INTERNATIONAL RELATIONS TOPICS

INDIA-NEPAL RELATIONS

 As close neighbours, India and Nepal share a unique relationship of friendship and cooperation
characterized by open borders and deep-rooted people-to-people contacts of kinship and culture.
There has been a long tradition of free movement of people across the borders.
 The India-Nepal Treaty of Peace and Friendship of 1950 forms the bedrock of the special
relations that exist between India and Nepal. Under the provisions of this Treaty, the Nepalese
citizens have enjoyed unparalleled advantages in India, availing facilities and opportunities at par
with Indian citizens.
 India‟s core interest in Nepal is a united Nepal‟s peace and stability which has a bearing on
India as well because of the long and open border shared between India and Nepal.
Bilateral defense relations have also been robust. India is Nepal‟s largest supplier of military
equipment. Besides, the two militaries cooperate through joint exercise, training and educational
exchanges. India and Nepal have several bilateral institutional dialogue mechanisms, including the
India-Nepal Joint Commission co-chaired by External Affairs Minister of India and Foreign Minister
of Nepal.
 However the India-Nepal relationship has often swung from one extreme to the other. In the last
three years alone, this tendency has been in full play, and with unfortunate results for both
countries.
 Nepal‟s extreme dependence on India and the latter‟s alleged,insensitivity to its smaller neig
hbour‟s sovereignty and efforts at micromanagement have undermined friendly relations and
generated anti – India sentiment in Nepal. Vested interest groups have also fuelled anti-India
sentiment to serve their narrow political and economic interests.
 Nepalese political parties have stoked anti-Indian protests to trigger unrest and destabilize
governments. Playing the China card has also enhances Kathmandu‟s leverage and helped it gain
more from an insecure India.
Recent Developments
PM K.P. Sharma Oli‟s visit to India: April 2018
 Nepalese PM K.P. Sharma Oli was on a three-day visit to India – his first foreign trip after taking
charge as Nepal prime minister for the second time in February 2018. The visit keeps up with the
tradition of India-Nepal ties under which the prime minister always makes the first visit to India.
Context of the visit
 However it came after three years of deep acrimony between India and Oli and about six
months of an intense effort by the two to patch up. The United Marxist Leninist (UML) Party
under Oli‟s leadership was seen as the main source of resistance to the Indian agenda. Ties
deteriorated after Oli had to step down as Nepal prime minister in 2016 following a blockade on the
India-Nepal border. Many in the Himalayan nation blame India for the blockade that crippled the
economy of the landlocked country. Oli reacted strongly and decisively. He whipped up Nepali
nationalism with anti-India overtones, defeated political formations that were willing to play for India
to marginalize him and flashed the China card to diversify Nepal‟s dependence on India. The ties
were further strained after Nepal decided to join China's One Belt One Road amid India's
concerns that the Chinese initiative would harm its strategic and economic interests.
 A little before the Nepal elections in November-December 2017, a senior Indian political interlocutor
visited Kathmandu. The same interlocutor met Oli in Bangkok and reiterated India would work with
his government. On his part, Oli pledged he would stick to tradition and make his first visit to India
1
 INTERNATIONAL RELATIONS TOPICS
as a sign of his commitment to close ties between the two countries. PM Narendra Modi spoke to
Oli twice on the phone before he became PM and once after he took office; External Affairs Minister
Sushma Swaraj made a visit to Kathmandu before the Oli government took over and, defying
protocol, spent most of her time with UML leaders (then still in opposition) and met Nepali Congress
leader and PM Sher Bahadur Deuba at the end. New Delhi had just emerged from a faceoff with
China in Bhutan‟s Doklam plateau and it couldn‟t afford to push Nepal into China‟s arms. PM
Oli‟s India visit is a culmination of this intensified diplomacy.
 Secure in his home turf, the new Prime Minister Oli seems intent on projecting a confident
Nepal externally. There has been a tectonic shift in Nepal‟s politics since 2016. In the elections to
the federal parliament and seven provincial assemblies late last year, the Left Alliance received a
sweeping mandate across the country. The Left controls six of the seven provinces. No prime
minister in Nepal‟s history has enjoyed the level of political support as K P Oli currently
does.
