India - Nepal Relations | International Relations for UPSC 2024 (Pre & Mains) PDF Download

 Page 1


 
India-Nepal Relations 
Introduction 
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. It shares a border of over 1850 kms in the east, 
south and west with ?ve Indian States – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand – and in 
the north with the Tibet Autonomous Region of the People's Republic of China.  
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. Nearly 6 
million Nepali citizens live and work in India 
India and Nepal don’t just share an open border; they have shared the deepest military links, with both 
countries traditionally awarding each other’s Army chiefs the honorary rank of General. 
Political 
•India has consistently responded with a sense of urgency to the needs of the people and Government of 
Nepal in ensuring the success of the peace process and institutionalization of multi–party democracy 
through the framing of a new Constitution by a duly elected Constituent Assembly.  
•
India has always believed that only an inclusive Constitution with the widest possible consensus by 
taking on board all stakeholders would result in durable peace and stability in Nepal. 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 
Economic 
•Nepal tops the list of countries in terms of India’s border trade with its neighbours, leaving more  
populous countries Pakistan and Bangladesh behind 
•
The main items of exports from India to Nepal are petroleum products, motor vehicles and spare parts, 
machinery and spares, medicines, hot rolled sheets, wires, coal, cement, threads and chemicals 
•
The main items of exports from Nepal to India are polyester yarn, textiles, jute goods, threads, zinc sheet, 
packaged juice, cardamom, G.I. pipe, copper wire, shoes and sandals, stones and sand 
Water Resources 
•
A three-tier mechanism established in 2008 to discuss all bilateral issues relating to cooperation in 
water resources and hydropower has been working well. A Development Authority was set up in 
September 2014 to carry out the Pancheshwar Multipurpose project 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
!
Page 2


 
India-Nepal Relations 
Introduction 
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. It shares a border of over 1850 kms in the east, 
south and west with ?ve Indian States – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand – and in 
the north with the Tibet Autonomous Region of the People's Republic of China.  
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. Nearly 6 
million Nepali citizens live and work in India 
India and Nepal don’t just share an open border; they have shared the deepest military links, with both 
countries traditionally awarding each other’s Army chiefs the honorary rank of General. 
Political 
•India has consistently responded with a sense of urgency to the needs of the people and Government of 
Nepal in ensuring the success of the peace process and institutionalization of multi–party democracy 
through the framing of a new Constitution by a duly elected Constituent Assembly.  
•
India has always believed that only an inclusive Constitution with the widest possible consensus by 
taking on board all stakeholders would result in durable peace and stability in Nepal. 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 
Economic 
•Nepal tops the list of countries in terms of India’s border trade with its neighbours, leaving more  
populous countries Pakistan and Bangladesh behind 
•
The main items of exports from India to Nepal are petroleum products, motor vehicles and spare parts, 
machinery and spares, medicines, hot rolled sheets, wires, coal, cement, threads and chemicals 
•
The main items of exports from Nepal to India are polyester yarn, textiles, jute goods, threads, zinc sheet, 
packaged juice, cardamom, G.I. pipe, copper wire, shoes and sandals, stones and sand 
Water Resources 
•
A three-tier mechanism established in 2008 to discuss all bilateral issues relating to cooperation in 
water resources and hydropower has been working well. A Development Authority was set up in 
September 2014 to carry out the Pancheshwar Multipurpose project 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
! 
•India and Nepal signed an agreement on “Electric Power Trade, Cross-Border Transmission 
Interconnection and Grid Connectivity"  popularly known as the Power Trade Agreement (PTA) in 
October 2014  
•A Power Development Agreement (PDA) for the 900 MW Arun-III hydroelectric project between India’s 
Satluj Jal Vidyut Nigam Limited and the Investment Board of Nepal (IBN) was concluded in November 
2014 
India’s Development Assistance to Nepal 
•
Government of India’s development assistance to Nepal is a broad-based programme focusing on 
creation of infrastructure at the grass-roots level, under which various projects have been implemented 
in the areas of infrastructure, health, water resources, education and rural & community development.  
•
In recent years, India has been assisting Nepal in development of border infrastructure through 
upgradation of roads in the T erai areas. 
•
The total economic assistance earmarked under ‘Aid to Nepal’ budget for FY 2017-18 was Rs. 375 crore. 
A total of Rs. 650 crore was allocated under the ‘Aid to Nepal’ budget head for FY 2018-19, registering 
an increase of 73% over the previous year. 
•
Apart from grant assistance, Government of India has extended Lines of Credit of USD 1.65 billion for 
undertaking development of infrastructure, including post-earthquake reconstruction 
Defence Cooperation 
•
India and Nepal have wide-ranging cooperation in the defence sector. India has been assisting the Nepal 
Army (NA) in its modernisation by supplying equipment and providing training 
•Assistance during disasters, joint military exercises, adventure activities and bilateral visits are other 
aspects of India’s defence cooperation with Nepal 
•A number of defence personnel from Nepal Army attend training courses in various Indian Army training 
institutions. The ‘Indo- Nepal Battalion-level Joint Military Exercise SURYA KIRAN’ is conducted twice a 
year alternately in India and in Nepal 
•The Gorkha regiments of the Indian Army are raised partly by recruitment from hill districts of Nepal. 
Currently, about 32,000 Gorkha Soldiers from Nepal are serving in the Indian Army 
Power 
•India and Nepal have a Power Exchange Agreement since 1971 for meeting the power requirements in 
the border areas of the two countries, taking advantage of each other's transmission infrastructure 
•
An Agreement on ‘Electric Power Trade, Cross-border Transmission Interconnection and Grid 
Connectivity’ between India and Nepal was signed on 21 October 2014 
?The Agreement is aimed at facilitating and further strengthening cross-border electricity 
transmission, grid connectivity and power trade between Nepal and India 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
!
Page 3


