India- Nepal Relations: Notes for UPSC

As close neighbors, India and Nepal share a unique relationship of friendship and cooperation characterized by open borders and deep-rooted people-to-people contacts of kinship and culture.

India-Nepal relation is an important topic from the GS Paper-II of the IAS Exam.

India – Nepal Relations – Latest Updates

  1. Recently, the Minister for Foreign Affairs of Nepal visited New Delhi for the sixth meeting of the India-Nepal Joint Commission. Nepal’s Prime Minister dissolved the House of Representatives in late December 2020, the move was termed ‘unconstitutional’ by the experts and the country’s Supreme Court is hearing writ petitions against the move.
  2. As a unique characteristic, Nepal’s internal political fundamentals continue to shape its foreign policy choices. In such a scenario, any inbound or outbound delegation is seen from a different prism.
  3. The Nepal government referring to the Treaty of Sugauli, 1816, took a decision to adopt a new political map that claims Indian territory of Lipulekh, Kalapani and other areas, as a part of Nepal.
  4. India Indian Army Chief’s contention that Nepal raised the dispute at the “behest of an external force”, namely China. These developments over the Kalapani territorial issue appear to threaten the basis of their special relationship, which has nurtured open borders and the free movement of people.
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India-Nepal Relations:- Download PDF Here

Background of India-Nepal relations

There has been a long tradition of free movement of people across the borders. Nepal has an area of 147,181 sq. Km. and a population of 29 million. It shares a border of over 1850 km to the south with five Indian States – Sikkim, West Bengal, Bihar, Uttar Pradesh, and Uttarakhand and in the north with the Tibet autonomous region of the People’s Republic of China. India-Nepal Treaty of Peace and Friendship of 1950 is the bedrock of the special relations that exist between India and Nepal. Both nations are also members of the South Asian Association for Regional Cooperation (SAARC).

Indo-Nepal Friendship Treaty

Under the provisions of the treaty, Nepalese citizen has enjoyed unparalleled advantages in India, availing the facilities and opportunities at par with Indian citizens. The Treaty has enabled Nepal to overcome the disadvantages of being a land-locked country. Over time, many regimes in Nepal have raised the issue of revision of the treaty. India has maintained that it is willing to examine all bilateral arrangements to further strengthen our relations. Specific suggestions from the Nepalese side have not been forthcoming. Beginning with the 12-Point Understanding reached between the Seven Party Alliance (SPA) and the Maoists in Delhi in November 2005.

Government of India welcomed the roadmap laid down by the historic Comprehensive Peace Agreement of November 2006 towards political stabilization in Nepal through peaceful reconciliation and inclusive democratic processes, India has consistently responded with a sense of urgency to the needs of the people and Government of Nepal in ensuring the success of the peace process and institutionalization of multi-party democracy through the framing of the new Constitution of India by a duly elected Constituent Assembly. India contributes to the development efforts of the Government of Nepal (GoN) by undertaking various development projects in the areas of infrastructure, health, rural and community development, education, etc.

India-Nepal Trade Relations

The grant assistance extended to Nepal during 2009-10 under ‘Aid to Nepal’ budget was ` 161 crores. Besides, GOI has extended considerable economic assistance to the ongoing peace process in Nepal. The overall quantum of India’s assistance to Nepal is approx. 3600 crores which include the Small Development Projects scheme offered by the Embassy of India delivers development assistance at the grass-roots level in sectors identified with the local population. It now covers over 370 projects with an outlay of approx. ` 402 crores. As part of India’s effort to assist with capacity building and development of Human Resources in Nepal, over 1500 scholarships are offered annually for Nepalese students to pursue various courses in India and Nepal.

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India continues to be Nepal’s largest trade partner, source of foreign investment and tourist arrivals. Bilateral trade between India and Nepal has increased substantially since the signing of the Trade Treaty in 1996 and received a further impetus after the signing of the revised Trade treaty in 2009 which has provisions that allow Nepal greater access to the Indian market. According to figures for the Nepalese fiscal year 2066 (July 2010), bilateral trade with India accounted stood at ` 16129.7 crores which accounted for 58.7% of Nepalese total external trade.

