INDIA NEPAL RELATIONS

Published on 08 Jan 2025

Nepal is an important neighbour of India and occupies a special significance in its foreign policy because of the geographic, historical, cultural and economic linkages/ties that span centuries. The India-Nepal Treaty of Peace and Friendship of 1950 forms the bedrock of the special relations that exist between India and Nepal.

Why is Nepal important to India?

✔     Geopolitical

●      Border: Nepal shares borders with five Indian states serving as vital points for cultural and economic exchange.

o   Example: Uttarakhand, Uttar Pradesh, West Bengal, Sikkim, and Bihar,

●      National Security: Nepal's strategic location along India's Himalayan frontiers, along with Bhutan, acts as a buffer against potential aggression from China.

●      Role in International Politics: Nepal plays a crucial role in India's perception in international forums such as SAARC, BIMSTEC, and BBIN, aligning with India's "Neighbourhood First" policy.

●      Ethnic and Familial Ties: Nepal encompasses a significant Madhesi population, sharing familial and ethnic connections with Indian states.

✔     Economy

●      Hydropower Potential: Nepal's rivers are the source of vital perennial river systems in India, contributing to ecological balance and hydropower potential.

✔     Cultural

●      Religious and Pilgrimage Sites: The country is home to numerous Hindu and Buddhist religious sites, making it a significant pilgrimage destination for a large number of Indians.

Areas of Cooperation

✔     Political

●      Bilateral Relations: India and Nepal maintain strong political ties, fostering diplomacy and cooperation on regional and international fronts.

●      Multilateralism: Participation in regional multilateral groupings strengthens regional cooperation.

o   Example: Forums like BBIN, BIMSTEC, NAM, and SAARC.

✔     Economic

●      Trade: India is Nepal's primary trade partner, providing foreign investments and trade support.

o   Example: India accounts for over two-thirds of Nepal's $12 billion external trade.

●      Investments: Indian firms invest significantly in Nepal across various sectors

o   Example: Manufacturing, services, power, and tourism.

●      Migrant Workforce: A substantial Nepalese migrant population in India contributes to the Indian economy.

●      Currency Usage: Indian currency, especially Rs 100 notes, is widely accepted in Nepal, simplifying transactions for Indian tourists.

✔     Connectivity

●      Landlocked Geography: Nepal is landlocked, bordered by India on three sides, with limited vehicular access to Tibet. Nepal relies on India for transit, given its landlocked status, facilitating third-country trade.

●      Integrated Check-Posts: India and Nepal have agreed to construct Integrated Check-Posts at four major border points, with two already completed and the remaining two under construction.

●      Connectivity Initiatives: Both nations have initiated connectivity programs to strengthen people-to-people linkages and boost economic development.

o   Example: Memorandums of Understanding (MOUs) have been signed to lay an electric rail track connecting Kathmandu to Raxaul in India.

●      Inland Waterways: India has agreed to allow Nepal to utilize three inland waterways, facilitating cargo movement.

o   Example: Nepal can operate vessels on the Ganges River, streamlining third-country imports.

o   India is actively developing inland waterways to provide Nepal additional sea access, symbolizing the linkage between Sagarmatha (Mt. Everest) and Sagar (Indian Ocean).

✔     Security

●      Modernization Support: Bilateral defence cooperation includes modernizing the Nepalese Army through equipment provision and training.

o   Example: Approximately 250 training slots are offered each year to train Nepal Army personnel in various Indian Army Training institutions.

●      Cooperation with the Army: Nepali citizens can join the Indian Army as both soldiers and officers, with recruitment from hill districts of Nepal contributing to the Gorkha Regiments.

o   Example: India and Nepal confer the honorary rank of General on each other's Army Chiefs as a symbol of mutual respect.

●      Joint Military Exercises: Since 2011, annual joint military exercises between India and Nepal have fostered cooperation.

o   Example: Surya Kiran

✔     Energy

●      Hydropower: Nepal's vast hydropower potential, estimated at 43 GW, can address its energy shortages and offer opportunities for exports to India.

o   Example: India's commitment to constructing a hydropower plant on Nepal's Arun river.

o   India and Nepal signed a long-term Power Trade Agreement, targeting the import of 10,000 MW of electricity from Nepal in the coming years.

●      Cross-Border Energy Trade: Collaborative hydropower projects align with India's neighbourhood-first policy and counter China's influence.

o   Example: Motihari-Amalekhgunj petroleum pipeline.

✔     Social

●      Development Assistance: India provides assistance for infrastructure development and other key sectors.

o   Example: India annually offers approximately 3,000 scholarships/seats for Nepalese students at various academic levels.

●      People-to-People Contacts: Initiatives promote cultural exchange, academic collaboration, and media engagement.

o   Example: India has signed sister-city agreements between Kathmandu-Varanasi, Lumbini-Bodhgaya, and Janakpur-Ayodhya.

