India And Nepal Mend Fences But Some Gaps Remain – Analysis


The Kathmandu Post remarked that “there were some hits but many misses.”

Few believed the Nepalese Prime Minister Pushpa Kamal Dahal when he said in Kathmandu ahead of his departure for New Delhi for talks with his Indian counterpart, Narendra Modi, that he expected the visit to be a “historic” one. 

But while the term “historic” may be hyperbolic, the two countries did iron out many rough edges in the relationship during talks between Dahal and Modi on June 1. Modi exulted in the success by describing it as a “hit”.

The Nepalese press, however has expressed reservations. The Kathmandu Post, for example, remarked that “there were some hits but many misses.” It described the official-level negotiations as “ice cold” but acknowledged that on Thursday Modi brought warmth into the proceedings making the two sides find middle-ground. 

The Post noted that Dahal had failed to make the expected ‘breakthrough’ on the air route and the Pancheshwar Multipurpose Project. Nepal was also pushing for an umbrella agreement for 25 years on the export of electricity. Presently, an annual renewal agreement is necessary.

The Nepalese side stood its ground on electricity export and threatened that it would not sign the pact on Lower Arun and Phukot Karnali hydropower projects unless India relented on the electricity deal. However the two sides reached an agreement in principle at the prime minister’s level on Thursday. 

Currently, Nepal is allowed to sell to India 452.6MW of electricity generated by 10 hydropower projects. But every year, Nepal needs to renew the approval, which adds to the uncertainty. However, at the end, it was announced that Nepal could sell 10,000 mw of power over 10 years. 

“Power companies of Nepal and India can now directly sign medium and long-term agreements on electricity import and export as per the umbrella agreement. So far, we had to renew the agreement every year to export electricity from a hydropower project in Nepal. Now the new deal has paved the way for buyers and sellers from the two countries to sign agreements for five to 25 years,”  Kulman Ghising, managing director of Nepal Electricity Authority told The Post.  

Nevertheless, only a symbolic agreement was signed because the Indian cabinet would have to give the green light first. 

Nepal had asked for an additional air route for in-bound flights through Mahendranagar. But India had security concerns over the air route and proposed that only aircraft flying low (between 15,000 to 24,000 ft) could use the corridor. Nepal argued that this would not suit jet aircraft. Finally, Nepal agreed to the Indian stipulation.  “It should be taken positively,” said  Dahal’s chief political advisor Haribol Gajurel.

The two countries agreed to build the 480 MW Phukat Karnali Hydropower Nepal, which will be developed by India’s National Hydro Power Company. They also agreed on signing a project development agreement for the 679 MW Lower Arun project to be undertaken by India’s state-run Satluj Jal Vidut Nigam.

India said it was keen on the Pancheshwar Multipurpose Project but The Post commented that this had been New Delhi’s stand for the last 26 years but has not moved forward. 

The two sides also signed seven agreements to boost cooperation in a range of areas, including the extension of a cross-border petroleum pipeline and the development of integrated check posts. A particularly noteworthy pact was the revised India-Nepal Treaty of Transit. 

Significantly, the two leaders virtually inaugurated integrated check posts at Rupaidiha in India and Nepalgunj in Nepal. They also virtually flagged off a cargo train from Bathnaha in Bihar to the Nepal customs yard.

To further strengthen cultural and religious ties with Modi’s Hindu nationalist government,  Dahal decided that projects related to the Ramayana circuit would be expedited. That this appealed to Modi was evident when it was Modi who referred to it at the press conference.

In his remarks, Dahal said that he appreciated Modi’s “Neighborhood First” policy and added: “The relations between Nepal and India are age-old and multi-faceted. This relationship stands on the solid foundation built on one hand by the rich tradition of civilizational, cultural, and socio-economic linkage and on the other by the firm commitment of the two countries to the time-tested principle of sovereign equality, mutual respect, understanding and cooperation.

Troubled Past 

Nepal-Indian relations had been fraught for a number of years over old and new issues. While the Nepalese complained of Indian hegemony, the Indians complained about Nepal’s dalliance with China. The fact that Prime Minister Dahal was heading a Maoist party only made matters worse from the New Delhi angle.

However, it is now clear that, behind the scenes, Dahal and Narendra Modi had been moving towards a rapprochement. Dahal, head of a Maoist Communist party, had realized that India under Modi could not be wished away, especially because of the stature bestowed upon it by the United States and the West, its fearless advocacy of the interests of the Global South in international forums and its importance in the comity of nations as chair of the G20 and the Shanghai Cooperation Organization (SCO).

Nepal had no option but to fall in line with New Delhi’s thinking because its economic links with the rest of the world is solely through India. Nepal shares a border of over 1,850 km with five Indian States, namely, Sikkim,  West Bengal, Bihar, Uttar Pradesh, and Uttarakhand. Land-locked Nepal relies heavily on India for the transportation of goods and services. Nepal’s access to the sea is also through India. Its imports are predominantly from India and through India. The economic and social links across the border are large, multifarious and irreplaceable.  

The open border and the stark dependence on India for trade and employment had placed Nepal-India relations at a depth no other bilateral relationship could match. And in contrast to a politically stable and strong India, Nepal is politically unstable, weak and lacking in direction.

(This article appeared in Ceylon Today on June 5, 2023)

P. K. Balachandran

P. K. Balachandran is a senior Indian journalist working in Sri Lanka for local and international media and has been writing on South Asian issues for the past 21 years.

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