Major Takeaways
 During the visit, the two countries also agreed to develop inland waterways and construct a rail line
from Raxaul in India to Kathmandu in Nepal. They agreed to conduct "feasibility studies" regarding
construction of a Raxaul-Kathmandu railway line and operating Nepalese steamers to transport
goods and people from Nepal to other countries. The proposal is politically significant, and comes
nearly two years after China agreed to construct a strategic railway link with Nepal through Tibet to
reduce Kathmandu's total dependence on India.
 PM Modi and his Nepalese counterpart also jointly inaugurated Integrated Check Post at Birgunj in
Nepal and ground breaking ceremony of Motihari-Amlekhgunj cross-border petroleum products
pipeline at Motihari. They agreed to expedite the existing connectivity projects such as construction
of railway lines from Jayanagar to Janakpur and from Jogbani to Biratnagar are already underway,
while three other railway projects remain in the pipeline: New Jalpaiguri-Kakarbhitta, Nautanwa-
Bhairahawa and Nepalgunj Road-Nepalgunj.
 India also agreed to conduct a pilot project on organic farming and soil health monitoring in Nepal to
help the natural resource-rich neighbour in developing agriculture and allied sectors.
Analysis of Oli‟s visit
 All apparent indications suggest that Nepali Prime Minister KP Sharma Oli‟s three-day visit to India
had been a success. The main purpose of the visit was to rebuild trust between the two
countries.
 PM Oli also realised that his posturing on seeking an alternative to India in China was more of a
political statement than an economic reality. He knows that without Indian help and support, his
electoral promises to deliver development cannot be kept. An unhappy India can also be a source
of trouble as his alliance with the Maoists, even after unification of the two Communist parties, will
remain inherently fragile and vulnerable.
 PM Oli asserted Nepal‟s sovereignty and independence, demanded non-interference and respect
for Nepal‟s sensitivities, asked for expediting implementation of pending and promised projects in a
time-bound manner, expected concrete steps to reduce Nepal‟s heavy bilateral trade deficit, and
sought all possible help in ensuring Nepal‟s political stability and economic development. He made
it abundantly clear that while keeping in mind India‟s core security interests, he will freely
engage with all other neighbours in promoting Nepal‟s interests.
 There was also the invisible elephant in the room – China – that was all too willing to and capable of
exploiting Indian weaknesses and vulnerabilities in the whole of South Asia, including Nepal, to

2
 INTERNATIONAL RELATIONS TOPICS
facilitate its assertive intrusion into India‟s neighbourhood, both economically and strategically. Its
Belt and Road Initiative had come into play as a major and attractive instrument in this respect.
 The Indian side has gone along with Oli‟s sentiments in all public pronouncements, but has quietly
conveyed the message subtly, yet firmly, that undue warming up with China and Pakistan will
not go down well with New Delhi. India preferred the strengthening of BIMSTEC (Bay of Bengal
Initiative for Multi-Sectoral Technical and Economic Cooperation) as against SAARC (South Asian
Association for Regional Cooperation), and suggested that Oli give up Pakistan‟s advocacy for
activating SAARC.
PM Modi‟s visit to Nepal, May 2018
 In a clear sign that relations with Nepal hold importance for India, Prime Minister Narendra Modi
paid a return visit to Nepal, his third visit in four years. It is the first high-level visit from India since
the formation of a new government in Nepal this year. The visit is being seen as an attempt by
both countries to bring back normalcy in ties after a spell of uneasiness, and is particularly
important in the backdrop of Beijing strengthening its political and economic ties with the
Himalayan nation.
