The year 2025 emerged as a period of crisis for India, defined by military, economic, and diplomatic challenges, according to The Financial Times annual review. The report pointed to a historic military setback against Pakistan, a weakening currency, and mounting economic uncertainty as key factors shaping the year.
The review highlighted India’s struggle to maintain strategic autonomy while balancing relations with the United States, China, and Russia. This delicate positioning, it noted, failed to yield expected economic or diplomatic gains.
The long-anticipated US-India trade agreement was repeatedly delayed, while the imposition of American tariffs further strained India’s economy. Limited progress on Goods and Services Tax (GST) reforms also weighed on growth prospects.
India’s currency came under sustained pressure throughout the year. The rupee depreciated by around 6% in 2025, falling to a record low of 91.14 against the US dollar, reflecting investor concerns and external headwinds.
Security tensions dominated the first half of the year after a deadly attack on tourists in IIOJK’s Pahalgam area triggered the worst military confrontation between India and Pakistan in decades. New Delhi blamed Pakistan for the incident, an allegation Islamabad denied while offering to participate in a neutral investigation.
During the four-day conflict, Pakistan shot down several Indian fighter jets and drones before a US-brokered ceasefire was reached on May 10. The episode significantly reshaped regional dynamics and strengthened Pakistan’s ties with Washington.
On the diplomatic front, India’s relations with Bangladesh deteriorated following political upheaval in Dhaka, while efforts to reset ties with China delivered limited results despite high-level engagements. Although leaders reaffirmed commitments to cooperation, mutual distrust persisted, with India accusing China of backing Pakistan during the conflict.
Overall, the report portrayed 2025 as a year marked by setbacks, missed opportunities, and heightened uncertainty for India at home and abroad.
