delhi follows a unique doctrine of strategic autonomy that sits at an intersection of managing competing interests. This could prove detrimental in moments of conflict. The Foreign Ministry’s remarks questioning India’s interest in performing ‘brokerage’ signify an unwillingness to assume the risks associated with high-stakes geopolitical mediation.

While New Delhi continues walking the tightrope to avoid destabilising long-term partnerships, it faces a choice between remaining a stakeholder with no agency that absorbs shocks or switching roles to shape regional outcomes.

(Deepanshu is Professor and Dean at O P Jindal Global University and a
visiting professor at LSE and
University of Oxford; Saksham is a
research analyst with the Centre for New Economics Studies at the university)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.