 PM Modi claimed all misunderstandings with Nepal were over and the bilateral ties are heading to a
new high while stressing that the recent election and its outcome would be written in golden words
in Nepal's history. For Nepal, Modi‟s visit shortly after the formation of the strong leftist government
led by Nepalese Prime Minister Oli is being seen as India‟s endorsement of the Nepalese
Constitution that was promulgated two and a half years ago. Oli was among the key leaders who
played a major role in drafting the 2015 constitution, which failed to get India‟s endorsement,
resulting in an official blockade against the neighbouring country.
 The PM flagged off his visit to Nepal with a visit to Janakpur where he jointly launched the
Ramayan circuit along with Oli to promote religious tourism in Nepal and India. They flagged off the
inaugural direct bus service between Janakpur and Ayodhya to launch the Nepal-India Ramayana
Circuit connecting Janakpur, the birthplace of Sita, with Ayodhya. India is developing 15 cities in
India under the Ramayana Circuit such as Ayodhya, Nandigram, Shringverpur and Chitrakoot, that
will be developed to promote religious tourism.
 PMs Modi and Oli set the ball rolling for the construction of the 900 MW Arun III project in
Sankhuwasabha district of eastern Nepal being developed by India through remote control. It is the
largest hydropower project to be developed in Nepal that is expected to be completed within five
years at a cost nearing Rs 6,000 crore. The venture will transform the Nepalese economy by
generating around 900 MW of power as it aims to provide billions of dollars to the Nepal
government in the form of free electricity, royalty and tax. India, too, would benefit through the
supply of the electricity generated by the project
 Modi‟s visit also gave impetus to another key connectivity and infrastructure project -the Raxaul -
Kathmandu rail link that was announced during Oli‟s visit to India in April this year, which will
connect Nepal to the Indian railway system. A survey of the area will be completed by the end of
this year and despite the challenging terrain the focus is on implementation. The Raxaul-
Kathmandu rail line will expand connectivity between the two neighbours and enhance people-to-
people linkages and promote economic growth and development. It is especially important in the
backdrop of China also proposing to build its own railway line between Lhasa in the Tibet
Autonomous Region and Kathmandu by 2022, with an apparent aim at reducing the Nepalese
capital‟s dependence on India.
 Talks on the ambitious Pancheshwar multi-purpose dam project were held. Sources have said the
detailed project report is complete. This project, which was conceived 22 years ago, besides
generating hydro-power to the tune of 4,800 MW, augmenting irrigation potential and controlling

3
 INTERNATIONAL RELATIONS TOPICS
floods, also has the potential to address Delhi‟s growing water demand through a proposed Sharda-
Yamuna inter-linking of rivers.
 New Delhi has continued its development cooperation commitments even as ties deteriorated as
was evident in the rising graph of electricity exports from India over the last four years. India now
meets a lion‟s share of 750-800-MW peak shortage in Nepal.
 They also explored methods to cut Nepal's trade deficit with India while providing easy entry to
Nepali products including ginger and cardamom. However, India remained silent on exchanging
banned Indian notes parked in various financial and banking institutions and held by general
people, and on Nepal's request to add four additional air routes via India.
 India is keenly aware that China‟s open chequebook policy has called into question its own
tardy implementation of infrastructure projects .In the past there have been constant complaints
that Indian aided projects were never completed in time and were poor in quality. This needs to be
changed. What is promised should be delivered on time and the job should also be well done. On
present reckoning, China has a better record of project execution than India and this is a
deficiency India needs to overcome to check China‟s presence and growing influence in
Nepal.
 For some analysts, the agreement on these game changers shows that India set out to please
Nepal and Nepal, for its part, was willing to be pleased. The big change is that India-Nepal
relations have now acquired a large transactional dimension. India is competing with China to
win over Nepal and the Nepalese, and keep the tide of public opinion in India‟s favour. Unhealthy
rivalry – such as India refusing to buy power from Nepal if it is generated from a Chinese-built
hydropower project – will not help India‟s case. To the contrary, it might be counterproductive.
 For another analysts, India, as Modi impressed on Nepal during his visit is unlikely to slacken when
it comes to raising its appeal with the “Hindu card”. In fact, during his visit, Modi missed no
opportunity to utilise Hinduism as a basis for India-Nepal bonding. This „religious diplomacy‟
pushed by India is a new facet of India-Nepal relations.
