After Reading This Article You Can Solve This UPSC Mains Model Question:
India–Nepal relations, despite deep historical and cultural ties, face recurring geopolitical and economic challenges. Examine these challenges and suggest measures to strengthen bilateral ties under India’s ‘Neighbourhood First’ policy. 15 Marks (GS-2, International Relations)
INTRODUCTION
- The recent change in Nepal’s leadership presents a fresh opportunity for India to revive bilateral ties through proactive diplomatic engagement. It is essential that the “Neighbourhood First” policy is prioritized to ensure regional stability and shared economic growth between the two nations.
EVOLUTION OF INDIA-NEPAL RELATIONS
The relationship between India and Nepal has been shaped by centuries of shared history, geography, and cultural overlap.
- Historical Foundations
- Ancient civilizational links through shared Hindu-Buddhist heritage, pilgrimage sites (Lumbini, Pashupatinath), and cultural exchanges.
- Treaty of Sugauli (1815-16) defined much of the modern 1,751 km open border with British India.
- Post-Independence Era (1947–1990)
- Diplomatic relations established: 17 June 1947.
- Cornerstone: 1950 Treaty of Peace and Friendship — open borders, free movement of people and goods, reciprocal rights, and security cooperation.
- Key water resource agreements: Kosi (1954) and Gandak (1959).
- Special relationship marked by economic assistance and people-to-people ties (including Gorkha recruitment in Indian Army).
- Democratic Transition and Economic Deepening (1990–2014)
- Support for Nepal’s multiparty democracy (1990) and Comprehensive Peace Agreement (2006).
- Mahakali Treaty (1996) for integrated river development.
- Renewal of Trade and Transit treaties; focus on hydropower cooperation and addressing trade imbalances.
- 21st Century: Connectivity and Functional Cooperation (2015–Present)
- India’s Neighbourhood First policy intensified high-level engagements (over 17 Head of Government/State visits since 2014).
- Major Infrastructure: Motihari-Amlekhgunj petroleum pipeline, cross-border railways (Jayanagar-Kurtha, Raxaul-Kathmandu progress), Integrated Check Posts, and freight services.
- Energy Sector Breakthrough: Long-term Power Trade Agreement; commitment for India to import 10,000 MW of electricity from Nepal over the next decade; new hydropower projects (Arun-III, Lower Arun, Phukot Karnali) and cross-border transmission lines.
- Digital Integration: UPI interoperability and enhanced people-to-people linkages.
- Education & Culture: Thousands of scholarships are provided annually by India, and the Pashupatinath-Kashi religious circuit continues to draw millions of pilgrims.
- Contemporary Trends (2025–2026)
- Emphasis on pragmatic economic interdependence in energy, connectivity, and green power trade.
- Progress in trilateral arrangements (e.g., with Bangladesh) and updates to transit protocols.
- Resilience rooted in deep cultural affinity, open border, and mutual interest in regional stability and development.
CHALLENGES IN THE INDIA-NEPAL RELATIONSHIP
- Territorial and Border Disputes: Differing interpretations of the Treaty of Sugauli (1815–1816) remain a core issue. Contested areas include Kalapani, Lipulekh, and Limpiyadhura.
- Nepal incorporated these territories in its 2020 constitutional map amendment and featured them on new Rs 100 currency notes in 2025.
- India maintains administrative control and rejects Nepal’s claims. Plans to resume India-China border trade via Lipulekh Pass in June 2026 have further reignited Nepali concerns over sovereignty.
- Perceptions of Asymmetry and the 1950 Treaty:
- Structural asymmetry in size and influence fosters Nepali perceptions of an Indian “big brother” attitude.
- The 1950 Treaty of Peace and Friendship is increasingly viewed by Nepal’s younger generation as an unequal colonial relic.
- The Eminent Persons Group (EPG) report recommending revisions has not been formally accepted by India, deepening the trust deficit.
- Economic Imbalances and Trade Deficit:
- A staggering trade deficit is faced by Nepal, as it relies on India for nearly 70% of its imports. Issues such as non-tariff barriers on Nepali agricultural products (like ginger and tea) and delays in the GST refund process for Nepali traders frequently cause economic tension.
- Security Issues from the Open Border:
- The 1,751 km open and porous border enables strong people-to-people ties but facilitates challenges such as smuggling, human trafficking, counterfeit currency circulation, and transnational crime. Effective border management requires continuous bilateral coordination.
- Water Resources and Hydropower Implementation:
- Shared rivers offer significant potential for energy and irrigation, yet disputes persist over benefit-sharing, project delays, and downstream impacts.
- Slow progress on initiatives like the Pancheshwar Multipurpose Project highlights differing priorities and implementation hurdles.
- Geopolitical Diversification and the China Factor:
- Nepal’s expanding partnerships with China, including participation in the Belt and Road Initiative (BRI), introduce triangular dynamics. India monitors enhanced Chinese infrastructure and connectivity projects in Nepal with strategic concern.
- Domestic Political Instability in Nepal:
- Frequent government changes, coalition politics and events such as the 2025 Gen-Z protests and 2026 parliamentary elections affect policy continuity. Rising nationalism and youth-driven demands occasionally amplify anti-India sentiments in domestic discourse.
WAY FORWARD: STRATEGIC ROADMAP FOR INDIA-NEPAL RELATIONS
- Resolve Territorial and Border Issues through Dialogue:
- Shift Kalapani, Lipulekh and Limpiyadhura disputes from public rhetoric to quiet, sustained diplomatic channels.
- Empower the Joint Boundary Working Group and technical experts to find mutually acceptable solutions based on historical evidence and mutual consent, while avoiding unilateral actions.
- Modernise the 1950 Treaty Framework:
- Formally acknowledge and initiate phased deliberations on the Eminent Persons Group (EPG) report.
- Update the 1950 Treaty of Peace and Friendship to reflect contemporary realities of sovereign equality, while preserving the unique open border and people-to-people linkages.
- Accelerate Hydropower and Energy Cooperation:
- Fast-track implementation of key projects including Arun-III, Pancheshwar Multipurpose Project and cross-border transmission lines.
- Fully operationalise the long-term Power Trade Agreement to enable Nepal’s 10,000 MW electricity exports to India, creating win-win economic gains and green energy integration.
- Enhance Connectivity and Infrastructure Delivery:
- Ensure timely completion of cross-border railways (e.g., Raxaul-Kathmandu), petroleum pipeline extensions, Integrated Check Posts and inland waterways. Focus on efficient project execution to build trust and deliver visible development benefits.
- Address Economic Imbalances and Promote Trade:
- Diversify trade through a possible Bilateral Economic Partnership Agreement, improve border infrastructure and support Nepal’s export competitiveness. Reduce the persistent trade deficit via greater Indian investment in agriculture, tourism, and manufacturing.
- Strengthen Border Management and Security Cooperation:
- Maintain the open border for humanitarian and economic benefits while introducing enhanced joint mechanisms for surveillance, data exchange (pre-arrival export information), and combating smuggling, trafficking and transnational crime.
- Deepen Digital and Technological Partnership:
- Advance UPI interoperability, cross-border digital payments, fintech, AI, and cybersecurity cooperation. Leverage forums like the Nepal-India Tech Forum 2026 to support Nepal’s digital public infrastructure and skill development.
CONCLUSION
The unique bond between these India and Nepal can be strengthened by focusing on economic cooperation and mutual respect. A stable and prosperous future will be achieved if both sides prioritize modern connectivity over old disagreements. By working together as equal partners, a stronger and more integrated South Asia can finally be built.
