INDIA-NEPAL RELATIONS

Posted 15 Feb 2024

Updated 22 Mar 2024

4 min read

Why in the news?

India and Nepal ink agreements during the 7th India-Nepal Joint Commission meeting held in Kathmandu.

More about the news

The commission was established in 1987 and acts as a platform for both foreign ministers to review the bilateral partnership.
Key Agreements signed between India-Nepal include:

Cooperation in Renewable Energy Development.
Export 10,000 MW of electricity over the next decade.
ISRO to launch Nepal’s Munal satellite on Polar Satellite Launch Vehicle (PSLV).

India-Nepal Treaty of Peace and Friendship of 1950 forms the basis of relations between two countries, characterized by an open border and deep-rooted people-to-people contacts of kinship and culture.

Areas of Cooperation between India and Nepal

Trade and Development	Trade and Investment: India has been a key development partner of Nepal. India is the largest trading partner of Nepal and the highest source of FDI. Bilateral trade crossed US$ 7 billion in FY 2019-20 with a trade deficit in favour of India. Connectivity and Development Partnership: India actively supports Nepal’s infrastructure development, including border infrastructure and cross-border rail links. Line of credit of $680 million by India to fund three major transmission corridors in Nepal- Bheri Corridor, Nijgadh-Inaruwa Corridor and Gandak-Nepalgunj Corridor. Twin Integrated Check Posts (ICPs) in Rupaidiha in India and Nepalgunj in Nepal in 2023. Revised treaty of transit that would provide Nepal access to inland waterways of India.
Political and Security	Political cooperation: Regular high-level visits between two countries. Nepal is a priority partner of India under its ‘Neighbourhood First’ policy. Defence Cooperation: Recruitment of Nepalese soldiers in Gorkha regiments of the Indian Army. Surya Kiran- annual Joint military exercise conducted alternatively in the two countries. Multilateral Cooperation as part of BBIN (Bangladesh, Bhutan, India, and Nepal), BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), Non-Aligned Movement, and SAARC. Nepal also joined India-led International Solar Alliance (ISA).
Energy	Power: India and Nepal have had a Power Exchange Agreement since 1971 for meeting the power requirements in the border areas. In 2023, India agreed to the first trilateral power trade from Nepal to Bangladesh through India for up to 40 megawatts of power. Hydropower cooperation: India and Nepal have had long-standing and fruitful hydropower cooperation (refer below article for the same).
Other areas	Culture: Prevalence of deep people-to-people connect especially along the border region of both countries. The Swadesh Darshan scheme has Buddhist and Ramayana circuits which connect the religious cities of Lumbini and Janakpur with that of India. Disaster Management: Following the 2015 earthquake in Nepal, New Delhi was the first responder as it carried out Operation Maitri in the region. India supplied Covishield to Nepal under its Vaccine Maitri Initiative.

Major Issues in India-Nepal Relations

Border Dispute: The ties between the two countries came under severe strain after Kathmandu published a new political map in 2020 that showed three Indian territories - Limpiyadhura, Kalapani and Lipulekh - as part of Nepal.
China’s influence: China has increased its economic engagement with Nepal through projects under its Belt and Road Initiative (BRI).
- Also, there are concerns over Chinese interference in Nepal’s politics.
Trust Gap: Due to India’s slow pace of project implementation and the alleged perception of India’s interference in Nepal’s politics.
Security issues: Porous border facilitates arms smuggling, terrorist activities and flow of counterfeit Indian currency, all of which pose serious security risks to India.
Gurkha issues: Relations came under strain when Nepal government blocked recruitment of Nepalese Gorkhas for the Indian Army’s Gorkha Regiment claiming that the Agnipath Scheme violated the 1947 Tripartite Agreement signed between the two countries and the UK.
Treaty of Peace and Friendship, 1950: The Treaty of Peace and Friendship has been at the center of the troubled history of Nepal-India relations which Nepal has declared “not in tune with time.”

Way Forward

Bilateral mechanisms are needed to discuss contentious issues such as border disputes.
- Boundary dispute resolution between India and Bangladesh can serve as a model.
Multilateral platforms such as BBIN, BIMSTEC, and SAARC can be utilised to serve common interests such as climate change, disaster management, and regional security.
Enhancement of air connectivity between the countries which is crucial for Nepal’s economy.
Revisiting the Friendship treaty as recommended by the Eminent Persons Group set up jointly by the two countries.
Hydropower Cooperation: Further explore and implement joint hydropower projects to harness Nepal's hydroelectric potential for mutual benefit.