Author name: 
Sahima Gupta, Political Science researcher at O.P. Jindal Global University.

India and Nepal, two South Asian countries share a multi-layered and unique relationship, which is tied by many factors. The economic, cultural and political aspects have motivated both the parties to strengthen and maintain the relationship. In fact, both of them require each other’s support in order to maintain geopolitical balance in the region. Nepal is traditionally, an important strategic ally of India and conversely, India is Nepal’s largest trading and business partner.


However, their relationship has strained over the years, which got worsened in 2015 with the adoption of a new constitution by Nepal as India had certain reservations against it. In 2015, the five-month long blockade of the Indo-Nepal border led to many hardships for the common Nepalese who believed that India was responsible for the crisis. Adding to the existing mistrust between the two countries, China is trying to increase its influence in Nepal, further complicating the relationship. Contentious territorial disputes such as ‘Kalapani’, ‘Lipulekh’ and ‘Susta’ have caused tensions between the two and Nepal has accused India of encroachment. Additionally, treaties such as the 1950 Indo-Nepal Treaty of Peace and Friendship, Kosi Agreement and Mahakali Treaty along with alleged mistreatment of migrant workers has left a deep scar on the relationship.


It is in this context that the Indian Prime Minister Narendra Modi’s visit to Nepal in May 2018 assumes significance. The primary focus of the visit was implementation of key India-Nepal initiatives. This happened barely a month after Nepal’s Prime Minister K. P. Oli undertook a three-day visit to India. The relationship with Nepal holds great significance for India and this has become apparent from the fact that this was Modi’s third visit to the country in the past four years, by which he has been seeking to highlight India’s commitment towards upholding the neighborhood first policy. This visit, which was the first after the formation of the new government in Nepal, holds importance specifically due to tensions between India and Oli in the past couple of years, his pro-China tilt and Beijing making several efforts at strengthening political and economic ties with Nepal. This visit was seen as an endeavour to get past the uneasiness between the two countries and bring back normalcy after the old wounds.


The aims of this visit were manifold. First, it would initiate the construction of 900 MW Arun III project in Sankhuwasabha, a district in eastern Nepal. Arun III is the largest hydropower project developed by India through remote control and has recently received its generation license. This project could completely transform the Nepalese economy as it aims at providing billions of dollars to the government in the form of free royalty, tax, and electricity. In turn, India also stands to benefit from this project, by receiving electricity supply.


Second, the visit could give momentum to a very important connectivity and infrastructure project – the Raxaul (Bihar) and Kathmandu rail link. This project was announced in April during K. P. Oli’s visit to India and aims at connecting Nepal to the Indian railway system. The body, which would be conducting the survey for the project, has been chosen by India and it also hopes that they would be able to complete it by the end of the year (2018). The goal is to increase the level of connectivity between the two countries and “enhance people-to-people linkages and promote economic growth and development.” It is intended at transportation of bulky goods as well. This project has also become a matter of great importance because China has proposed to build their very own railway line between Lhasa in the Tibet Autonomous Region and Kathmandu by 2022. As of now, Nepal has agreed to build the strategic railway, and considers it to be an alternative trade route for the supplies of various commodities to their region. It has been contended that this is being planned in order to reduce Nepal’s overwhelming dependence on India.


Third, the visit would provide an impetus for boosting inland waterway transportation. For this, Kalughat in Bihar has been identified as the transit point. Both countries have assessed the Treaty of Trade and Transit and have agreed to discuss the modalities and technicalities of incorporating inland waterways as a means of moving cargo in it, so that inland waterway transportation could take off. Nepal is a land-locked country and therefore, an initiative taken for a separate river transport system can prove to be beneficial for it. It will provide Nepal a route to the sea, thereby reducing the cost of cargo movement within the framework of the trade and transit arrangements.


Fourth, development assistance was another focus of this visit. There are two main areas where talks need to move forward in terms of cooperation and partnership – agriculture and power. In the case of the former, meetings have already occurred where the relevant projects have been identified. Furthermore, in order to facilitate partnership in this sector, India has agreed to share its experience in organic farming, soil health cards etc.  In terms of power, India’s power regulator (Central Electricity Regulatory Commission) has already requested responses from Nepal, Bangladesh, and Bhutan so that the terms of the power trade are clear. Meanwhile, Modi has asserted that Nepal should complete the commitments regarding forest clearance and land acquisition.


Last but not the least, it could also lead to a discussion on the Pancheshwar Multipurpose project, which is a bi-national hydropower project to be developed on River Mahakali, bordering Nepal and India. The project report is complete and can generate hydropower to the tune of 4,800 MW. It can enhance irrigation potential and flood control downstream as well. It would regulate the free flow of two rivers Karnali and Mohana, which cause floods. This project also embodies the potential of addressing Delhi’s growing demand for water, by a proposed Sharda-Yamuna inter-linking of rivers, which would be done by bringing the surplus water from Sharda to the Indo-Nepal border and then to Yamuna through Uttarakhand and Uttar Pradesh. 


Modi’s visit has generated positive responses, which are crucial for maintaining a cordial relationship between the two countries. Sunil Manandhar, former Minister of Science and Technology and a member of the Central Secretariat of the ruling CPN-Maoist Centre, pointed out, “Modi’s visit will certainly consolidate Nepal-India bilateral relations.” He further added, “The visit is taking place at such an important moment when a stable government is in place at the centre with the slogan of attaining economic prosperity and development.” According to him, this particular visit can help Nepal achieve economic progress through cooperation and assistance from India.


Before the polls, the main parties had an unfriendly attitude towards India. In fact, the Oli-led CPN-UML had raised the matter of blockade during the election campaign to garner support for himself. However, after winning the election, the Leftist party adopted a more positive attitude towards India. Besides, former Foreign Minister Prakash Sharan Mahat, who belongs to Nepali Congress, Nepal’s chief opposition party and seen mostly as pro-India, stated, “This visit signifies that India accords top priority to her relations with Nepal, and our government should pay attention for getting maximum benefit from the visit.” Mahat further added, “Nepali Congress has been consistently following the policy of a ‘good neighborhood’ and we believe in resolving any problem or issue between the two countries through diplomatic means.”


Nepal has had differences and disagreements with India due to delays in the implementation of various crucial projects. As a result, it is important, that Modi stands by his word, and implements these strategic initiatives on time, which could remove years of distrust. The visit has given impetus to several activities and discussions, which have left the existing relationship on a positive and forward-looking note. In addition, given that China has been trying to increase its influence in Nepal, the success of these projects could help India gain back its pivotal position and further establish a cordial relationship.


Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the view of Manipal Advanced Research Group.