 Modi‟s charm offensive with emphasis on Hinduism as a binding factor – as distinct from the stress
on Buddhism in the not too distant past – raises serious questions. The most important of these is
whether Hindu religious diplomacy can work as a cementing force in India-Nepal relations. The
Hindu element has been a part of the relationship, but was never to the fore as it is now under
Modi. An earlier attempt under Modi, to project India as a „Buddhist power‟, including in Nepal, was
not very successful. The fact that Modi‟s visits to temples in Nepal were supported by the Oli
government shows that Nepal is no longer averse to New Delhi‟s „Hindu agenda‟.
 Analysts have observed that the visit could be intended to counter China‟s increasing presence in
Nepal. Modi‟s presence in the Himalayan country may have been a soft power strategy to remind
Nepal that Chinese interest is purely commercial, but India is interested in exploring historical bonds
between the two countries. Some analysts noted that Modi‟s emphasis on religious and historical
bonds may signify a shift in India‟s Nepal foreign policy.
 Modi‟s visit to Janakpur in Madhes‟ province is also being interpreted as a subtle attempt to convey
to Madhesis that India has not abandoned their cause. Janakpur is also at the southern border and
the visit will highlight the centrality of cross-border relations, and the special role of the Tarai in
India-Nepal ties. India sees its security as tied inextricably with the situation in this region because
of an open border with heartland states of Bihar and UP.
China‟s Rising influence in Nepal
 India and China have competed for influence in Nepal for decades.
 From China‟s perspective, Nepal‟s significance stemmed largely from the fact that it borders Tibet.
4
 INTERNATIONAL RELATIONS TOPICS
 Unsurprisingly then, Chinese engagement with Nepal has aimed at getting it to crackdown on
Tibetan activism on Nepalese soil or any anti-China activities that may be sponsored by Western
powers in Nepal. Nepal‟s importance to China grew in the wake of deteriorating Sino-India relations
especially in the context of its sanctuary to the Dalai Lama and the large Tibetan exile community in
India.
 Nepal‟s significance in Chinese strategic calculations can be classified as follows-
(1) India‟s dominating presence in Nepal, so close to restive Tibet, aroused fear in China that
India would stroke unrest in that region and is the underlying reason for Chinese attempts to
weaken India’s presence and influence in Nepal.
(2) Nepal also offers China potential use against India in times of war.
(3) Lastly, China sees Nepal as its gateway to the vast South Asian market.
Difference of Perception in Nepalese Eye
 Unlike India‟s turbulent relationship with Nepal, Sino-Nepal relations have been stable. This is
largely because Beijing has cultivated all Nepalese regimes, whether autocratic or democratic. This
is quite in contrast to India, which has backed anti-monarchy movements and insurgencies in
Nepal.
 China‟s military relations with Nepal have intensified over the last decade. In 2005, when India
halted military supplies to Nepal in the wake of King Gyanendra‟s imposition of emergency rule,
China quickly stepped into provide weapons.
 Moreover, anti-China sentiment in Nepal is less intense as the people of the two countries do
not mingle as much as Nepalese and Indians. The Nepalese like and respect the Chinese for
keeping out of Nepal‟s internal politics.
Growing Chinese Presence: Soft Power Diplomacy
 In 2013, China was the fourth largest market for Nepal‟s goods, absorbing 4% of its exports and the
second largest (15 percent) source of its imports. Sino-Nepalese trade was worth $23 billion in
2014.
 Chinese FDI in Nepal has surged in recent years; in fiscal year 2012-13,it touched $19.39 billion
(30.89 percent of Nepal‟s total FDI) to topple India as Nepal‟s top investor.
 In December 2014, China increased its official aid to the country by more than five times—
from $24 million to $128 million between 2015 and 2016. This increase may have had to do with
China and India‟s ongoing race to expand their trade relations with neighbouring countries and their
competition for regional hegemony.
