India shares a unique relationship with Nepal as compared to all its other neighbours. Nepal is the only country other than Bhutan with whom India shares an open border of over 1850 Kms. Both countries share a unique relationship of friendship by virtue of free movement of people across the borders coupled with religious and cultural ties.

Historical Relationship India-Nepal

Relationship between modern day states of India and Nepal started in 1950, when both countries signed two treaties – Peace and Friendship Treaty and Treaty of trade and commerce. While the former established reciprocal treatment of Indian and Nepalese citizens in residence, property, business and movement the later aimed at strengthening the trade ties to streamline customs and duties between the two nations. An Indian military mission was also established in Kathmandu and India became the sole provider to military equipment, arms and ammunition to Nepal. Multiple Trade and Transit Treaties were signed between India and Nepal as trade ties strengthened between the two countries in the 1970s and the 1980s.

Current Relationship India-Nepal

Regular high level exchanges have taken place between the two countries to boost bilateral relations. These include, Prime Minister Modi’s visit to Nepal thrice since he has become the Prime minister of India. Prime Minister of Nepal also visited India twice once in 2016 and very recently in 2018.

In aftermath of 2015 massive earthquakes, India immediately sent relief teams. The immediate disaster recovery efforts were accompanied by financial aid and relief material to cope with aftermath of earthquakes.

India maintains its position as Nepal’s largest trade partner and foreign investor. India accounts for over two-third of Nepal’s merchandise trade, about one-third of trade in services, 46% of foreign direct investments and almost 100% of petroleum supplies. India has also made significant agreements with Nepal in the sector of management of water resources and energy cooperation which include development of hydro-electric power.

India and Nepal have a long standing bilateral defence cooperation which includes assistance to Nepalese army for its modernization through provision of equipment and training. Indian army includes Gorkha regiments which are raised partly by recruitment from hill districts of Nepal.

India has maintained its position as most favourable nation with Nepal until recently. Change of government in Nepal and increasing Chinese influence has brought India Nepal relations under strain. China’s new found economic power challenges India’s privileged position in Nepal.

Future Prospects: India Nepal Relationship

The new government under Prime Minister Modi, has taken several initiatives and has indicated that India wants to address Nepal’s concerns. And despite Nepal’s new found affinity towards China, Nepal has responded positively to Modi’s and Foreign Minister Sushma Swaraj’s overtures. The recent joint communiqués between India and Nepal seem to have all the right words and tone for a constructive move forward in their bilateral relations.

As things are, Nepal cannot dispense with its reliance on India. India is and will remain vital for the country in many ways. However, Nepal is now a member of China’s massive BRI, which puts India in a difficult position. ndia must introduce new economic, developmental and infrastructure initiatives with Nepal that will not only bring tangible benefits to Nepali citizens, but also address the vulnerabilities that will emerge in Nepal as the country engages with China.