India's relationship with Pakistan will remain strained, despite the resumption in April 2010 of the formal peace process, which had been suspended since the November 2008 terrorist attack on Mumbai. Indian disquiet about crossborder terrorism has been one of the main obstacles to efforts to improve bilateral ties, and India remains concerned that Pakistan has acted with insufficient urgency against those that India believes to have been responsible for the Mumbai attack. Progress on bridging the "trust deficit" between the two countries will be slow, and if India suffers another terrorist attack linked to Pakistan relations will deteriorate again.

Relations between India and China will remain tense and problematic. In mid-December China's prime minister, Wen Jiabao, made a three-day state visit to India. The trip was a success in commercial terms, as the two sides reportedly signed business deals worth some US$16bn. However, rising strategic tensions stand in the way of significantly warmer ties between Asia's two aspiring great powers. Incursions by Chinese troops into areas disputed with India will complicate the resolution of long-running border disagreements between the two countries. China has started to issue special visas to Indian citizens from two states, Arunachal Pradesh and Jammu and Kashmir, thereby implying that residents there have a different status from other Indian nationals), and India has introduced tighter visa requirements for Chinese workers. China claims part of the Indian-administered section of Kashmir, while India says that China is illegally occupying part of its territory. India also objects to Chinese-funded infrastructure projects in the Pakistani-administered part of Kashmir and is worried about China's military build-up in Tibet. These issues are likely to overshadow attempts to build mutual confidence and expand bilateral trade in 2011­15.