 In October 2015, at the height of the protests by the Madhesi, China opened the border crossing
point at Jilung, which links Tibet and Nepal. It was used to transport petroleum products and other
essential items. China also provided 1.4 million litres of fuel for emergency needs and $500 million
in post-disaster reconstruction to Nepal, which was still recovering from its devastating earthquake
in April 2015. The Chinese fuel sale to Nepal was significant. It marked the end of India‟s
decades-old monopoly over fuel sales to Nepal.
 China has already pledged USD 8.3 billion towards building roads and hydel power projects
in Nepal against India's commitment of USD 337 million.
Recent developments in Sino-Nepal ties
 China has made strong in-roads into Nepal within a short span of time. With its direct involvement in
the political affairs of Nepal now, China has emerged as a strong alternative partner for Nepal‟s
overall development. The decision to become a part of the BRI project, even in the face of
5
 INTERNATIONAL RELATIONS TOPICS
strong opposition from India, is a clear indication that Nepalese leadership is looking at
China to develop alternative trading routes through Tibet. Under the Belt and Road Initiative
(BRI) that Nepal signed with China in May last year, Nepal is also expected to receive huge
investments to finance its vastly underfunded hydropower, connectivity and tourism
sectors. Apart from that, three roads are under construction connecting China and Nepal, which
should be ready in a couple of years. The connectivity projects under BRI will have far reaching
significance for Nepali economy.
 PM Oli also said he would revive the China-backed $2.5 billion hydropower Budhi Gandaki
project which was scrapped by the previous government headed by Sher Bahadur Deuba citing
irregularities. According to Oli, Nepal urgently needs to develop hydropower as an alternative to the
highly expensive petroleum that it fully imports, most of it from India. Nepal‟s fuel import bill is said
to have trebled in the last five years.
 Nepal's new prime minister KP Oli has said he wants to deepen ties with China to explore more
options and get more leverage in his dealings with India in keeping with the times. Oli, widely
regarded as pro-China, also said he wants to update relations with India and favours a review of all
special provisions of the Indo-Nepal relations, including the long-established practice of Nepalese
soldiers serving in India's armed forces.
 During K P Oli‟s visit to Beijing in June 2018 China and Nepal signed eight agreements for
developing major infrastructure projects in the land-locked Himalayan nation to further
deepen bilateral ties. They agreed for the development of 164 MW Nepal Kali gandaki Gorge
Hydropower Project and the construction of 40.27 MW Siuri Nyadi Hydropower Plant Project. A
separate MoU on Framework Agreement for Cooperation in 600 MW Marsyangdi Cascade
Hydropower and the Construction of 75 MW Trishuli Galchhi Hydropower Project, an MoU to
prepare a detailed feasibility study on Eastern Tarai Irrigation System in the Biring, Kamala and
Kankai rivers were some major infrastructure projects mentioned in these agreements.
 China has agreed to undertake exploration and feasibility study for natural gas and petroleum
products in Nepal. China has also agreed to help build necessary infrastructure for storage of
petroleum products in Nepal.
 But the highlight of the visit was the MoU to build a strategic railway link connecting Tibet with
Kathmandu through the arduous Himalayan terrain. The new railway line will connect the Kyirong
trading port in the city of Xigaze in Tibet with the Nepali capital Kathmandu. Kyirong in Tibet is
about 25km from Nepal's Rasuwagadhi border transit point, which is 50km from Kathmandu. PM Oli
expressed hope that cross-border railway projects will give an impetus to cross-border connectivity
between Nepal and China. This is the second significant initiative by Mr. Oli, after he signed a
transit trade treaty with China during his brief previous tenure in 2016 to reduce dependence
on India for transportation of goods to Nepal.
 Nepal Prime Minister KP Sharma Oli has pledged to implement at the earliest the landmark
transport and transit agreement signed with China, a move aimed at reducing landlocked country's
total dependence on India. The transit and transportation treaty with China is likely to end New
Delhi's monopoly over the landlocked nation's trade through Haldia port in Kolkata. It gives Nepal
an option to use the next nearest Tianjin port in China that is 3,000 km from the Nepal border.
