‘Geostrategic Neoliberalism’ and India’s New Neighbourhood Policy

This research paper examines the geopolitical drivers of the Indo-Lanka Free Trade Agreement (ILA) from a realist IPE perspective. The study concludes that in addition to economic imperatives, there are compelling geopolitical factors driving the ILA, in the context of the transformation of India’s neighbourhood policy following economic liberalisation in 1991. It argues that India’s new neighbourhood policy of ‘geostrategic neoliberalism’, which incorporates neoliberal ideology driven by geopolitical imperatives, is a compelling driver of the ILA. It is driven by India’s desire to seek prosperity and stability in the neighbourhood, through economic engagement, in order to achieve its ambition of emerging as a credible global power. It is complemented by the mutual desire of India and Sri Lanka to enhance their respective geostrategic space through economic integration. The ILA, which incorporates the principle of asymmetric responsibility and grants special concessions to Sri Lanka, becomes a neoliberal instrument used in this new economic engagement. The neoliberal project has recast India’s role as regional hegemon in a more accommodative light than during its preliberalisation phase, marking its transformation from threat to opportunity. But it also incorporates a version of Indian hegemony that is more expansive than earlier. This transformation is leading to a trend of India-centric convergence of all countries in South Asia, except Pakistan. Sri Lanka stands to benefit both politically and economically from this evolving relationship.