Relations went into decline after 1950 over Portugal's refusal to surrender its exclaves of Goa, Daman and Diu and Dadra and Nagar Haveli on India's west coast.

By 1955, the two nations had cut off diplomatic relations, triggering a crisis that led to a war between two countries which resulted in the Indian Annexation of Goa in 1961.

Relations between Portugal and the Indian Union were quite cordial in 1947, particularly in light of Portuguese willingness to terminate the old Padroado treaty with the Holy See, which had traditionally given the Archbishop of Goa 'patriarchal' authority over other parts of India.

[4] As of the creation of the Republic of India in January 1950, Portugal held a handful of territories on the Indian subcontinent—the districts of Goa, Daman and Diu and Dadra and Nagar Haveli—collectively known as the Estado da Índia.

Foreign secretary Alec Douglas-Home made it absolutely clear that the NATO alliance did not extend to Portuguese entanglements overseas, and that they should not expect anything more than a mediating role.

[9] He also warned that if Portugal invoked the old Anglo-Portuguese Alliance, Britain's response would be constrained, as she had no intention of engaging in hostilities with a member of the Commonwealth.

In anticipation of this operation, India sealed the border on 28 June 1954 and prevented the Portuguese from dispatching armed forces from coastal Damman to the inland enclaves.

[4] On 15 August 1955, 3–5,000 unarmed Indian activists[17] attempted to enter Goa at six locations and were violently repulsed by Portuguese police officers, resulting in the deaths of between 21[18] and 30[19] people.

The shooting stopped when CBS cameraman Arthur Bonner and United Press International correspondent John Hlavacek, intervened and rescued the injured activists.

[13] Communist parties led protests marked by rioting in several locations as well as fomenting strikes in several factories demanding an armed response.

The Times of India attacked him for "vacillation, contradiction and appeasement", while the Bombay Free Press Journal accused him of "obliquely encouraging the satyagrahis with vague, irresponsible statements that satyagraha will solve the problems of Goan freedom."

[21] In August 1955, Portuguese prime minister António de Oliveira Salazar stated that there would be no transfer to sovereignty "by peaceful means.

"[22] In 1956, Portuguese ambassador to France, Marcello Mathias, along with prime minister Salazar, argued in favour of a referendum in Goa to determine its future.

[24] On 14 December 1960, the United Nations General Assembly passed Resolution 1514 (XV) urging all countries to take steps to place their colonies and non-self-governing territories on the road to self-determination in accordance with Article 73 of the UN Charter.

[28] Meanwhile, on 6 December, Mexico offered the Indian government its influence in Latin America to bring pressure on the Portuguese to relieve tensions.

The US government stopped short of suggesting self-determination for the people of Goa, unready to apply that policy to all other Portuguese holdings worldwide, and would damage US–Portugal relations.

[30] The American ambassador to India, John Kenneth Galbraith, repeatedly requested the Indian government to resolve the issue peacefully through mediation and consensus rather than armed conflict.

United States President John F. Kennedy, in a message to Nehru, argued that if India used force against Goa, this, along with its military presence in Congo, would make an otherwise Gandhian nation look belligerent.

He urged them to "ensure that the situation does not deteriorate to the extent that it might constitute a threat to peace and security", and to enter into negotiations to solve the problem.

Following the breakdown of diplomatic efforts, India conducted an armed invasion of Goa, Daman and Diu on 18 December 1961, supported by artillery, air and naval forces.

[38] Signs of improved relations included two visits of Mario Soares: one as Prime Minister to attend the 1984 funeral of Indira Gandhi and again President/chief guest at the Republic Day event in New Delhi in 1992.

Parliamentary exchanges commenced in 1999 with a visit of 9 ministers from Portugal led by Dr. Antonio de Almeida Santos, Speaker of the National Assembly of the Portuguese Republic from 15 to 22 December 1999.

[37] Ministerial visits included Dr. Joao Cravinho, Secretary of State for Foreign Affairs on 21–22 November 2006, Anand Sharma, Indian Minister of State (MOS) for External Affairs to Lisbon from 10 to 12 June 2007, Luis Amado Foreign, Minister of Portugal to India from 8–11 July 2008 and Shashi Tharoor as MOS to the COD Ministerial in July 2009.

[38] A Cooperation Agreement was signed in January 1992, between the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Portuguese Institute for Foreign Trade and Investment (ICEP).

[38] Indian exports consisted principally of marine products, cotton and synthetic textiles, leather, footwear, hides and skins, staple fibres, coffee, tea & spices.