NEW DELHI—There is a fin de regime aura in Delhi, like the fog that swathes the capital on winter mornings. The Indian National Congress-led governing coalition faces elections in the spring. Two-term Prime Minister Manmohan Singh has announced that he will not remain in the position, even if Congress wins. Rahul Gandhi, the latest scion of the Nehru-Gandhi political dynasty, is being groomed for the succession but shows little disposition for leadership.

Narendra Modi, chief minister of Gujarat state since 2001, is the prime ministerial candidate of the opposition National Democratic Alliance, led by his Bharatiya Janata Party (BJP). Viewed by many as a man of providence who can stir India from its torpor, he has little appeal with Muslim voters, following communal violence and massacres in Gujarat on his watch a decade ago. Many moderate voters doubt his secular, pan-Indian credentials, and question whether he deserves credit for Gujarat’s rapid economic growth. There is criticism, too, of the limited trickle down of new wealth to the poor in his state as well as his allegedly authoritarian tendencies. Others see these criticisms as misplaced, reflecting broader Indian realities.

The assumption that Modi and the BJP would sweep to power following next spring’s general election has been shaken by the success of the Aam Aadmi (“Common Man”) Party in Delhi legislative assembly elections in December. Its leader, Arvind Kejriwal, became Delhi’s elected leader in a minority government, supported by the Congress Party. This upset demonstrated AAP’s ability to mobilize voters’ anger at corruption and inertia. But the AAP’s capacity to repeat this breakthrough at the national level is far from certain, given inexperience, internal bickering, and nationalist opposition to the views of some AAP leaders on sensitive issues like Kashmir.

Business and community leaders worry that the AAP’s strong showing may make it harder than usual for Congress or BJP to form a stable governing coalition. This would delay action to stimulate growth that, at 5 percent, is insufficient to address India’s dire economic and social problems. Without a credible national government committed to creating a more transparent business environment, foreign direct investment will remain far below potential.

The rise of anti-establishment parties, opposed to the status quo and contending with decaying catch-all or rising nationalist parties, is not unknown in Europe. Mainstream parties need to respond by delivering better government. But the track record in Italy, for example, is not encouraging. Upstart parties can thwart the formation of stable governments while lacking the electoral strength and experience to produce results themselves. In India, the proliferation of regional or parochial parties makes the task particularly difficult.

The outcome in India matters to the United States and to Europe for geopolitical and economic reasons. India and the United States are natural allies given challenges to regional stability from Afghanistan, Pakistan, and, increasingly, China. There is a link between India’s capacity to tackle its internal problems and its capacity to act as an effective partner. A government facing seething domestic discontent is unlikely to adopt constructive foreign policy positions. Recent diplomatic spats, for which responsibility is shared, are a case in point. They should not divert energy from substantive economic and trade issues as well as regional conflict, terrorism, and cyber-security, on which Delhi and Washington need to work together.

Similar considerations apply to India and the EU, now in their seventh year of free trade negotiations. Both stand to gain from fewer tariff and non-tariff barriers. The EU is India’s largest export market. A former Indian ambassador argued at a Delhi roundtable last month that few points separate the two sides and an agreement could be concluded in 2014. However India’s high level of protection (e.g. on cars) and restrictions affecting banking, insurance, and public procurement, as well as the EU’s agricultural policy and limits on cross-border services, remain obstacles. Entrenched positions are unlikely to change in an election year.

There is little to be gained in India or the West by lecturing one another on societal issues involving individual and collective rights. Attitudes and legal provisions concerning such issues are changing quickly in North America, Europe, and Asia. There is much to be learned from each other’s experience.

In a thriving democracy, like India, contending voices are heard through all available means of communication, including social media, through which controversial issues quickly go viral. Outsiders are free to make their views known but real change must come from within. The EU’s new leadership, and especially its future foreign policy chief, would do well to bear this in mind when crafting policies towards the world’s largest democracy.

Michael Leigh is a senior adviser to the German Marshall Fund of the United States.