An opportunity to repolish India-Nepal ties

News: The Nepal’s Prime Minister Sher Bahadur Deuba is on trip to India from April 1.

This visit holds significance since it is the first visit of Nepal’s PM to India since 2018, and is also the first bilateral visit of the new PM of Nepal.  

What are the issues with India-Nepal relations? 

India-Nepal bilateral relations reached a historic low when the Indian blockade was done in September 2015. 

After demonetisation, India refused to accept the demonetised rupee bills from the Nepal Rastra Bank.

Poor perception of India’s trust in Nepal. For example, the passengers boarding flights from Nepal to India are subjected to a pre-boarding security check. This happens despite 20 years of the hijacking of an Indian Airlines aircraft. 

India has not welcomed the million-grant assistance proposed by Millennium Challenge Corporation (MCC), a US government foreign aid agency and approved by the Nepali parliament. It may prevent improvement in the India-Nepal relationship and give a dent to the Indo-US relationship. 

Nepal is often blamed for playing geopolitical games between China and India due to its unique geographical location.  

China is actively engaged in Nepal. It has made inroads into the politics of Nepal. For example, it sponsored an anti-MCC campaign. 

Since July 2020, The Nepal Parliament has been dysfunctional due to development of the cracks within the former Communist alliance.  

What is the way forward?

First, India can build trust in Nepal through a power trade agreement. The hydropower will remain the only source that can manage peak demand in India despite India’s focus on solar energy projects in India. 

Second, both countries should promote trade and transit arrangements through electronic platforms. It can provide many new opportunities for businesses on both sides of the border. 

Third, Nepal needs to work upon the Bilateral Investment Promotion and Protection Agreement (BIPPA) signed between India and Nepal. Its implementation would attract more foreign investments from Indian investors.  

Fourth, New Nepali leadership can provide confidence to India that Nepal is interested to work with India.  

Source: The post is based on an article “An opportunity to repolish India-Nepal ties” published in The Hindu on 1st April 22.