Nepal-India Relations


Overview

Nepal and India enjoy excellent bilateral ties. Founded on the age-old connection of history, culture, tradition and religion, these relations are close, comprehensive and multidimensional and are pronounced more in political, social, cultural, religious and economic engagements with each other. To add up the formal flavor to this historic relations, the two countries established diplomatic relations on 17 June 1947. The unwavering commitment to the principles of peaceful coexistence, sovereign equality, and understanding of each other’s aspirations and sensitivities have been the firm foundations on which our bilateral relations have been growing further.

Nepal’s solemn desire to cultivate and foster the cordial and friendly ties with its neighboring countries are reflected in its long standing position of not allowing its territory to be misused by any elements inimical to India and also expects same sort of reciprocity and assurances from her. The open border between the two countries remains a unique feature of our relations. Frontier without restriction has greatly facilitated the free movements of our people to each other’s territory and enhanced interactions.

Political Relations

Nepal-India relations are, in essence, much more than the sum of treaties and agreements concluded between the two countries. The frequent high level visits by the leaders of the two countries at different points of time and the interactions thereof constitute the hallmark of the ties between the two countries. Furthermore, such visits have helped promote goodwill, understanding and cooperation between the two countries and, have injected a fresh momentum to further consolidate age-old and multi-faceted bilateral relations of friendship and cooperation on a more mature and pragmatic footing.

At the cordial invitation of the then President of India Shri Pranab Mukherjee, Rt. Hon’ble President Mrs. Bidya Devi Bhandari paid a State Visit to India in April 2017. Earlier, after the dawn of the epoch-making events in the annals of the Nepali history, Dr. Ram Baran Yadav, as the first President of Nepal, had paid a State visit to India in February 2010 at the invitation of Ms. Pratibha Devisingh Patil, then President of India. From the Indian side, Shri Pranab Mukherjee, then President of India, paid a State Visit to Nepal in November 2016. Then President Mr. K. R. Narayanan had visited Nepal in May 1998. Before him, other Presidents of India who visited Nepal were Mr. Giani Zail Singh in July 1986, Mr. Neelam Sanjiva Reddy in 1981, Mr. Zakir Hussain in October 1966, Mr. S. Radhakrishnan in November 1963, and the first President of independent India, Dr. Rajendra Prasad in October 1956.

At the invitation of the Prime Minister of India, His Excellency Shri Narendra Modi, Rt. Hon’ble Prime Minister Mr. Sher Bahadur Deuba paid a State Visit to India in August 2017. The then Prime Minister of Nepal, Mr Pushpa Kamal Dahal ‘Prachanda’ paid a State Visit to India in September 2016. He also participated in the BRICS-BIMSTEC Outreach Summit in Goa, India in October 2016. Likewise, then Prime Minister Mr. K P Sharma Oli paid a State Visit to India in February 2016. Similarly, at the invitation of then Prime Minister Mr. Sushil Koirala, the Prime Minister of India His Excellency Shri Narendra Modi paid an official visit to Nepal in August 2014. This was a historic visit by a prime minister of India to Nepal after 17 years which reflected the commitment of the newly formed Government in India to enhance India’s relations with neighboring countries. Bilateral issues were discussed also during His Excellency Prime Minister Modi’s visit to Nepal in November 2014 to participate in the 18th SAARC Summit. The two Prime Ministers met on the sidelines of the 69th UNGA in September 2014. Earlier, then Prime Minister Mr. Sushil Koirala had visited India to attend the swearing-in ceremony of the Prime Minister elect Shri Narendra Modi in May 2014.

Deputy Prime Minister and Minister for Foreign Affairs Mr. Krishna Bahadur Mahara visited India in July 2017 at the invitation of Her Excellency Smt Sushma Swaraj, Minister of External Affairs of India. Then Minister for Foreign Affairs Dr. Prakash Sharan Mahat visited India in September 2016. Likewise, then Deputy Prime Minister and Minister for Foreign Affairs Mr. Kamal Thapa visited India in November 2015. At the invitation of the then Foreign Minister Mr. Mahendra Bahadur Pandey, the External Affairs Minister of India Smt Sushma Swaraj paid an official visit to Nepal in July 2014. The Foreign/External Affairs Ministers co-chaired the third meeting of the Nepal-India joint Commission, which undertook an extensive review of the entire gamut Nepal-India relations. The Joint Commission was reactivated after a gap of 23 years. Her Excellency Smt Swaraj visited Nepal in June 2015 to participate in the International Conference on Nepal’s Reconstruction and in August 2017 to participate in the 15th BIMSTEC Ministerial Meeting. Then Minister for Foreign Affairs Dr. Prakash Sharan Mahat visited India in October 2016 leading a Nepali delegation to participate in the 4th meeting of Nepal-India Joint Commission.

Nepal-India Economic Relations

India has been a key development partner of Nepal. The latter received strong support and solidarity from the people and Government of India in advancing its home-grown peace process as well as in the process of writing the Constitution through the elected Constituent Assembly. Following the massive earthquakes in Nepal in April and May 2015, India promptly offered helping hands. The Government of India has also been substantially supporting Nepal’s reconstruction efforts.

The Indian cooperation started in 1952 with the construction of an air-strip at Gaucharan. Since then, India has been assisting primarily in the areas of infrastructure development and capacity development of human resources in Nepal. Such assistance received from India has helped supplement the developmental efforts of Nepal. India’s economic assistance to Nepal has grown manifold in the past few decades, particularly since the restoration of multiparty democracy in Nepal in 1990.