India-Nepal Military Relations

India had played a leading role in helping the Nepal Army (NA) in its modernization through the provision of equipment and training. More than 180 training slots are provided every year for training of NA personnel in various Indian Army training institutions. The Chief of Army Staff of the Indian Army is given the honorary rank of a General in the Nepal Army and a reciprocal honor is conferred on the Chief of the Nepal Army. India has always been proud to have Nepalese as soldiers in her Forces and has made every effort to ensure that they are looked after and cared for in their twilight years. As of now, we have over 1.23 Lakh ex-servicemen residing in Nepal. in 2010-11 the payments of pensions to the Indian ex-servicemen in Nepal amounted to ` 1100 crores.

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Latest Developments in India-Nepal Relations.

PM Narendra Modi’s Visit To Nepal (2014) Prime Minister Narendra Modi made every effort to be seen as Nepal’s best friend — a commoner, a pilgrim, the guardian of a Nepali in need, and less of a prime minister of a big country. By the time he left Nepal, he had won the hearts and minds of the Nepalese, imprinting deeply the idea that he alone has the will and ability to transform Nepal into a prosperous country. His repeated emphasis on India’s respect for Nepal’s sovereignty, and the message that missed opportunities of the past and failed promises should not act as speed-breakers in “our future journey to prosperity together”, were perhaps aimed at looking ahead at the future, not harping on the past.

By all accounts, many across the border were enthused by the PM’s promise of befriending neighbors. Modi did not disappoint. With a speech to Kathmandu’s parliament and constituent assembly, widely described in Nepal as “magical”, and by wading into welcoming crowds in Kathmandu, Modi may have taken away much of the recently accumulated poison in an old relationship. By emphasizing the absolute sovereignty of Kathmandu and affirming that Delhi will not interfere in its internal affairs, Modi tried to address one of the main concerns that animate Nepal’s elites — the deep fear of India. While not uncommon among small countries that live next to a large nation, Delhi had found it hard all these decades to overcome the entrenched suspicion of India in Kathmandu. Modi confronted this central problem head-on by offering to revise the 1950 India-Nepal Friendship Treaty — for many in Kathmandu, the very symbol of an unequal relationship. Modi complimented the new political emphasis on sovereign equality with a persuasive vision for shared economic prosperity through the development of transborder connectivity, agriculture, tourism, and hydroelectric power.

Due to the long-standing Kalapani issue, Indian-Nepali Relations have taken a turn for the worse as of June 2020.  Kalapani is a patch of land near the India-Nepal border, close to the Lipulekh Pass on the India-China border, which is one of the approved points for border trade and the route for the Kailash-Mansarovar yatra in Tibet. The issue has been a thorn in Indo-Nepal relations since independence.

On June 13, 2020, the parliament of Nepal voted unanimously to amend the Constitution to redraw the country’s new political map, laying claim over the strategically key areas of Lipulekh, Kalapani, and Limpiyadhura along the border with India. The Home Minister of Nepal also announced that  100 more border posts will be built along the new line as the dispute still rages on. At present, the Indian Government has invited Nepal for talks to resolve this long-standing border issue through diplomatic means.

Way Forward with India-Nepal Relations

  • India should stop looking at Nepal purely through a security prism, and at bilateral relations only as transactional and part of a zero-sum game with China.
  • India should focus on working towards multifaceted relationships to the advantage of both nations.
  • India should negotiate diplomatically to resolve the boundary dispute with Nepal under the aegis of International law on Trans-boundary Water Disputes. In this case, boundary dispute resolution between India and Bangladesh should serve as a model for this.
  • India should maintain a policy of keeping away from the internal affairs of Nepal, while at the same time, in the spirit of friendship, India should guide the nation towards a more inclusive democracy.

Frequently Asked Questions about India-Nepal Relations

Why did Nepal not become a part of the Indian union after India gained independence in 1947?

Upon, India’s independence in 1947, it was decided by the Government of Nepal not to join the Indian union as it had a cultural identity of its own and sought to continue its tradition of independence since ancient times. Moreover, India respected Nepal’s sovereignty in the spirit of cooperation and that criticism from the international community for what would be seen as the annexation of Nepal would be disastrous to the newly-independent nation.

What assistance does India provide for Nepal?

India extended a financial aid of 1.6 billion Nepalese rupees to Nepal to help 50,000 people in Nuwakot and Gorkha districts rebuild their houses damaged in the devastating earthquake in 2015. India has so far granted Nepal a total of Rs 4.5 billion Nepalese rupees under the housing reconstruction projects.

India-Nepal Relations:- Download PDF Here

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