Neighbours first: On India-Nepal ties

Source: The post “​Neighbours first: On India-Nepal ties” has been created, based on “​Neighbours first: On India-Nepal ties” published in “The Hindu” on  30th March 2026.

UPSC Syllabus: GS Paper-2- International Relations

Context: India and Nepal share a unique civilisational relationship based on open borders, deep cultural ties, economic interdependence, and strong people-to-people connections. The appointment of Nepal’s new Prime Minister Balendra Shah provides an opportunity for both countries to reset relations and strengthen cooperation under India’s “Neighbourhood First” policy. However, evolving domestic political dynamics in Nepal and past bilateral tensions require a cautious and forward-looking diplomatic engagement strategy.

Significance of India–Nepal Relations

1. Civilisational and Cultural Linkages

1. India and Nepal share centuries-old cultural, religious, and linguistic ties reinforced through shared traditions such as pilgrimage circuits and intermarriage across borders.
2. The open-border arrangement between the two countries allows unrestricted movement of people, strengthening familial and economic linkages.

2. Economic Interdependence

1. Nepal is a landlocked country and depends heavily on India for trade transit routes and access to global markets.
2. India remains Nepal’s largest trading partner and a major source of investment and development assistance.
3. Regional energy cooperation through cross-border electricity trade provides Nepal with opportunities to export hydropower and earn revenue.

3. Strategic Importance

1. Nepal occupies a critical geopolitical position between India and China, making it strategically significant for India’s regional security interests.
2. Stable India–Nepal relations are essential for maintaining security along India’s northern borders.

Emerging Political Changes in Nepal and Their Implication

1. Rise of New Political Leadership

1. The election of Balendra Shah, Nepal’s first Madhesi Prime Minister at a relatively young age, reflects a shift away from the traditional dominance of the Pahadi political elite.
2. This change represents the emergence of a new generation of leadership that is less influenced by historical political alignments with India.

2. Influence of Gen-Z Political Mobilisation

1. The political transition in Nepal following the fall of the government of K. P. Sharma Oli reflects the rise of youth-led political mobilisation demanding governance reforms and national assertion.
2. This evolving political landscape requires India to engage with new stakeholders rather than relying on legacy political relationships.

3. Uncertain Foreign Policy Orientation

1. The foreign policy priorities of the new Nepali leadership regarding relations with India, China, and the United States are still evolving.
2. Therefore, India must adopt a flexible diplomatic approach while engaging with Nepal’s emerging political leadership.

Challenges in India–Nepal Relations

1. Legacy Political Distrust

1. India–Nepal relations experienced strain in the past decade due to disagreements related to Nepal’s constitution-making process and cross-border trade disruptions.
2. Perceptions of interference in Nepal’s domestic affairs have occasionally generated nationalist sentiments within Nepal.

2. Territorial Issues

1.  Differences over boundary-related matters have periodically created diplomatic tensions between the two countries.
2. The publication of maps reflecting the idea of “Greater Nepal” by some political actors has raised concerns in India.

3. Strategic Competition in the Region

1. Nepal’s increasing engagement with China has introduced new geopolitical complexities into India–Nepal relations.
2. Infrastructure cooperation between Nepal and external partners requires careful diplomatic management by India.

4. Pending Institutional Issues

1. Nepal has requested revisions to the
   India–Nepal Treaty of Peace and Friendship (1950),
   which remains a sensitive issue in bilateral relations.
2. Restrictions on overflight permissions and electricity trade involving third-country investments have also affected bilateral cooperation.

Opportunities for Strengthening India–Nepal Relations

1. Energy Cooperation

1. India’s regional energy grid initiatives can help Nepal export surplus hydropower and strengthen economic integration between the two countries.
2. Facilitating electricity trade will contribute to Nepal’s economic growth and regional energy security.

2. Support During External Economic Shocks

1. Nepal remains vulnerable to disruptions in fuel and fertilizer imports due to global geopolitical conflicts.
2. India can play a supportive role by ensuring stable supply chains for essential commodities.

3. Facilitating Aviation and Connectivity

1. Granting overflight permissions for new Nepali international airports can strengthen regional connectivity and tourism growth.
2. Improved connectivity will enhance trade and people-to-people exchanges.

4. Strengthening Development Partnership

1. India’s development assistance in infrastructure, health, education, and connectivity sectors can reinforce long-term trust between the two countries.
2. Expanding cooperation in border infrastructure and digital connectivity can deepen bilateral engagement.

5. High-Level Political Engagement

1. Early diplomatic outreach by inviting Balendra Shah to India would signal India’s commitment to strengthening neighbourhood relations.
2. Regular high-level visits help maintain political trust and strategic clarity between the two governments.

Way Forward

1. Adopt a Sensitive Diplomatic Approach: India must engage Nepal with respect for its sovereignty while acknowledging changing domestic political dynamics.
2. Update Bilateral Institutional Frameworks: Revisiting the India–Nepal Treaty of Peace and Friendship (1950) can help address long-standing concerns and modernise bilateral cooperation.
3. Expand Economic and Energy Integration: Strengthening cross-border electricity trade and infrastructure connectivity can transform bilateral relations into a mutually beneficial economic partnership.
4. Strengthen the Neighbourhood First Policy: Prioritising Nepal within India’s neighbourhood diplomacy framework will reinforce trust and stability in South Asia.

Conclusion: India and Nepal share a unique relationship shaped by geography, history, and culture, but evolving political dynamics in Nepal require renewed diplomatic engagement. A strategy based on mutual sensitivity, institutional reforms, connectivity expansion, and high-level political outreach can help both countries build a stable and future-oriented partnership under the “Neighbourhood First” approach.

Question: India–Nepal relations are rooted in geography, culture and economic interdependence, yet they face periodic political challenges. In the context of Nepal’s new leadership, examine the opportunities and challenges in India–Nepal relations and suggest the way forward for strengthening bilateral ties.

Source: The Hindu