 
India-Nepal Relations 
Introduction 
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. It shares a border of over 1850 kms in the east, 
south and west with ?ve Indian States – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand – and in 
the north with the Tibet Autonomous Region of the People's Republic of China.  
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. Nearly 6 
million Nepali citizens live and work in India 
India and Nepal don’t just share an open border; they have shared the deepest military links, with both 
countries traditionally awarding each other’s Army chiefs the honorary rank of General. 
Political 
•India has consistently responded with a sense of urgency to the needs of the people and Government of 
Nepal in ensuring the success of the peace process and institutionalization of multi–party democracy 
through the framing of a new Constitution by a duly elected Constituent Assembly.  
•
India has always believed that only an inclusive Constitution with the widest possible consensus by 
taking on board all stakeholders would result in durable peace and stability in Nepal. 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 
Economic 
•Nepal tops the list of countries in terms of India’s border trade with its neighbours, leaving more  
populous countries Pakistan and Bangladesh behind 
•
The main items of exports from India to Nepal are petroleum products, motor vehicles and spare parts, 
machinery and spares, medicines, hot rolled sheets, wires, coal, cement, threads and chemicals 
•
The main items of exports from Nepal to India are polyester yarn, textiles, jute goods, threads, zinc sheet, 
packaged juice, cardamom, G.I. pipe, copper wire, shoes and sandals, stones and sand 
Water Resources 
•
A three-tier mechanism established in 2008 to discuss all bilateral issues relating to cooperation in 
water resources and hydropower has been working well. A Development Authority was set up in 
September 2014 to carry out the Pancheshwar Multipurpose project 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
! 
•India and Nepal signed an agreement on “Electric Power Trade, Cross-Border Transmission 
Interconnection and Grid Connectivity"  popularly known as the Power Trade Agreement (PTA) in 
October 2014  
•A Power Development Agreement (PDA) for the 900 MW Arun-III hydroelectric project between India’s 
Satluj Jal Vidyut Nigam Limited and the Investment Board of Nepal (IBN) was concluded in November 
2014 
India’s Development Assistance to Nepal 
•
Government of India’s development assistance to Nepal is a broad-based programme focusing on 
creation of infrastructure at the grass-roots level, under which various projects have been implemented 
in the areas of infrastructure, health, water resources, education and rural & community development.  
•
In recent years, India has been assisting Nepal in development of border infrastructure through 
upgradation of roads in the T erai areas. 
•
The total economic assistance earmarked under ‘Aid to Nepal’ budget for FY 2017-18 was Rs. 375 crore. 
A total of Rs. 650 crore was allocated under the ‘Aid to Nepal’ budget head for FY 2018-19, registering 
an increase of 73% over the previous year. 
•
Apart from grant assistance, Government of India has extended Lines of Credit of USD 1.65 billion for 
undertaking development of infrastructure, including post-earthquake reconstruction 
Defence Cooperation 
•
India and Nepal have wide-ranging cooperation in the defence sector. India has been assisting the Nepal 
Army (NA) in its modernisation by supplying equipment and providing training 
•Assistance during disasters, joint military exercises, adventure activities and bilateral visits are other 
aspects of India’s defence cooperation with Nepal 
•A number of defence personnel from Nepal Army attend training courses in various Indian Army training 
institutions. The ‘Indo- Nepal Battalion-level Joint Military Exercise SURYA KIRAN’ is conducted twice a 
year alternately in India and in Nepal 
•The Gorkha regiments of the Indian Army are raised partly by recruitment from hill districts of Nepal. 
Currently, about 32,000 Gorkha Soldiers from Nepal are serving in the Indian Army 
Power 
•India and Nepal have a Power Exchange Agreement since 1971 for meeting the power requirements in 
the border areas of the two countries, taking advantage of each other's transmission infrastructure 
•
An Agreement on ‘Electric Power Trade, Cross-border Transmission Interconnection and Grid 
Connectivity’ between India and Nepal was signed on 21 October 2014 
?The Agreement is aimed at facilitating and further strengthening cross-border electricity 
transmission, grid connectivity and power trade between Nepal and India 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
! 
?The Agreement provides a framework for power trade between the two countries, import by Nepal 
from India until it becomes power surplus and subsequent import by Indian entities from Nepal, on 
mutually acceptable terms and conditions 
Education 
Over the years, India’s contribution to the development of human resources in Nepal has been one of the 
major aspects of bilateral cooperation. GoI provides around 3000 scholarships/seats annually to Nepalese 
nationals for various courses at the Ph.D/Masters, Bachelors and plus–two levels in India and in Nepal. These 
scholarships cover a wide spectrum of subjects including engineering, medicine, agriculture, pharmacology, 
veterinary sciences, computer application, business administration, music, ?ne arts, etc 
Culture 
•GoI initiatives to promote people-to-people contacts in the ?elds of art & culture, academics and media 
include cultural programmes, symposia and events organized in partnership with different local bodies 
of Nepal, as well as conferences and seminars in Hindi 
•
Familiarization visits to India by Nepalese journalists/editors and short term training in India for 
Nepalese editors/journalists/experts/of?cials in the ?eld of print & electronic media and archaeology are 
also arranged 
•
Assistance is also provided to several India-Nepal Friendship Organizations working to promote Indian 
culture and India-Nepal bilateral relations. India is establishing an e-library system across Nepal 
•
The Nepal–Bharat Library was founded in 1951 in Kathmandu. It is regarded as the ?rst foreign library in 
Nepal. Its objective is to enhance and strengthen cultural relations and information exchange between 
India and Nepal 
Indian Community 
Around 6,00,000 Indians are living/domiciled in Nepal. These include businessmen and traders who have 
been living in Nepal for a long time, professionals (doctors, engineers, IT personnel) and labourers (including 
seasonal/migratory in the construction sector) 
Points of Contention 
Political 
•Proactive and partisan role of Indian state in Nepali politics: The Indian strategy right from the rule of 
the monarch has always been two-fold 
?to identify such political groups in the country that are willing to produce changes that are suitable 
to Indian interests 
?or to side with political elite in the Himalayan nation 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
!
Page 4


