Assessment of India’s Approach to Nepal
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Issue Net Edition | Date : 19 Feb , 2023

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As per International Monetary Fund, India is fastest growing economy in the world. Indian economy is crossing Chinese economy that will grow just by 5.2% in 2023. Economy and security are the two faces of the same coin. In other words, both affect each other, and most importantly both have the potential to transform the regional and international polity and economy. Economic growth and military might both determine any country’s stature in international system of states.

Rapidly growing economy and world-class military forces coupled with its vast geographical area proffers India a very unique and dominant stature in comparison to other nations in South Asian region. Accordingly, India is playing a very crucial role by extending its support in every possible manner to all nations. But there are some stances in the past that demand some course corrections in India’s foreign policy in accordance to the present challenges and the actions in the past that generated trust deficit between India and Nepal.

Constantly growing presence of China in Nepal is seriously threatening the strategic and political interests of India. Nepal, a buffer state between India and China, has a very unique position in India’s foreign and national security policy. Therefore, India should pay more emphasis on its foreign relations with Nepal to marginalize or, in fact, ousting the China’s influence that is relentlessly undermining India’s role in Nepal.

In above mentioned context, it is highly desired to analyze India’s relations with Nepal by keeping China’s engagement in Nepal in view. In addition, attention will be paid on the future challenges that are crucial for – political and economic stability, and most importantly security of Nepal in order to make India’s foreign policy more effective, result oriented to safeguarding and expanding India’s strategic and political interests.

Engagement of China in Nepal’s Internal Affairs

Fragile democracy has become the defining characteristic of Nepal polity over a long period of time. Promulgation of Nepali Constitution ensured the guarantee for smooth functioning of the Nepal’ politics but in actuality the trajectory of political events are not progressing ahead that are necessitated for political stability in Nepal. For instance, Prime Minister K P Sharma Oli dissolved the lower house of the Parliament on 20 December, 2022 due to infighting in ruling party over the power sharing and distributing the constitutional positions to their favorites. Nepal Communists Party (NCP), an alliance was formed by merging the Communist Party of Nepal (United Marxist Leninist) of K P Sharma Oli and Communist Party of Nepal (Maoist Center) led by Pushpa Kamal Dahal with the support of Chinese Ambassador Ms Hou Yangi.

Chinese Ambassador tried her level best to keep this alliance intact. China has developed very cordial relationship with K P Sharma Oli during his reign from 2015-16. To counter the Nepali Congress and Madhesi Parties that are known as pro-India, China played a very crucial role in bringing together these left-wing factions to fulfill its geopolitical ambitions. In addition, other factors such as Nepal’s strained relationship with India due to border blockade by Madhesi protesters during this interval, personal and business interests of Nepali leaders provided an appropriate occasion to K P Sharma Oli to tilt towards China to balance India.

Under the influence of China, K P Sharma not only claimed Kalapani, Lipulekh, and Limpiyadhura pass but also issued a new map encompassing the whole territory that is part of India’s Uttrakhand State. More importantly, China has established ideological linkages with Nepal Communist Party by organizing the workshop on Xi Jinping’s ideas on Chinese model of economic development and socialism. During Xi Jinping’ visit to Nepal in 2019, bilateral relationships was transformed into strategic partnership.

Under this partnership, many agreements, MoUs, treaties were signed in many spheres such as transport, agriculture, and industry. Xi Jinping offered Nepalese Rupees 56 billion assistance to Nepal for development projects. Most importantly, Nepal has become signatory to China’s Belt and Road Initiative (BRI) and various projects such as Kathmandu-Kerung Railway, Galchi-Rasuwagarhi- Kerung 400 KV transmission line. China is the highest FDI contributor to Nepal. Efforts are going on for China’s engagement in tourism, education, and culture sectors.

Future Challenges for Nepal

Political instability is the resultant of the various factors such as weak socio-economic conditions, internal and external conflicts, corruption, religious and ethnic tensions, democratic accountability, weak government, coalitional government not based upon ideology but just to win the elections, lack of transparency, and above all quality of bureaucracy of a nation. Nepal has been the victim of civil war from 1996-2006. Political instability is causing severe problems such as lack of development that resulting in high unemployment, illiteracy, gender inequality, lack of education, weak investment, and extreme poverty. Moreover, Nepal’s society is bifurcated on the caste lines and on-going conflict between Hinduism and Buddhism also jeopardizes the developmental pace which, in turn, leads to political instability in Nepal.

Rampant corruption that is rooted in the nexus that involves politicians, civil servants, and people in business and citizens has become the integral part of the politics of Nepal and is responsible for its deep economic crisis. Weak infrastructure, environmental degradation due to high deforestation, and lack of modernization due to unavailability of advanced technology are the factors responsible for current situation in Nepal.

