India-Nepal Relations

• Context (IE): The External Affairs Minister recently visited Nepal.

Key Outcomes of the Visit

• Nepal to export 10,000 MW of power to India in the next 10 years.
• MoU for cooperation in renewable energy was signed by the Nepal Electricity Authority and National Thermal Power Corporation Limited, India.
• Both countries exchanged agreements on the implementation of High Impact Community Development Projects, Munal Satellite, and Handover of 5th tranche of post-Jajarkot earthquake relief supply.
• Inauguration of three cross-border transmission lines.

India-Nepal Relations: Convergences

Economic cooperation

• India is Nepal’s largest trade partner (Nepal is India’s 11^th largest) and the largest source of total foreign investments, accounting for 32% of total FDI in Nepal.

Military relations

• India has been assisting the Nepal Army in its modernization by supplying equipment and providing training, assistance during disasters, and joint military exercises (E.g. Exercise Surya Kiran).
• The Gorkha regiments of the Indian Army are raised partly by recruitment from hill districts of Nepal.

Connectivity

• India has been assisting Nepal in the development of border infrastructure through the upgradation of roads in the Terai area.
• Development of cross-border rail links at Jogbani-Biratnagar, Jaynagar-Bardibas; and establishment of Integrated Check Posts at Birgunj, Biratnagar, Bhairahawa, and Nepalgunj.

Development

• Various projects have been implemented in the areas of Health, Agriculture, digital technology, etc. E.g. acceptance of UPI by Nepal.
• The total economic assistance earmarked under ‘Aid to Nepal’ budget in FY 2022-23 was Rs 6.8 billion.
• During the 2015 Nepal earthquake, India was the first country to respond by dispatching National Disaster Response Force teams and special aircraft with rescue and relief materials.

Water resources cooperation

• A three-tier bilateral mechanism was established in 2008, to discuss issues relating to cooperation in water resources, flood management, inundation, and hydropower between the two countries.
• Investment in Arun-3 run-of-the river hydroelectric project.

Energy cooperation

• India and Nepal have had a Power Exchange Agreement since 1971 for meeting the power requirements in the border areas of the two countries.
• Agreement on ‘Electric Power Trade, Cross-border Transmission Interconnection and Grid Connectivity’ signed in 2014 to facilitate cross-border electricity transmission, grid connectivity & power trade.
• India has built several hydroelectric projects, like Pokhara, Trisuli, Western Gandak, Devighat, etc in Nepal.
• South Asia’s first cross-border petroleum products pipeline connecting Motihari in India to Amlekhgunj in Nepal was inaugurated in 2019.

Culture & Community

• The India-Nepal Treaty of Peace and Friendship of 1950 forms the bedrock of the special relations that exist between India and Nepal.
• Under the Treaty, Nepalese citizens enjoy unparalleled advantages in India, availing facilities and opportunities at par with Indian citizens.
• Familiarization visits to India by Nepalese journalists/editors and short-term training in India for Nepalese editors/ journalists/experts/officials in the field of print & electronic media and archaeology.
• Sister-city agreements (Kathmandu-Varanasi, Lumbini-Bodhgaya, and Janakpur-Ayodhya) signed between both countries.

India-Nepal Relations: Divergences

• Trade in favor of India: Trade between the two countries is highly in favor of India.
• Outstanding border disputes between the two countries at Susta, Kalapani, and the ‘tri-junction’ of Lipulekh.
  • Release of a New Map by Nepal in 2019 claiming Kalapani, Limpiyadhura, and Lipulekh of Uttarakhand and the area of Susta, Bihar as part of Nepal.
• Revision of India-Nepal Friendship Treaty 1950 as Nepal views it outdated, unequal and gives unprecedented powers to India to interfere in Nepal’s domestic matters.
• Big-brother attitude: India has been accused of interfering in the country’s internal affairs, acting as a ‘hegemon’ or ‘big brother’, driving its policies in self-interest, and overlooking Nepal’s sensitivities.
• Lack of timely implementation of projects: E.g. Kosi Agreement (signed in 1954) and Mahakali Treaty (in 1996) to build the Pancheshwar Multipurpose Project have not been implemented to date.
• Security concerns: Open borders between both are being abused for fostering illegal activities such as Illegal migration, infiltration, Human trafficking, smuggling of fake currencies, drugs and arms, etc.
• China factor: China’s chequebook diplomacy, its influence, and its presence (Nepal’s participation in BRI, Trans-Himalayan Multi-Dimensional Connectivity Network) in the region pose challenges to the India-Nepal relationship.

Nepal-China Relations Political sphere: The critical stance of India on Nepal’s promulgation of the Constitution and the unofficial blockade and discontinuation of fuel supply adversely impacted India’s image in Nepal. China, on the other hand, used its economic diplomacy to project itself as a non-interfering neighbor by welcoming the new Constitution and opening trade posts at the border. Connectivity sphere: ‘Trans-Himalayan Multidimensional Connectivity Network’ agreement with China to build all-weather road connectivity between Nepal and Tibet. MoU on BRI signed. Defence Cooperation: Conduct of joint Sino-Nepal military exercises for the first time.

Way Forward

• Focus on core areas such as economic diplomacy, people-to-people ties, and cultural connections to create stronger dependency bonds.
• Enhancing connectivity through timely completion of pending projects.
• Winning the perception battle by exhibiting India’s commitment to an equitable and sustainable partnership based on mutual respect, the principle of sovereignty, and non-interference.
• Promoting ‘backdoor diplomacy’ to unite the entire political spectrum and encourage talks to resolve thorny issues. E.g. Madhesi rights.
• Resolving border issues by forming a Joint Technical Boundary Committee.

Backchannel diplomacy, also known as Track II diplomacy, is the practice of informal, unofficial, and non-governmental contacts and activities between private citizens or groups of individuals. Chequebook diplomacy is a foreign policy that involves countries exchanging economic aid and investments to gain diplomatic favor.