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India-Nepal Relationship

GS Paper 2

 Syllabus: Bilateral relation with neighbour


Source: TH

 Context: Recently, Nepal’s Prime Minister Pushpa Kamal Dahal Prachanda’s visited India and signed many bilateral agreements.

During the visit, India and Nepal announced a series of projects focusing on highways, I-ways, and trans-ways, aiming to strengthen ties between the two countries.


Some of the key projects include: 

  • Hydroelectricity:
    • Development of the Phukot Karnali Hydroelectric Project
    • Project Development Agreement for the Lower Arun Hydroelectric Project
    • India set a target of importing 10,000 MW of electricity from Nepal.
  • Pipeline:
    • Phase II facilities under Motihari-Amlekhgunj Petroleum Pipeline.
  • Connectivity:
    • The 35-km cross-border railway line linking Jaynagar in Bihar to Kurtha in Nepal.
    • Revised Transit Agreement (1992): To allow Nepal access to India’s inland waterways.
    • Inaugurated the Indian Railway cargo train from Bathnaha in India to Nepal Customs Yard.
  • Solar Energy:
    • Nepal to join the India-led International Solar Alliance.
  • Manufacturing:
    • India to set up a fertilizer plant in Nepal
  • Border Trade:
    • Integrated Check posts at Rupaidiha in India and Nepalgunj in Nepal.


Areas of Cooperation in the India-Nepal Relationship:

Unique India-Nepal Ties The relationship between India and Nepal has been unique due to factors such as social, religious, and community exchanges, inter-marriages, and peaceful coexistence along their 1,770-kilometer border.
Economic Interdependencies India is Nepal’s as its largest trade partner, highest source of foreign direct investment (FDI), transit for third-country trade, a major supplier of petroleum, and one of the top sources of inward remittances.
Defence Cooperation India assists in modernizing Nepal Army through equipment supply and training. Joint military exercises (e.g., Surya Kiran), disaster assistance, and bilateral visits. Recruitment of Nepalese soldiers in Gorkha regiments of the Indian Army.
Connectivity Construction of integrated check posts and hydroelectric projects (see examples above).
Power Cooperation Cross-border transmission lines to supply power from India to Nepal (see examples above)
Educational, People-to-People, and Cultural Exchanges Visa-free entry for citizens of both countries. Nepalese citizens living and working in India. Promoting people-to-people exchanges through agreements and initiatives. Cultural centres, sister city agreements, and alumni networks.
Multilateral Partnership BBIN (Bangladesh, Bhutan, India, and Nepal), BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), Non-Aligned Movement, and SAARC (South Asian Association for Regional Cooperation) etc.



Challenges in India-Nepal Relationship:

Challenges Examples
Boundary Issues The ongoing dispute over areas like Kalapani and Susta. Limited progress in resolving the dispute. Tensions escalated with the publication of new Indian and Nepali maps.
Treaty Revision Nepal’s request to revise the 1950 Friendship treaty was perceived as unequal. Lack of progress in initiating talks or accepting EPG recommendations.
China’s Influence Nepal’s increased engagement with China, including infrastructure agreements. Joining the Belt and Road Initiative. Concerns over Chinese interference in Nepali politics.
Connectivity Issues Nepal seeking air connectivity, particularly through specific airports in India. Dependence on Indian permission for international flights. Infrastructure projects constructed by Chinese companies but requiring Indian viability.
Economic Factors Transition to formal economy in India impacting informal trade arrangements. Difficulty in doing business with India compared to China. The decline in Indian investments was replaced by Chinese investments
Terrorism Porous and poorly patrolled borders enabled the smuggling of weapons, ammunition, and counterfeit currency. Pose security risks to India from terrorist organizations and insurgent groups operating in India’s northeast.
Trust Issues Growing trust gap due to the slow pace of project implementation by India. Perception of India’s interference in Nepal’s politics. Challenges in maintaining trust and political sovereignty.



India-Nepal relations require formal mechanisms to resolve boundary issues, drawing from successful resolutions in other regions. People-to-people interactions and updated discourse are crucial, considering Nepal’s federated governance and changing demographics.


Insta Links

 India-Nepal relations


Mains Links

The bilateral relations between India and Nepal have been sliding apart, and hence there is a need for recalibration of ties. Discuss. (250 Words)


Prelims Links

Consider the following pairs: (UPSC 2016)

Community sometimes mentioned in the news

  1. Kurd — Bangladesh
  2. Madhesi — Nepal
  3. Rohingya — Myanmar

Which of the pairs given above is/are correctly matched?


(a) 1 and 2
(b) 2 only
(c) 2 and 3
(d) 3 only


Ans: C