Corruption, inflation, and new reform measures of the Indian government in 2012 have brought about frequent eruptions of protest in the streets of India. Consequently, the image of the Indian government was badly hurt. The Prime Minister Singh conducted a major restructuring of his cabinet in order to balance various political factions and to improve the image of the ruling INC Party, while the main opposition party BJP was actively preparing for the next general election. The Indian economic growth has dropped to an unprecedented new low, industrial growth plunged by a large margin, and the fiscal deficit continued to increase. The diplomatic environment of India improved further and all-roundly, mechanisms of trilateral and multilateral dialogue have made in-depth development, and defense cooperation with countries out of the region continued to deepen. Military exchanges between India and China also have made some recovery from the previous level. As an observer state, India is getting increasingly positive toward becoming a formal member of SCO, though not without some doubts amid expectations.