A Review of India’s Relation with Nepal

Nepal is shield to India due to its strategic geographical location. Therefore, India wants to keep it secure from Chinese influence that is inimical to India’s strategic interests and priorities. China is constantly influencing Nepal’s left-wing political parties by luring them in every possible way. In fact, Nepali Communist Part (NCP) has developed ideological linkages with Chinese Communist Party (CCP) and conducted two days workshop on Xi Jinping’s ideology and that was attended by the top leaders of the both left-wing political parties.

From the time of abolition of Monarchy as an institution in Nepal, China is constantly trying to mold the face of the Nepal’s politics to fulfill its geopolitical and geostrategic ambitions. Politicians of Nepal know very well how to take the strategic advantage of this situation  as K P Sharma took during his reign from 2015-16 by using the China card. By acknowledging its strategic location between two adversary nations, Nepal devised its foreign policy by keeping the balancing act as its topmost consideration in addition to security (territorial integrity);stability(political and economic); and status due to psychological syndrome.

Against this backdrop, India has to “review” its approach that it is following over a long period of time in the light of current political dynamics of Nepal. First, India should deliberate extensively on Indo-Nepal Peace and Friendship Treaty, 1950 by considering the needs and aspirations of the citizens of Nepal, current demands regarding to maintain its territorial integrity and security, and most importantly according a very unique strategic place in its foreign and national security policy to Nepal as it deserves in current South Asian regional politics which is being altered by China in every possible way. Moreover, as per the critiques, India should be more supportive and play a very progressive role by abandoning the ‘Big Brotherly’ or overbearing attitude.

Furthermore, India should avoid any unnecessary intervention like supporting some factions in Terai region in Nepal that is supposed to be a provocative gesture by Nepal’s citizens. Boundary disputes relating to Kalapani River and the discrepancy in locating its source of origin have become bone of contention between India and Nepal. Area around the Kalapani River is very crucial for India due to illegal cross-border activities and crimes originated from Nepal. Therefore, it is very sensitive area and India wants to control over it.

Another frictional point between the India and Nepal relation is Ganga-Brahmaputra basin encompassing several rivers such as Mahakali, Karnali, Sapt Gandak, Sapt Kosi. These rivers originate from the trans-Himalayan region, cross Nepal and flow southwards to join the Ganges in India and hence are trans-boundary in nature.  Nepal contributes 45% to the average annual flow to these rivers but occupies just 13% of the total drainage of the Ganga basins. Complicating the situation further is the past experience of Nepal when it signed treaties with India such as Kosi Treaty (1954), Gandak Treaty (1959).

It generated an element of trust deficit between India and Nepal because, as per Nepal, it did not receive its due in these treaties. According to the Nepal water resources experts – “These treaties created ill feeling and mistrust between two nations leading to a big gap in joint water resources development initiatives.” These water resources are very crucial to both countries for hydroelectricity power generation and irrigation and hence are highly significant for sustaining India’s high economic growth and the agriculture which is also the main source of subsistence for Nepal.

Despite the interdependency caused by these unique geographical features, development of water resources is marred by historical wrongs, geopolitics, non-sensitivity to each other demands and concerns, small country syndrome, and most importantly aggressive gestures and regressive approach for management of development of water resources. Nepalese have build-up the perception that India, as a hegemonic power, is unilaterally managing the development of water resources and subsequently controlling their maintenance and operations. India should seriously review its approach regarding Nepal by considering its strategic importance by keeping China as a main actor that is leaving no stone unturned in changing the contour of South Asian regional politics.

Both countries should consider the views, security concerns, needs and aspirations of the local people especially residing in Madhesi regions that play a very crucial role in domestic politics of both countries. Moreover, India should avoid any act such as ‘Nepal Blockade’ of 2015 that gives the impression of unnecessary intervention in domestic political affairs of Nepal. These acts proffer sufficient strategic opportunity to the politicians of Nepal for tilting swiftly towards China. India should design its intervention progressively that is conducive to political stability and social cohesion in Nepal.

Nepal should also consider India’s security consideration and growing needs of India’s economy. There is a reciprocal relationship between security and economy and both, in turn, affect polity of a nation. Open and porous border along which five Indian states such as Uttar Pradesh, Uttarakhand, West Bengal, and Sikkim are located consists many points through which terrorists and destabilization activities such as money laundering, smuggling of arms and narcotics  are being run by criminals and ISI sponsored proxies and spy rings that are aiming to fracture India in many ways. It seems that Nepal is unable to control and continuously ignoring these anti-India activities.

Nepal’s leniency is encouraging some fundamentalist and terror funding organization from Middle East to create power bloc which is also being fueled by ISI to cause disruption in the Gangetic planes where India is very sensitive. More importantly, this power bloc is creating law and order problems by creating ethnic unrest in Nepal also. Nepal has to understand this critical situation which is jeopardizing the security, economy, and development of both countries. By keeping aside minimal and short-term gains, Nepal has to understand that how this geographical interdependence that binds India and Nepal together could be fruitful to its holistic development. 


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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Deepak Kumar

is policy Analyst, columnist, and commentator on India's foreign policy. He writes on important issues that affect India's national security.

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