[Answered] Amid the political crisis in Nepal, India needs a policy reset. Examine the foreign policy challenges and strategic imperatives for India in engaging with the new leadership with tact and sensitivity.

Introduction

Nepal, India’s closest neighbour with over 1,850 km shared border and historic cultural ties, faces political churn—17 prime ministerships in two decades—demanding that India recalibrate policy balancing strategic imperatives with sensitive diplomacy.

Foreign Policy Challenges

1. Political Instability and Leadership Transition: Frequent government changes weaken continuity in bilateral relations. Resignation of K.P. Sharma Oli, who mobilised anti-India nationalism during the 2020 Kalapani border dispute, highlights volatility. Challenge: engaging new leaders without appearing interventionist.
2. Perception of Hegemony: Since 1947, India often seen as a “big brother.” 2015 unofficial blockade left deep scars in Nepal’s public memory, fueling anti-India rhetoric. Rising “India Out” campaigns demand tactful, perception-sensitive engagement.
3. China Factor:  Nepal integral to China’s Belt and Road Initiative (BRI) since 2017. Beijing’s investments in hydropower and infrastructure compete with India’s outreach. India must counterbalance without turning Nepal into another Sino-Indian contestation ground.

• • Federalism and Inclusivity: Nepal’s 2015 Constitution marginalised Madhesis and Janajatis, groups with cross-border kinship. India must cautiously engage provincial leadership beyond Kathmandu to strengthen federal democratic processes, avoiding perceptions of interference.
  • Economic Fragility: Post-pandemic slowdown, unemployment, and remittance dependence (over 24% of GDP, World Bank 2022) aggravate unrest. Political instability threatens bilateral projects like hydropower cooperation and border infrastructure.

Strategic Imperatives for India

1. Geostrategic Importance: Nepal forms a buffer between India and China. Control over mountain passes historically shaped India’s Himalayan frontier security doctrine. Cooperation with Nepalese forces crucial under India’s neighbourhood first policy.
2. Economic Interdependence: India accounts for over 60% of Nepal’s trade and largest FDI source (Reserve Bank of India, 2023). Hydropower: Recent India-Nepal-Bangladesh energy export framework a game-changer. Opportunity to provide budgetary and technical support in crisis, enhancing trust.
3. Connectivity and Integration: Rail projects (Jayanagar-Bijalpura-Kurtha), cross-border transmission lines, and integrated check posts deepen integration. Digital cooperation in fintech, e-governance, and education can empower Nepal’s youth (median age 25 years).
4. Soft Power and Cultural Diplomacy: Shared civilizational ties (Ramayana circuit, Buddhism heritage) remain underutilized. India’s scholarships, healthcare aid (during COVID-19, vaccines under “Vaccine Maitri”) highlight potential.
5. Tactful Engagement: Avoid personality-driven diplomacy; focus on institutions. Encourage inclusive democracy, learning from Sri Lanka’s 2022 economic crisis response. Adopt multi-vector diplomacy—working with provinces, civil society, and youth leaders.

Way Forward

1. Engage inclusively: Strengthen ties beyond Kathmandu elites.
2. Economic first approach: Deliver infrastructure, trade facilitation, and hydropower investments.
3. Strategic balance: Counter China through cooperation, not confrontation.
4. Perception management: Promote “equal partnership” narrative to avoid hegemonic image.

Conclusion

As Kautilya in Arthashastra emphasised, neighbours are natural partners and rivals. India’s Nepal policy must blend realism with sensitivity, ensuring security, stability, and shared prosperity in a transforming Himalayan neighbourhood.