Nepal and the Democratic Socialist Republic of Sri Lanka established diplomatic relations on 1 July 1957. Relations between the two countries are marked by goodwill, mutual understanding and cooperation. Nepal opened an Honorary Consulate General in Colombo in 1975 and the Embassy of Nepal was established in Colombo in 1995. Sri Lanka has a residential Embassy in Kathmandu since 1993. Nepal and Sri Lanka celebrated the 60th Year of the establishment of diplomatic relations between the two countries in 2017.
Both Nepal and Sri Lanka are the founding members of the South Asian Association for Regional Cooperation (SAARC) and are also members of the Bay of Bengal Initiatives for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). The two countries share similar views on many international issues and work closely at various international forums including UN, NAM, and WTO.
Exchange of high-level visits has contributed to elevate the bilateral relations. His Excellency Mr. Maithripala Sirisena, President of Sri Lanka visited Nepal in 2018 during the 4th BIMSTEC Summit. Rt. Hon. Bidya Devi Bhandari, President of Nepal visited Sri Lanka to attend the concluding ceremony of the International Vesak Day held in Kandy in May 2017. Similarly, the then President of Sri Lanka His Excellency Mahinda Rajapaksa visited Nepal in November 2014 to attend the 18th SAARC Summit held in Kathmandu. He also paid a state visit to Nepal in March 2009. He had also visited Nepal in October 2009.
During the state visit of the president of Sri Lanka His Excellency Mahinda Rajapaksa to Nepal in March 2009, Nepal and Sri Lanka signed an agreement on the establishment of a Joint Commission at the level of Foreign Ministers of both countries. The Joint Commission looks after the areas of trade, finance, agriculture, industry and development of infrastructure, science and technology, investment and other areas mutually agreed upon.
The volume of trade between the two countries remains minimal in spite of signing the bilateral trade agreement as early as in April 1979. The major exports from Nepal to Sri Lanka in 2019 consisted of wool, horsehair yarn and woven fabric, textile articles, printed books, newspapers, pictures and other products of the printing industry etc. Similarly, the major imports from Sri Lanka included live animals and dairy products, coffee, cereals, miscellaneous chemical products, essential oils and, medical or surgical instruments etc. Bilateral trade statistics of past five years are given below:
Value in -000 NRS.
| Year | Imports from Sri Lanka | Exports to Sri Lanka | Trade Balance |
| 2015 | 243,590 | 44,313 | -199,277 |
| 2016 | 148,608 | 3,272 | -145,336 |
| 2017 | 213,852 | 10,228 | -203,624 |
| 2018 | 277,508 | 3,776 | -273,732 |
| 2019 | 149,458 | 2,814 | -146,644 |
Source: – Trade and Export Promotion Center, GON, 2019
Lumbini, the birth place of Shakyamuni Buddha and one of the holiest destinations for the Buddhists from around the world, has been attracting the Buddhist pilgrims from Sri Lanka every year. The Government of Sri Lankan remains supportive to Nepal’s efforts to further develop Lumbini as the fountain of World Peace. Sri Lanka has also built a Monastery and a Rest House Complex in Lumbini.
Every year, Nepal receives a large number of tourists from Sri Lanka. In 2019, Sri Lanka remained in the top 5th position as per the number of tourists visiting Nepal. The number of tourists’ arrival from Sri Lanka to Nepal in the past five years are given below:
| Year | No. of Tourists |
| 2015 | 43,117 |
| 2016 | 57, 521 |
| 2017 | 45,361 |
| 2018 | 69,640 |
| 2019 | 55,869 |
Source: – Nepal Tourism Statistics, 2019
Nepal and Sri Lanka signed an Air Services Agreement (ASA) in March 2009 in Kathmandu with the aim of increasing the flow of tourists to each other’s country through direct air connectivity between Kathmandu and Colombo.
Sri Lanka has made joint venture investment in the banking and insurance sectors of Nepal. Nepal and Sri Lanka signed the Avoidance of Double Taxation Agreement in July 1999.
Religious and cultural relations have brought the people of both countries closer. The two countries signed a Cultural Agreement in July 1999. The Agreement has helped promote cultural interactions between the two countries through various types of socio-cultural exchanges. Around 50 Nepali students are studying Buddhist Philosophy and other subjects in Sri Lanka at present. Similarly, around 100 Sri Lankan students are studying medical science and other subjects in Nepal.
The Government of Sri Lanka has provided the assistance for the reconstruction of Rato Machchindranath Temple at Bungamati and Anandakuti Mahabihara at Swoyambhu that were damaged in the earthquake in 2015.