Nepal

1. Strategic geography and the foundations of partnership

Nepal connects India’s Himalayan security environment with the densely populated Gangetic plains. Its rivers feed major Indian river systems, while its southern Terai is closely integrated with adjoining Indian districts through markets, migration and kinship. Developments in Nepal consequently affect Indian border management, disaster preparedness, energy security and regional connectivity. Nepal should nevertheless be understood as an autonomous partner, not merely as a buffer between India and China.

The relationship rests on an unusually dense social foundation. Hindu and Buddhist pilgrimage circuits connect Pashupatinath, Janakpur and Lumbini with Indian destinations such as Ayodhya, Varanasi and Bodh Gaya. Cross-border marriages and family networks underpin the frequently used description roti-beti relations. Nepali citizens have traditionally worked and studied in India, while the service of Gorkha soldiers in the Indian Army adds a distinctive defence and social connection.

The 1950 Treaty of Peace and Friendship provides a foundational framework. Articles 6 and 7 address reciprocal treatment concerning economic participation and privileges relating to residence, property, trade and movement. The open-border regime is supported by this wider relationship and subsequent practices, rather than being reducible to one treaty clause. Many Nepali political actors seek treaty revision because they regard the original framework as insufficiently responsive to contemporary sovereign equality.

For UPSC analysis, the key distinction is between interdependence and asymmetry. India possesses much greater economic and strategic capacity, but Nepal retains political agency and can resist initiatives perceived as intrusive. Effective neighbourhood diplomacy therefore requires consultation, predictability and respect, not an assumption that cultural proximity automatically produces political trust.

2. Political relations, sovereignty and territorial disputes

Nepal’s transition from monarchy and civil conflict to a federal democratic republic transformed bilateral diplomacy. The 2006 Comprehensive Peace Accord ended the decade-long Maoist insurgency, the monarchy was abolished in 2008, and a new Constitution was promulgated in September 2015. India supported Nepal’s peace and democratic transition, but relations became strained over constitutional inclusion, particularly the concerns of Madhesi and Tharu communities.

Severe supply disruptions at the India–Nepal border in 2015 created lasting resentment in Nepal. Nepal widely described these as an Indian blockade; India denied imposing one and attributed disruptions to protests and insecurity near crossing points. A balanced answer should distinguish these competing accounts while recognising the episode’s humanitarian consequences and its damage to India’s public standing.

The western territorial dispute concerns the identification of the Kali River’s source under the 1816 Treaty of Sugauli between Nepal and the East India Company. Nepal claims Limpiyadhura as the river’s origin and includes Kalapani and Lipulekh within its territory; India disputes Nepal’s interpretation and claim. Nepal incorporated a revised map into its constitutional emblem in June 2020. Susta represents a separate dispute associated with the Gandak/Narayani river boundary.

The Bilateral Boundary Working Group addresses technical tasks such as boundary pillars and related issues, but the major outstanding disputes require political and diplomatic negotiation. Public cartographic assertions or nationalist rhetoric cannot substitute for examination of historical records, surveys and mutually accepted procedures. India should also engage Nepal’s federal, provincial and local institutions without appearing to favour particular parties or constitutional arrangements.

3. Trade, connectivity and energy interdependence

India is Nepal’s largest trading partner and a principal source of investment and transit access. Nepal’s dependence on imported fuel, manufactured goods and Indian transport routes creates strong commercial links but also exposes it to supply shocks. Its substantial trade deficit with India reinforces concerns about unequal gains. Trade and transit arrangements, including access through Kolkata/Haldia and Visakhapatnam, help connect Nepal to global markets.

Connectivity cooperation increasingly focuses on reducing logistical costs. Integrated check posts at major crossings, including Raxaul–Birgunj and Jogbani–Biratnagar, combine customs and border services. The Jaynagar–Kurtha passenger railway, subsequently extended to Bijalpura, restored an important cross-border rail connection. The Motihari–Amlekhgunj petroleum pipeline, inaugurated in 2019, reduced dependence on fuel tanker movement and demonstrated the value of reliable cross-border infrastructure.

Hydropower offers the strongest opportunity to move from aid-centred relations towards shared prosperity. Nepal can export seasonal electricity surpluses, earn revenue and attract investment, while India gains access to low-carbon power and regional balancing opportunities. Indian participation in projects such as Arun III complements growing power trade. However, project delays, resettlement, environmental impacts and transmission constraints require careful management.

The January 2024 long-term power trade agreement established a framework for increasing Nepal’s exports to India to 10,000 MW within ten years; this is a target, not an already achieved volume. The commencement of 40-MW exports from Nepal to Bangladesh through India in November 2024 demonstrated the potential for subregional electricity markets. Transparent approval rules, bankable contracts and timely transmission investment are essential to sustain confidence.

4. Open-border security, rivers and the China dimension

The open border facilitates livelihoods and gives bilateral relations a depth unusual in South Asia. It also creates challenges involving trafficking, counterfeit currency, narcotics, smuggling and movement by criminal networks. India’s Sashastra Seema Bal and Nepal’s Armed Police Force cooperate in border management. The appropriate approach is intelligence-led coordination and better infrastructure rather than treating ordinary cross-border mobility as a security threat.

Defence cooperation includes training, assistance and the Surya Kiran joint military exercise. India’s introduction of the Agnipath recruitment scheme in 2022 also raised questions in Nepal about the future terms of Gorkha recruitment. Such issues intersect with employment, pensions and historical sentiment, requiring consultation rather than unilateral assumptions about their bilateral implications.

Shared rivers create both opportunities and vulnerabilities. The Kosi and Gandak agreements and the 1996 Mahakali Treaty illustrate long-standing cooperation, but disputes persist over benefits, embankment maintenance, inundation and implementation. The Pancheshwar Multipurpose Project under the Mahakali framework remains a prominent example of unrealised potential. Monsoon floods, sedimentation, landslides and glacial-lake risks demand basin-level science, timely data sharing and coordinated warning systems.

China has expanded its role through infrastructure, investment and political engagement; Nepal joined the Belt and Road Initiative in 2017. Nepal’s pursuit of diversified connectivity reflects its own interests as a landlocked country. India has legitimate concerns about strategically sensitive infrastructure, but framing every Nepali engagement with China as disloyalty is counterproductive. India’s durable advantages are geographic proximity, market access and social networks, which must be reinforced through dependable delivery.

5. A practical agenda for neighbourhood diplomacy

India should anchor its Nepal policy in sovereign equality, non-interference and delivery-oriented cooperation. Sensitive questions such as treaty revision and territorial claims need sustained diplomatic channels insulated from electoral rhetoric. Broad engagement across Nepal’s political spectrum can reduce the perception that India’s relationship depends on particular leaders or parties.

Economic priorities should include quicker customs clearance, interoperable digital payments, stronger rail and road links, electricity transmission and easier access for viable Nepali exports. Local consultation, transparent compensation and environmental safeguards can improve acceptance of infrastructure projects. Cooperation through BIMSTEC and the Bangladesh–Bhutan–India–Nepal framework can advance practical connectivity even when wider South Asian regionalism remains constrained.

Human security should complement strategic cooperation. Joint flood forecasting, earthquake preparedness, anti-trafficking measures and accessible consular support produce visible benefits. India’s assistance after the 2015 earthquake shows the diplomatic value of rapid humanitarian response, but long-term trust depends equally on reconstruction quality and everyday reliability. The central policy lesson is to convert structural interdependence into mutually recognised gains.

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