Visit of Nepal’s PM to India

Context: During Nepal’s PM visit to India, both countries signed series of agreements to strengthen their bilateral relations.

Outcomes of the visit:

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  • A Transit Agreement signed between two countries, which will help Nepal’s population to access India’s inland waterways.
  • A long-term Power Trade Agreement has signed to take forward India – Nepal vision document for cooperation 2022. Under this, target has been set for import of 10,000 MW of electricity from Nepal. 
  • A proposal to build new pipeline from Siliguri to Jhapa in easter Nepal.
  • A MoU is signed for the development of Phukot Karnali Hydroelectric Project.
  • Both countries agreed to achieve the time bound progress on the Pancheshwar multipurpose project.
  • Both Prime Minister’s participated in a ceremony of Gorakhpur – Bhutwal Transmission line.
  • Inauguration of cargo train from Bathnaha in India to Nepal Customs Yard.
  • Two integrated check posts (ICPs) have been inaugurated at Nepalgunj in Nepal and Rupaidhia on India side.
  • Both countries calls for fast track completion of projects related to Ramayana Circuit.

India Nepal Relations background:

India and Nepal share close and friendly relations characterized by age-old historical and cultural linkages, open border and deep-rooted people-to-people contacts. The multifaceted relations between the two countries have been given a renewed momentum in the last few years through intensified high-level political exchanges, regular meetings of bilateral mechanisms across diverse sectors of cooperation, expanding economic and development partnership, boosting connectivity and cooperative initiatives in water resources and hydro-power sectors, defense and security. The India-Nepal Treaty of Peace and Friendship of 1950 forms the bedrock of the special relations that exist between India and Nepal. Nepalese citizens avail facilities and opportunities on par with Indian citizens in accordance with the provisions of the Treaty. Nearly 8 million Nepalese citizens live and work in India. 

Areas of Cooperation:

  1. Defence Cooperation: India and Nepal have a significant defense cooperation, with India assisting the modernization of the Nepal Army through equipment supply and training. Nepal Army personnel attend training courses in Indian Army institutions. The Indian Embassy in Kathmandu facilitates pension disbursement and welfare programs for ex-Gorkha soldiers and their families. They also conduct joint military exercises like Surya Kiran.
  2. Connectivity & Development Partnership: India provides comprehensive development assistance to Nepal, with a focus on grassroots infrastructure, health, water resources, education, and rural development. Additionally, India has extended Lines of Credit worth USD 1.65 billion for infrastructure projects and launched the “India-Nepal New Partnership in Agriculture” for collaborative projects in agricultural research and development.
  3. Water resources Cooperation: Water resources cooperation, particularly regarding shared rivers, is a crucial aspect of India-Nepal relations. Numerous rivers flow from Nepal to India, forming a significant part of the Ganges river basins. These rivers hold the potential for irrigation and power generation. A three-tier bilateral mechanism established in 2008 effectively addresses water resource-related issues, flood management, inundation, and hydropower cooperation between the two countries.
  4. Energy Cooperation: India and Nepal have a Power Exchange Agreement since 1971, utilizing each other’s transmission infrastructure for power supply in border areas. Several transmission interconnections enable power exchange and trade. High-capacity cross-border transmission lines and agreements facilitate enhanced electricity transmission and grid connectivity. Additionally, South Asia’s first cross-border petroleum products pipeline was inaugurated in 2019, connecting Motihari in India to Amlekhgunj in Nepal.
  5. Economic Cooperation: India is Nepal’s largest trading partner, with bilateral trade more than $8.5 billion. Nepal mainly exports petroleum products, vehicles, and agricultural products to India, while importing items such as petroleum, machinery, medicine, and electrical equipment. Indian firms contribute over 30% of Nepal’s foreign direct investment and operate in sectors like manufacturing, banking, insurance, power, and tourism. 
  6. Education: India offers approximately 3,000 scholarships each year to Nepalese students for various academic levels and disciplines, both in India and Nepal, including fields like engineering, medicine, agriculture, and fine arts.
  7. Cultural Cooperation: Both countries have signed several agreements and memoranda of understanding (MoUs) in fields such as literature, broadcasting, journalism, fine arts, youth affairs, and twinning of sister cities. Additionally, India is establishing an e-library system in Nepal. The Swami Vivekananda Centre for Indian Culture and the Nepal-Bharat Library are notable institutions promoting Indian culture in Nepal. 

Issues between two India & Nepal:

  • There has been no progress on the 5000 MW Pancheshwar multipurpose project on Mahakali River because of Nepal’s reluctance.
  • Progress has also not been witnessed on the dam on Kosi River which would prevent flooding in both India and Nepal because of lack of willingness on the part of Nepal.
  • India announced Rupees 100 crore grant for the development of Janakpur in 2018, but no proposal has been received from the Nepalese side.
  • Nepal’s parliament gave approval to second constitutional amendment which gave legal status to the new political map of Nepal and its boundaries with India near the Lipu-Lekh pass.
  • For Nepal, the Kali River originates from Limpiyadhura in the higher Himalayas, giving it access to a triangular-shaped land defined by Limpiyadhura-Lipulekh and Kalapani. (Originating from Treaty of Sugauli, (1814).
  • Nepal shares a border of 1400 km with China in the Tibet region. China is Nepal’s second largest trading partner. It has undertaken various projects including the development of airports, hydropower etc.
  • Nepal has been using the China card in its dealing with India under the pretext of balancing its relation between the two big neighbors.
  • With increasing economic influence of China, Nepal does not want to be left out of this success story. It signed a MoU with China on the BRI in 2017.
  • China has also started to intrude in the affairs of Nepal Army by providing training and supply of equipment. This is one of the biggest causes of concern for India because of Indian army’s links with the Nepal army.
  • China is leveraging ties with the Maoist parties of Nepal and occasionally using the cheque book diplomacy to increase its influence.

Way Forward

  • Treaty of Peace and Friendship, 1950 should be replaced with a more balanced and democratic treaty.
  • A regulatory regime needs to be introduced by making people produce identity cards while crossing over to either side. 
  • Jointly tackling common challenges in areas of combating terrorism, extremism and all kinds of trafficking.
  • Our engagement with Nepal must find a prominent place for Nepali citizens who are our immediate neighbors. The engagement should not just be limited to the political elites.
  • India needs to appreciate that the people-to-people links between our two countries have an unmatched density and no other country, including China, enjoys this asset.
  • To counter the Chinese influence, India needs to speed up unfinished projects that India has committed and create conditions of mutual trust which makes it difficult for China to leverage any dispute that arises in future.
  • India needs to understand that the Nascent Nepalese democracy will assert independence in its Foreign Policy. But it important for India to create conditions which makes it a go to country for Nepal in times of need.
  • India also needs to work on its perception in the hill population of Nepal.

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