As agreed during the State Visit to India of then Prime Minister of Nepal Mr. Pushpa Kamal Dahal ‘Prachanda’ in September 2016, a Nepal-India Joint Oversight Mechanism has been constituted co-chaired by the Foreign Secretary of Nepal and the Indian Ambassador to Nepal to review the progress made and resolve any issues in the implementation of the projects under India’s economic and development cooperation. The Mechanism meets once every two months.

 Large and Intermediate Projects undertaken with India’s economic assistance

B.P. Koirala Institute of Health Sciences, Dharan; Emergency and Trauma Centre at Bir Hospital, Kathmandu; and Manmohan Memorial Polytechnic at Biratnagar are some of the flagship projects completed and operationalized under the Indian assistance.

Integrated check-posts have been proposed at four points on Indo-Nepal border namely (i) Raxaul-Birganj, (ii) Sunauli-Bhairahawa, (iii) Jogbani-Biratnagar and (iv) Nepalganj Road-Nepalgunj. The construction of ICPs in Birgunj and Biratnagar is ongoing, while procedures are underway for Bhairahawa and Nepalgunj. Likewise, as envisaged by the MoU for the construction of Terai roads under phase I, the process of implementation has started. Further, India has agreed to provide LoC for the phase II.

An MoU on Development of Railway Infrastructure at five points along the Nepal-India border was signed in 2010. The construction process has been ongoing for Jayanagar-Janakpur-Bardibas-Bijalpura and Jogbani-Biratnagr sectors. For the remaining three links, both sides have started preliminary works. Likewise, MoU on the establishment of Nepal Bharat Maitri Polytechnic at Hetauda in Makawanpur District of Nepal was signed on 16 February 2010 in New Delhi. The project is being implemented.

In the International Conference on Nepal’s Reconstruction held in Kathmandu in June 2015, the Government of India pledged a fund of US$ 250 million grant and US$750 million soft loan. Agreements have already been signed for both grant and loan. List of projects have been identified for the utilization of the grant while projects are being finalized for the use of Line of Credit. In addition to two past lines of credit (US$ 100 million and US$ 250 million), His Excellency Prime Minister of India Shri Modi announced during his visit to Nepal in August 2014 another line of credit of US$ 1 billion to be utilized to finance development projects chosen by Nepal. The Government of Nepal finalized the projects. The modality of contracting these projects is being worked out. In the meantime, India has agreed to provide fresh LoC for Terai roads phase II, sub-stations at Hetauda and Dhalkebar, cross border transmission line connecting Butwal and for a polytechnic in Kaski.

Cooperation in Water Resources

Water resource is considered as the backbone of Nepali economy. The issue of water resources has always been getting due prominence in the agenda of bilateral cooperation between Nepal and India for a long time. With a view to optimizing the benefits and addressing the problems, both Governments have set up three-tier mechanisms called Joint Ministerial Commission for Water Resources (JMCWR), Joint Committee on Water Resources (JCWR) and Joint Standing Technical Committee (JSTC) to implement agreements and treaties and also address water induced problems of flood and inundation. There is also an additional mechanism – Joint Committee on Inundation and Flood Management (JCIFM) – which deals explicitly with the issues of inundation, embankments and flood forecasting.

An important Power Trade Agreement was signed between the two countries in 2014 paving way for the power developers of the two countries to trade electricity across the border without restrictions. Private/public power developers from India have reached agreements with the Investment Board of Nepal to develop two mega hydropower projects – Upper Karnali and Arun III.

 

Trade, Transit and Investment

 The partnership with India in the areas of trade and transit is a matter of utmost importance to Nepal. India is Nepal’s largest trading partner. India has provided transit facility to Nepal for the third country trade. Both public and private sectors of India have invested in Nepal. The trade statistics reveals phenomenal increase in the volume of bilateral trade over the years between the two countries. However, Nepal has escalating trade deficit with India. Nepal and India have concluded bilateral Treaty of Transit, Treaty of Trade and the Agreement of Cooperation to Control Unauthorized Trade.

 Status of Trade between Nepal and India                                                ‘000 Rs.

  FY 2012/2013 FY 2013/2014 FY 2014/2015 2015/2016
Import 397,957,920 482,345,300 500,044,484 487,597,307
Export 51,788,460 59,458,375 55,859,253 39,695,134
Balance -346,169,460 -422,886,925 -444,185,231 -444,185,231

Source: TEPC, 2016

Pursuant to the provision of the Treaty, to oversee the matters related to the implementation of treaty, bilateral trade, transit and investment issues, the Inter-Governmental Committee (IGC) and the Inter-Governmental Sub-Committee (IGSC) mechanisms have been set up at the level of Commerce Secretaries and Joint Secretaries of both countries respectively.

Security Cooperation and Boundary Management

 Security related issues are of prime concern to both the countries. To deal jointly with each other’s security concerns, the two countries have institutionalized Home Secretary level meetings and established Joint Working Group on Border Management (JWG) and Border District Coordination Committees (BDCCs).

Nepal-India Joint Technical Committee formed in 1981 made important accomplishments in scientifically mapping Nepal India boundary. The Boundary Working Group (BWG) established in 2014 has taken over the technical works related to Nepal-India boundary. BWG has already mobilized joint teams in the field for construction, repair and restoration of boundary pillars, inventory of encroachment of No Man’s land and cross border occupation, and GPS observation of boundary pillars.

Multilateral and Regional Fora

Both Nepal and India have common approach to regional and multilateral institutions and hence, work in tandem in the United Nations, Non-aligned Movement and other international fora on most of the important international issues. Furthermore, both the countries have been deeply engaged in the regional and sub-regional frameworks of SAARC, BIMSTEC and BBIN for enhancing cooperation for greater economic integration by harnessing collectively the potentials and complementarities available in the region.