●      Humanitarian Assistance: India extends support during natural disasters in Nepal.

●      Societal and cultural Integration: The presence of a significant Indian community in Nepal enriches social and economic diversity.

o   Example: ASI assists in renovating the Pashupatinath Temple Complex in Kathmandu after an earthquake.

Challenges in India – Nepal Relations

✔     Political

●      1950 Treaty Criticism: The India-Nepal Treaty of 1950 has faced criticism from Nepali political elites who view it as unequal, with growing calls for its renewal.

●      Border Security: The porous Indo-Nepal border poses internal security challenges for India, as it is exploited by terrorist and insurgent groups.

o   Example: Issues like fake currency, human/drug trafficking, and illegal arms trade persist.

●      Trust Deficit: Over time, a trust deficit has grown due to India's perceived delays in implementing various projects in Nepal.

●      Constitutional Issues: The promulgation of Nepal's new Constitution in 2015 led to tensions as marginalized groups like Madheshis felt excluded. Nepal alleged Indian interference in the Constitution-making process.

o   Example: The tension between the two countries intensified because of a blockade that prevented trucks from going into Nepal.

China factor ✔     Blockade Consequences: The 2015 blockade created an opportunity for China to increase its influence in Nepal by airlifting critical supplies, diminishing India's traditional leverage. ✔     Belt and Road Initiative (BRI): Nepal's participation in China's BRI in 2017 further strengthened its ties with China. ✔     Trans-Himalayan Connectivity: President Xi Jinping's visit in 2019 elevated the relationship to a 'strategic partnership' and introduced the concept of the Trans-Himalayan Connectivity Project, changing Nepal from landlocked to land-linked. ✔     Transit Protocol with China: In 2020, Nepal implemented the Nepal-China Transit Protocol, reducing reliance on India for international trade and enabling access to Chinese ports for third-country trade. ●      Example: Trans-Himalayan railway link to Tibet will connect Gyiron in Tibet with Nepal's capital city of Kathmandu reducing reliance on India. ✔     Foreign Policy Alignment: Nepal reaffirmed its commitment to the 'One-China policy,' pledging not to allow its territory to be used against China. ✔     Increasing FDI: China has been the top source of FDI pledges to Nepal in recent years, particularly in infrastructure development. ✔     Infrastructure Development: Chinese aid is viewed positively by Nepalis for its focus on infrastructure development, including the construction of a regional international airport in Pokhara. ✔     Reducing Indian Influence: China actively seeks to reduce India's influence in Nepal and expand its presence in the country.

 

✔     Economic

●      Trade Deficit: Nepal's increasing trade deficit with India is a concern, with over 90% of trade being Nepali imports from India.

●      Agricultural exports: Nepal's exports face non-tariff measures undermining the benefits of India's customs duty-free market access.

✔     Social

●      Anti-India Sentiment: Certain ethnic groups in Nepal harbour anti-India sentiments, stemming from the perception that India interferes excessively in Nepal's internal affairs, impacting its political sovereignty.

 

Border Dispute Overview   ✔     The India-Nepal border dispute centres on the location of the source of the Kali River, which serves as the boundary between the two countries. ✔     Nepal claims that the river originates at Limpiyadhura, placing Kalapani and Lipulekh within its territory. ✔     India contends that the river's source is lower down, and the disputed areas rightfully belong to India. ✔     Both nations formed committees to resolve the issue but have not reached a consensus. ✔     In 2020, Nepal released a new map that included these regions, leading to tensions between the two countries. India rejected the map, citing historical inaccuracies.

Way Forward

✔     Mutual Acceptance: Both countries need to find a mutually acceptable solution to complex issues rather than resorting to unilateral actions or territorial nationalism.

✔     Constant Dialogues: Regular communication and dialogue between India and Nepal are essential for resolving border issues and fostering better relations.

✔     Sovereign Equality: India should engage with Nepal on the basis of "sovereign equality" to build a stronger partnership.

✔     India Open Approach: Convince Nepal that it is "India Open" rather than "India-locked" by leveraging India's strengths in IT, pharma, education, agriculture, and more to benefit Nepal.

✔     Economic Viability: Assess the economic viability of trans-Himalayan projects, emphasizing the potential economic benefits of connecting with the Indian system and ports.

✔     Project Implementation: Address concerns about project delays by expediting long-pending initiatives, such as hydropower projects like Pancheshwar.

✔     Nepali Diaspora: Recognize the significant contribution of Nepali citizens living and working in India, fostering goodwill and serving as ambassadors of friendship.

PM Modi has given a new 5T (Tradition, Trade, Tourism, Technology and Transport) formula to Nepal. A new focus should be laid on Neighborhood First which must be aimed at reducing the delivery deficit between the promise and performance of India as much and as fast as possible.

Tags:
Polity

Keywords:
Nepal SAARC BIMSTEC BRI Kali River

Syllabus:
General Studies Paper 2

Topics:
India and Its Neighbors