Earlier this month India decided to send five planes and two ships carrying water and machinery parts to Maldives after drinking water was cut off to more than 100,000 residents in the nation’s capital of Male due to a fire in the city’s only water sewage treatment plant.

The Indian Navy’s patrol vessel INS Sukanya carried 35 tons of fresh water and two reverse osmosis plants onboard, which can produce 20 tons of fresh water per day to meet the water crisis in Maldives.

India’s large fleet tanker delivered about 900 tons of fresh water to the Maldivian capital, while two C-17 planes of the Indian Air Force also delivered another 90 tons of potable water.

Maldives, located southwest of India in the Indian Ocean, depends entirely on treated seawater. The low-lying island nation has no natural water source, so it asked for help from various countries including India, China and the United States. Just a day later, China pointedly sent a military vessel carrying 960 ton of fresh water to the Maldives to help with that fresh-water crisis. Beijing has also donated $500,000 to Male for the repairs of the country’s damaged sole desalination plant.

This water diplomacy underlines the power struggle between China and India, which is rapidly shaping the South Asian strategic landscape.

Last month the summit meeting of the South Asian Association for Regional Cooperation (SAARC) in Nepal was also marked by this Sino-Indian contest. India had to work hard to block China’s entry into the grouping.

For a long time, the dominant narrative of SAARC has been how India-Pakistan rivalry has hampered its evolution into anything of significance. That is now rapidly losing its salience with China’s growing dominance of the South Asian landscape.

China entered SAARC as an observer in 2005, supported by most member states. India could do little about it and so acquiesced. Now, much to India’s consternation, Pakistan, Sri Lanka and Nepal are supporting China’s full membership in SAARC.

China’s rising profile in South Asia is no news. What is astonishing is the diminishing role of India and the rapidity with which New Delhi is ceding strategic space to Beijing in on the subcontinent.

Even as China is becoming the largest trade partner of most states in South Asia, including India, New Delhi is busy repeating the old mantra of South Asia being India’s exclusive sphere of influence. Of course, no one even takes note of it anymore.

Pakistan’s “all-weather” friendship with China is well-known, but the reach of China in other South Asian states has been extraordinary.

Bangladesh and Sri Lanka view India as more interested in creating barriers against their exports than in spurring regional economic integration. India’s protectionist tendencies have allowed China to don the mantle of regional economic leader.

Instead of India emerging as a facilitator of socio-economic development in Sri Lanka, Nepal and Bhutan, it is China’s developmental assistance that’s having a larger impact.

China’s strategy toward South Asia is premised on encircling India and confining her within the geographical coordinates of the region. This strategy of using proxies started off with Pakistan and has gradually evolved to include other states in the region, including Bangladesh, Sri Lanka and Nepal.

China is entering markets in South Asia more aggressively through both trade and investment, improving its trade and investment linkages with South Asian states through treaties and bilateral cooperation.

Following this up with construction of a ring of road and port connections in India’s neighborhood and deepening military engagements with states on India’s periphery, China has firmly entrenched itself in India’s backyard.

This quiet assertion of China has allowed various smaller countries of South Asia to play China off against India. Most states in the region now use the China card to balance against the pre-dominance of India.

Forced to exist between their two giant neighbors, the smaller states in South Asia have responded with a careful balancing act.

India’s structural dominance in South Asia makes it a natural target of resentment among its smaller neighbors. And yet there is no hope of fostering regional economic cooperation in the absence of Indian leadership. India’s failure to counter China’s rise in South Asia has made it even more unlikely that such cooperation will evolve productively.

As the two regional giants compete with each other in the near future, they will be more focused on their relative gains vis-a-vis each other than on the absolute gains that regional cooperation could bestow on South Asia.

Regional economic integration has faltered in South Asia.

The formation of SAARC in 1985 marked a watershed event in the regional dynamics of the South Asian subcontinent. This historic step reflected the first institutionalized effort to forge multilateral cooperation among the countries of the region.

Covering over 1.5 billion people across India, Pakistan, Bangladesh, Nepal, Sri Lanka, Bhutan, Maldives and Afghanistan, SAARC is one of the largest regional organizations in the world. But its achievements so far have been so minimal that even the constituent states have become lackadaisical in their attitudes toward it.

Intra-regional trade in South Asia remains far below potential despite the member states signing the South Asian Free Trade Agreement that came into force in 2006.

India could have succeeded in stopping the Chinese juggernaut in South Asia by suggesting that all observer states to SAARC, including China, support common development projects in the region before becoming dialogue partners. Yet this is a pyrrhic victory, if at all. The outcome of the Kathmandu summit of SAARC was as disappointing as that of its predecessors.

Of the three connectivity agreements on road, rail and energy pushed by New Delhi, only the one on energy could be signed. Though the target date for the formation of a regional economic community was set in the next 15 years, it remains far from clear how that will be achieved in light of the present stasis in the organization.

Meanwhile, China has reached out to South Asian states in a major way by promising $30 billion investment in infrastructure development and 10,000 scholarships for South Asian students. Many South Asian states have already decided to be part of China’s Silk Road Economic Belt or Maritime Silk Road initiatives. Most, including India, have joined China’s Asian Investment Infrastructure Bank.

The Modi government has made South Asia a priority in its foreign policy. It remains to be seen if Modi can “reinvigorate” and “revitalize” SAARC in the coming years as he suggested at the Kathmandu summit — by encouraging neighbors to join India’s growth story.

India’s attempts to keep China out of the subcontinent have clearly not worked, and despite Modi’s lofty ideas, it’s going to be a long road ahead for India in South Asia.

Harsh V. Pant teaches in the Defense Studies Department at King’s College London.