Background:

• As close neighbours, India and Nepal share unique ties of friendship and cooperation characterised by an open border and deep-rooted people-to-people contacts of kinship and culture. 
• There has been a long tradition of free movement of people across the border. Nepal shares a border of over 1850 km with five Indian states – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand.

Factors leading to strong bond between India and Nepal:

• Shared Heritage: India and Nepal share a rich cultural heritage rooted in Hinduism and Buddhism, with significant religious sites such as Lumbini (Buddha’s birthplace in Nepal) and Varanasi (a major Hindu pilgrimage site in India).
• Historical Connections: The peoples of the two countries have had historical interactions through trade, migration, and cultural exchange over centuries. 

• Treaty of Peace and Friendship (1950): The India-Nepal Treaty of Peace and Friendship of 1950 forms the bedrock of the special relations that exist between India and Nepal. Nepalese citizens avail facilities and opportunities on par with Indian citizens in accordance with the provisions of the Treaty. Nearly 8 million Nepalese citizens live and work in India.

• Trade and Investment: India is Nepal’s largest trade partner and a major source of foreign investment. Bilateral trade value is around US$ 10 billion.
• Development Aid: India has been a significant contributor to Nepal’s development, providing aid for infrastructure projects, education, healthcare, and capacity building. 
  • Since 2003, India has taken up over 550 High Impact Community Development Projects (HICDPs) in Nepal and has completed 488 projects in the areas of health, education, drinking water, connectivity, sanitation, and the creation of other public utilities across all 7 provinces of Nepal at the grassroots level.

• Border Security: With an open border, both countries cooperate closely on border management to combat cross-border crime and ensure mutual security.

• Power sector Development: Nepal’s vast hydropower potential presents opportunities for both countries. Joint ventures and agreements aim at harnessing these resources to meet energy needs.
  • In Energy Sector, the cooperation that begun with Trishuli Hydropower Projects, Pokhara Hydropower projects, Kataiya Power house and Devigh at Hydro-electric project has further developed with commissioning of Motihari-Amlekhgunj Petroleum Pipeline in 2019, first cross-border petroleum product pipeline in the South Asia region
• Water Sharing Agreements: Rivers flowing between the two nations necessitate cooperative management and usage agreements to prevent and resolve disputes over water resources.
• Social and People-to-People Contacts: Scholarships, educational exchanges, and cultural programs enhance mutual understanding and strengthen social ties.

Challenges in India’s relations with Nepal:

• Kalapani-Lipulekh-Limpiadhura Border Dispute: This region, covering about 372 square kilometres, is claimed by both India and Nepal. In 2024, Nepal released a new political map incorporating this territory, which escalated tensions.
  • In 2024, Nepal had decided to come out with a Rs-100 currency note that depicts the country’s map with the areas under Indian control, leading to fresh tensions.
• China’s Growing Presence: Nepal’s increasing engagement with China, including significant investments and infrastructure projects under the Belt and Road Initiative (BRI), is a concern for India. China pledged $500 million in aid to Nepal in 2019, highlighting its growing influence.

• Trade Deficit: Nepal’s trade deficit with India is substantial. In 2022, Nepal imported goods worth about $8 billion from India while exporting only about $1.1 billion, leading to a trade deficit of nearly $6.9 billion.
• Border Blockades: In 2015, an unofficial blockade along the India-Nepal border caused severe shortages of essential goods like fuel and medicine in Nepal. Nepal accused India of supporting the blockade due to political disagreements, significantly straining bilateral relations.

• Internal Politics: Nepal’s internal political dynamics often influence its relations with India. For instance, during the 2015 constitutional crisis, different political factions in Nepal had varying stances towards India, affecting bilateral cooperation.
• Perceived Interference: Many in Nepal perceive India’s involvement in its internal affairs as excessive. A 2020 survey indicated that around 43% of Nepalis viewed India’s influence in Nepal’s politics as negative.

• Cross-Border Terrorism and Crime: The 1,751-kilometre-long open border is sometimes exploited for smuggling, human trafficking, and movement of insurgents, posing security challenges for both countries.

• Water Sharing Issues: Disputes over water-sharing agreements and the construction of dams and barrages on shared rivers have been contentious. For example, the Mahakali Treaty (1996) for sharing the Mahakali River’s waters has faced implementation issues.
• Hydropower Projects: Joint hydropower projects, such as the Pancheshwar Multipurpose Project, often face delays and disputes over investment, revenue sharing, and environmental impact, affecting progress and trust.
• Delay in Implementing Agreements: Delays and bureaucratic hurdles in implementing bilateral agreements and projects can lead to frustration. For instance, the Raxaul-Kathmandu rail project, agreed upon in 2018, has seen slow progress.

Solutions to develop India-Nepal relations:

• Respect for Nepal’s Sovereignty: India should respect Nepal’s decisions on its internal political affairs. By avoiding interference, India can help ensure a positive bilateral relationship. India should continue its policy of non-interference while quietly supporting stability and development. 
• Holistic Development Road Map: India could propose a development agenda similar to its initiatives like the “Neighbourhood First Policy,” which includes investments in infrastructure, health, and education.
• Economic Cooperation: Strengthening economic ties through investments and trade agreements. For instance, India is Nepal’s largest trade partner, accounting for over 65% of Nepal’s total trade volume in 2022. Enhancing trade infrastructure and reducing trade barriers can further boost economic cooperation.
• Responding to Demographic Needs: Initiatives like the “Skill India” program can be extended to Nepal to address youth unemployment. Collaborative projects in education and vocational training can prepare Nepal’s young population for better job opportunities.
• Social and Cultural Ties: Promoting cultural exchanges, such as the annual India-Nepal Folk Crafts Festival, and leveraging shared heritage sites like Lumbini, the birthplace of Buddha, can strengthen ties. Over 1.4 million Indian tourists visited Nepal in 2019, highlighting the potential for tourism collaboration.
  • Utilising soft power tools like educational scholarships (e.g., over 3,000 scholarships provided to Nepalese students annually by the Indian government) and cultural exchanges to build goodwill and mutual understanding.
• Security and Intelligence Cooperation: Strengthening cooperation to combat security threats. The joint military exercise “Surya Kiran” is an example of successful security collaboration. Such exercises can help both countries address cross-border smuggling and terrorism.

Conclusion: 

• Clear and consistent communication between India and Nepal through appropriate channels can help in developing relations. A relationship based on equality should be fostered by both the stakeholders for the welfare of the entire region.

Source:

https://www.thehindu.com/opinion/lead/stabilising-india-nepal-ties-in-changing-times/article68171930.ece#:~:text=This%20will%20ensure%20that%20there,on%20the%20foundation%20of%20common

https://www.indembkathmandu.gov.in/page/about-development-partnership/