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India-Nepal Relations: A Practical Approach


The recent trip to India by Prime Minister Pushpa Kamal Dahal Prachanda shows a dedication to tackling issues, looking into opportunities, and assessing many facets of bilateral cooperation.


GS Paper 2; Bilateral Relationship

Mains Question

Examine the contribution that economic integration has made to improving India and Nepal’s bilateral ties, paying particular attention to important fields like hydropower, infrastructure, and connectivity. (150 Words)

Realistic Irritant Handling

  • Political Courage of Prachanda: Despite difficulties at home, Prachanda showed political courage by pressing forward with a trip to India, demonstrating his dedication to establishing a brighter future for Nepal.
  • Concentrating on possibilities: Prachanda’s strategy entailed giving collaboration possibilities top priority rather than allowing political clamour to influence one’s decisions. With a realistic approach, issues like the 1950 Treaty, border disputes, and the Eminent Persons Group (EPG) report are meant to be settled.

The 1950 Treaty of Friendship and Peace

  • It establishes national treatment for both Indian and Nepalese businesses (i.e., once imported, foreign goods would be treated no differently than domestic goods), and it talks about the reciprocal treatment of Indian and Nepali citizens in the two countries with regard to residence, property, business, and movement.
  • Additionally, Nepal now has access to Indian-made weapons.

Nepal’s importance to India

  • Buffer state: Nepal protects other nations from potential Chinese assault.
  • Internal Security: With Nepal’s assistance, reducing drug trafficking and cross-border incursions.
  • Diaspora: Indian workers in Nepal and the Nepali diaspora in India.
  • Energy security: There are numerous transboundary Himalayan rivers with enormous hydroelectric potential that India and Nepal share.

Aiming for Economic Integration

  • Identifying Game Changers: The visit focused on critical areas for reshaping the economic environment, including hydropower projects, infrastructure expansion, access to river transportation, creative tourism circuits, and increased connectivity. When the Pancheshwar Multipurpose Project (PMP) was negotiated, signed, and ratified by parliament a few years ago, despite political upheavals in both nations, there was an extraordinary level of cross-party unanimity.
  • Renewing Your Commitment Following COVID-19, both nations reaffirmed their dedication to bilateral cooperation with the goal of enhancing deliveries and collaborating across many industries.
  • Cooperation in the power sector: The sub-region’s energy security and prosperity are set to be improved by cooperation in the power sector, especially the trilateral power transaction from Nepal to Bangladesh through India.

Technology and Payments Collaboration

  • Digital Financial Connectivity: The MoU between the Nepal Clearing House Ltd. and the National Payments Corporation of India promotes cross-border digital payments, promoting economic integration and regional collaboration.
  • Space Technology Cooperation: India’s pledge to help Nepal with technology, satellite services, ground stations, and disaster response opens up possibilities for collaboration in these areas.

Taking On Challenges

  • The challenge for Nepal is to depoliticize collaboration with India, notably in the management of water resources, while concentrating on enhancing governance and battling corruption.
  • Perception and Ownership: To ensure a sense of ownership, equity, and credit for significant joint endeavours across the political spectrum, India needs to overcome the perception in Nepal that it is no longer a foreign policy priority.


  • Despite opposition criticism, Nepal can obtain India’s assistance in fulfilling its requirements and expectations if it maintains a steady focus on development.
  • India and Nepal can establish closer ties for the mutual benefit of both countries by taking a practical approach, dealing with irritants, and encouraging cooperation in many sectors.

December 2023