Haldia port is 1,000 km away. Nepal still gets all of its petroleum products from India and conducts
its trade through Indian ports, and nearly 70 percent of Nepal‟s trade takes place with India.
 The Chinese side has been emphatic that its relations with Nepal will be conducted according to
the five principles of peaceful coexistence — the basis for a foreign policy among equals.
 Attracted by its natural beauty and relative affordability, more than 100,000 Chinese tourists
travelled to Nepal last year and the number is growing. There are plans to connect the capital

6
 INTERNATIONAL RELATIONS TOPICS
Kathmandu with Lord Buddha‟s birthplace Lumbini and the lake city of Pokhara with China-funded
railways. Chinese are building international airports near Lumbini and Pokhara, and Chinese
companies are already the leading investor in Nepal‟s hydropower sector. The power-generation
and irrigation potentials of Nepal‟s great Himalayan Rivers still remain largely untapped.
 Besides China is also investing heavily in opinion building in Nepal. Unofficial estimates
suggest, there are at least half a dozen institutes in Nepal researching on China- centric issues and
delegations of journalists, businessmen, academicians etc are visiting China almost on a weekly
basis.
 Certainly, the Chinese pushed the Maoists and Oli‟s moderate communist party to come
together during the elections and announce their reunification on May 17. The main group of
Nepal's Maoist former rebels and the liberal Communist UML party merged to form the Himalayan
republic's biggest left party in a move likely to upset India but have China rejoicing. The two
constituents of the ruling coalition had formed the Nepal Communist Party, which now heads the
nation's first majority government in 19 years.
 Analysts said the unification would have regional implications as giants China and India jostle for
influence with aid and investment in infrastructure like roads and hydroelectric power plants. India
has always remained concerned about the rise of Communist forces in Nepal. Now that a strong left
party leads the government here, these concerns will only grow in future. On the other hand, China
will be happy because the united party will be naturally closer to Beijing.
 There is concern in Nepal as well India whether Nepal would get into a “debt trap” as it
happened elsewhere in Sri Lanka. Though there is no harbor to be gobbled up as it
happened in Sri Lanka, Nepal needs to be careful as Chinese offers have never been benign
as is made out to be.
Nepal and Pakistan
 Pakistani Prime Minister Shahid Khaqan Abbasi paid a two-day official visit to Nepal from 4-5 March
2018 to congratulate his counterpart KP Sharma Oli for his recent appointment as the new PM of
Nepal after the historic provincial and state elections. This was the first official visit by a
Pakistani PM to Nepal after a gap of 24 years.
 There were vibrant bilateral talks between the two sides to push forward Nepal-Pakistan relations,
to revive the SAARC process and most significantly, to enhance regional connectivity through the
BRI (Belt and Road Initiative), a flagship project under China. Reportedly, Abbasi expressed
happiness over Nepal joining the BRI, which he said is “a game changer for the whole of South
Asia”, and suggested that Nepal could use the Gwadar Port in Balochistan province of
Pakistan through Kerung-Tibet main railway line.
 Besides, Abbasi expressed the need to expedite the SAARC process, which has been stalled given
the India-Pakistan rivalry mainly over Kashmiri militancy. Terrorism figured prominently during the
bilateral talks. Abbasi pointed out that Pakistan is facing isolation with regard to international
terrorism, but the country is equally affected by the scourge of terror activities.
 PM Oli is said to be close to China. With Nepal coming closer to Pakistan, an all-weather ally of
China, India may be faced with a tough dilemma in its dealings with the Oli government.
 Abbasi‟s visit is thus, significant in two ways. First, it shows the keen desire of both Pakistan and
China to develop close linkages with Nepal to negate Indian influence there. It is to be noted that
Abbasi did not meet Opposition leaders of Nepali Congress and even former PM Baburam
Bhattarai of Naya Shkati, both of whom are considered close to India. Second, if Kathmandu cozies
up to Pakistan (and therefore China), India may face tough competition to maintain a strategic

7
 INTERNATIONAL RELATIONS TOPICS
space in Nepal, which it considers as its traditional sphere of influence. It will be highly difficult for
India to stop Chinese rise or contain it in a manner that will give more strategic advantage to it.
