India-Nepal Relations

Historical Foundation

• Provisions:

  • Establishes “close and open borders,” allowing free movement of people and goods.

  • Requires Nepal to consult India on defense and foreign policy matters affecting mutual interests.

  • Grants reciprocal national treatment for citizens in each other’s territories (e.g., employment, property rights).

• Controversy:

  • Nepal views some clauses as unequal, particularly Article 7 (requiring mutual consultation on defense), and has sought revisions. India has been open to updating the treaty but insists on retaining core principles.

  • Periodic calls in Nepal to replace the treaty with a “modern” framework reflecting sovereignty and equality.

Defense Cooperation

• Gorkha Recruitment:

  • Around 32,000 Nepali Gorkhas serve in the Indian Army’s 7 regiments under the Tripartite Agreement (India, Nepal, UK).

  • Recent tensions arose over India’s Agnipath scheme (short-term military recruitment), which Nepal initially opposed due to lack of consultation.

• Joint Exercises:

  • Surya Kiran: Annual bilateral army exercise focusing on counter-terrorism, disaster response, and UN peacekeeping drills.

  • Other engagements: India assists Nepal Army in modernization, training, and infrastructure (e.g., Nepal Army’s Mountain Warfare School).

• Strategic Concerns:

  • India views Nepal as a buffer state against China, leading to sensitivities over Nepal’s military ties with China (e.g., Nepal’s 2017 participation in China’s military drills).

Multilateral Cooperation

• BBIN (Bangladesh, Bhutan, India, Nepal):

  • Aims to enhance sub-regional connectivity through initiatives like the BBIN Motor Vehicles Agreement (MVA), stalled due to Bhutan’s non-ratification.

  • Focus areas: Energy trade, transport corridors, and digital connectivity.

• BIMSTEC:

  • Nepal collaborates with India on regional security, counter-terrorism, and economic integration in the Bay of Bengal region.

• SAARC:

  • Progress hindered by India-Pakistan tensions. India has shifted focus to BIMSTEC for regional cooperation.

• International Solar Alliance (ISA):

  • Nepal joined in 2019, collaborating on solar energy projects to reduce dependency on hydropower and fossil fuels.

Economic and Development Ties

• Trade:

  • India is Nepal’s largest trade partner (≈65% of Nepal’s imports and 60% of exports). Major exports: petroleum, vehicles, machinery.

  • India-Nepal Trade Treaty (1996): Provides duty-free access to Nepali goods in India, except for alcohol and tobacco.

• Hydropower:

  • India invests in Nepal’s hydropower potential (e.g., Arun III Project (900 MW), funded by India’s Satluj Jal Vidyut Nigam).

  • Cross-border transmission lines (e.g., Dhalkebar-Muzaffarpur) enable electricity trade.

• Connectivity:

  • Integrated Check Posts (ICPs) at Birgunj and Biratnagar streamline cross-border trade.

  • Rail links: Jaynagar-Bardibas (under construction), and Raxaul-Kathmandu (planned).

  • Petroleum Pipeline: South Asia’s first cross-border oil pipeline (Motihari-Amlekhgunj, operational since 2019).

Cultural and People-to-People Ties

• Religion: Shared Hindu-Buddhist heritage. Pilgrimage sites like Pashupatinath, Lumbini, and Janakpur attract millions of Indian devotees.

• Open Border:

  • 1,850-km porous border facilitates kinship ties (≈6 million Nepalis work in India; ~600,000 Indian nationals reside in Nepal).

  • Security concerns: Cross-border crime, trafficking, and undocumented migration.

• Education: Over 30,000 Nepali students study in India, with scholarships provided by India.

Challenges in Bilateral Relations

• Territorial Disputes:

  • Kalapani-Lipulekh-Limpiyadhura: A tri-junction area claimed by Nepal (via 2020 constitutional amendment) but controlled by India. Tensions flared after India published a map including the region in 2019.

• China Factor:

  • Nepal’s signing of China’s Belt and Road Initiative (BRI) in 2017 and growing infrastructure loans from China (e.g., Pokhara Airport) have raised concerns in India about strategic encroachment.

• 2015 Blockade:

  • India’s unofficial blockade during Nepal’s constitutional crisis strained relations, fueling anti-India sentiment in Nepal.

• Domestic Politics:

  • Nepal’s federal restructuring (2015) and internal political shifts (e.g., Communist Party’s rise) influence foreign policy balancing between India and China.

Recent Developments (2022–2023)

• High-Level Visits: PM Pushpa Kamal Dahal’s 2023 visit to India emphasized hydropower cooperation and connectivity.

• Energy Partnerships: India approved Nepal’s electricity export to Bangladesh via Indian grid (2023).

• Digital Integration: Launch of cross-border digital payments (UPI in Nepal) and RuPay card acceptance.

Conclusion

India-Nepal ties are a mix of deep-rooted affinity and pragmatic challenges. While historical and cultural bonds remain strong, Nepal’s quest for strategic autonomy and India’s concerns over China’s influence add complexity. Balancing mutual interests through dialogue and economic integration remains critical for stability in South Asia.