OTHER ISSUES
WATER RESOURCES
Potential for cooperation
 In the area of hydropower India and Nepal are complementary. India, with its ever–increasing
energy requirements, presents a vast ready market for hydropower for Nepal.
 Nepal has huge potential for hydropower development and the present status of development is
approximately 600 MW, which is less than 2% of its economically feasible potential of 42000 MW.
 Because of the terrain, Nepal also provides the best, if not the only, option for downstream flood
control and dry season augmentation.
 With only run-of-the-river projects, in the summer when there is peak demand in India, there would
be surplus in Nepal to export and in winter when Nepal is unable to generate much electricity as
water levels in rivers go down, she can import any shortfall. Already in India, power trading
between regions is a thriving business. Even with only 4% of India‟s electricity being traded, the
turnover in power trading is Indian Rs 30,000 crores. Such power trading has the potential to make
Nepal the richest country in South Asia.
Way out
 Here Nepal can learn from Bhutan which has financed much of the country's impressive
economic growth, political modernisation and social development in recent years through revenue
from Indian-designed hydroelectric projects on its soil that provide power both to Bhutan and to
India's North-East.
 There are thus two principal points of contention between India and Nepal: the issue of water
rights and the question of the management, control and operation of the barrage. Nepal being
an upper riparian and India a lower riparian state.
 The important point is that water cooperation can be an effective antidote to the irritants in
India-Nepal relations. While Nepal needs the Indian market for exporting hydro-power, India
needs Nepal‟s resources to satiate its agricultural needs and minimise it power deficit. Problem
solving approaches that can result in win-win outcomes should therefore be the primary aim.
Medium-size hydroelectric projects in Nepal for committed exports can also be started. Private-
public partnership should be encouraged to speed up the development of the projects. Both
governments should encourage these efforts with proper facilities, securities and incentives to the
developers.
India‟s still strong Influence
 While China‟s influence in Nepal has been expanding in recent decades, it is in view of some
experts, nowhere near matching India‟s influence there. The India-Nepal Treaty of Peace and
Friendship of 1950, geographic terrain, ethnic and cultural similarities, etc. has contributed to
India‟s still considerable influence in Nepal.
 Although Nepal has transit treaties with India and China, it is with India that the bulk (98%) of its
trade with third countries is conducted.
 To ease the hardship caused by the 2015 blockade, the Nepali government reached out to China
for fuel. However, China was able to meet only a tiny fraction of Nepal‟s fuel needs. However
in view of some experts, by playing the Chinese card, Nepal has exposed a hollowness of this
card for the simple reason China cannot be an alternative because of geography and costs.
8
 INTERNATIONAL RELATIONS TOPICS
 It does seem that Tianjin can at best provide Nepal with another option to conduct trade with third
parties. However, it cannot replace or even undermine seriously the importance of Indian
ports in Nepal‟s trade due to several reasons- .
(1) It is because Tianjin port is located 3,000 km away from Nepal while Haldia port is just 1,000
km away from the Indo-Nepal border. So distance and cost overruns cast doubts over its
economic feasibility.
(2) Also, India has offered Nepal use of additional port- Visakhapatnam port.
(3) India also has a strong transport infrastructure already in place that facilitates Nepal‟s trade
with and through India. In addition to the Raxaul-Birgunj railway, which has been operational
since 2005, two other rail lines linking the two countries are under construction and more are in
the pipeline.
(4) India and Nepal already have 25 border crossing points and two integrated checkpoints which
is more than that with China. Two more checkpoints are under construction.
(5) Despite China‟s formidable capacity, expertise and experience in infrastructure building,
especially in the Himalayan region, treacherous terrain and hostile weather do not favour
China‟s trans-Himalayan ambitions. Building rails and roads here will not be easy. Also
most of the mountain passes between the two countries are snow-bound throughout the
year. The financial cost of hauling cargo across the Himalayas will be huge.In contrast, routes
from Nepal to India run seamlessly across plains. In addition to a less daunting terrain,
travel and trade between India and Nepal is facilitated by a porous India-Nepal border. Thus,
the advantage is still with India and is likely to remain so in the foreseeable future.
(6) Also, the Chinese seem reluctant as greater engagement with Nepal will mean more traffic, of
both people and goods, with Tibet. China apparently doesn‟t want that since the border could
then serve as a new conduit for Free Tibet activists, It feels Tatopani border outpost has
been misused by Free Tibet activists.
India-China-Nepal Trilateral?
 The spirit of the Wuhan informal summit echoed strongly during the visit of Nepal Prime Minister
K.P. Oli to Beijing, with China proposing a new dialogue mechanism that would also involve India
.The Chinese side proposed to Mr. Oli, a “two-plus-one” format for dialogue. This is different
from a trilateral mechanism. Under the Chinese proposal, China and India can jointly conduct a
dialogue with a third regional country. The proposal in not Nepal-specific.
 During Mr. Oli‟s visit, the Chinese side made its intent clear to engage deeply with Nepal, and
develop special ties with its Himalayan neighbour. Yet, Beijing also made it plain that China-
Nepal ties would be docked with India‟s shared interests as well. The Chinese leadership, in
fact, made direct reference to the April Wuhan informal summit, which has begun to have a
cascading impact on the region. The Chinese made it clear that they were not interested in pursuing
a zero-sum approach with Nepal. In fact, Chinese leadership spoke about the Wuhan informal
summit between President Xi Jinping and Prime Minister Narendra Modi, including the discussion
between the two leaders on achieving greater regional cooperation, which covered connectivity.
 During Mr. Oli‟s visit, it had become evident that China was inclined to fulfill its ambitious agenda
with Nepal gradually, after ensuring that such steps were in sync with India‟s interests.
 Analysts say that the Nepali side has understood the “big picture”, appreciating that China is keen
to build bridges with India, as Beijing‟s friction with the U.S. under the Trump administration begins
to mount. Besides, bringing India on board is essential for enhanced regional connectivity,
including a trans-Himalayan corridor through Nepal, if President Xi‟s Belt and Road Initiative
is to achieve its full potential.
9
 INTERNATIONAL RELATIONS TOPICS
 During his Beijing visit, PM Oli said that Nepal can be a bridge between India and China as it
wants to leverage its friendship with both the countries to boost its own development. In fact, Nepal
wants to move from the state of a land-locked to a land-linked country through the development of
adequate cross-border connectivity. In his view, Nepal‟s friendship with both neighbours places her
in an advantageous position to realise this goal. Nepal‟s developmental needs are immense and
her dreams for growth and prosperity can materialize only through meaningful and mutually
beneficial economic partnership with its both neighbours.
 Some in the Oli administration seem anxious to see the China-Nepal-India trilateral cooperation get
off the ground for its obvious political dividends. The trilateral cooperation will not only make Nepal‟s
job of balancing relations with the two giants easier but will also consolidate Nepal‟s existence as a
vibrant economic bridge between the world‟s fastest growing big economies.
 So Nepal welcomed „two-plus-one‟ dialogue mechanism. Nepal understands the spirit of
Wuhan. Besides connectivity, other issues can be the management of rivers such as Kosi and
Karnali that originate in Tibet and then flow into Nepal and India.
 According to some analysts, the ball is now in India‟s court to respond to China‟s two-plus one
formulation. Nepal offers the perfect opening to test whether Beijing and New Delhi can dock their
collective rise and uplift their neighbours based on their genuine consent. By grasping the two plus
one opening, India will have the opportunity to join and shape the conversation of co-developing
Nepal in a trust-building partnership with China. If the Nepal pilot project works, the „two plus one‟
formula can become the template for the peaceful rise of South Asia, synergised by India and China
as the twin engines of regional growth.

10