 
India-Nepal Relations 
Introduction 
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. It shares a border of over 1850 kms in the east, 
south and west with ?ve Indian States – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand – and in 
the north with the Tibet Autonomous Region of the People's Republic of China.  
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. Nearly 6 
million Nepali citizens live and work in India 
India and Nepal don’t just share an open border; they have shared the deepest military links, with both 
countries traditionally awarding each other’s Army chiefs the honorary rank of General. 
Political 
•India has consistently responded with a sense of urgency to the needs of the people and Government of 
Nepal in ensuring the success of the peace process and institutionalization of multi–party democracy 
through the framing of a new Constitution by a duly elected Constituent Assembly.  
•
India has always believed that only an inclusive Constitution with the widest possible consensus by 
taking on board all stakeholders would result in durable peace and stability in Nepal. 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 
Economic 
•Nepal tops the list of countries in terms of India’s border trade with its neighbours, leaving more  
populous countries Pakistan and Bangladesh behind 
•
The main items of exports from India to Nepal are petroleum products, motor vehicles and spare parts, 
machinery and spares, medicines, hot rolled sheets, wires, coal, cement, threads and chemicals 
•
The main items of exports from Nepal to India are polyester yarn, textiles, jute goods, threads, zinc sheet, 
packaged juice, cardamom, G.I. pipe, copper wire, shoes and sandals, stones and sand 
Water Resources 
•
A three-tier mechanism established in 2008 to discuss all bilateral issues relating to cooperation in 
water resources and hydropower has been working well. A Development Authority was set up in 
September 2014 to carry out the Pancheshwar Multipurpose project 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
! 
•India and Nepal signed an agreement on “Electric Power Trade, Cross-Border Transmission 
Interconnection and Grid Connectivity"  popularly known as the Power Trade Agreement (PTA) in 
October 2014  
•A Power Development Agreement (PDA) for the 900 MW Arun-III hydroelectric project between India’s 
Satluj Jal Vidyut Nigam Limited and the Investment Board of Nepal (IBN) was concluded in November 
2014 
India’s Development Assistance to Nepal 
•
Government of India’s development assistance to Nepal is a broad-based programme focusing on 
creation of infrastructure at the grass-roots level, under which various projects have been implemented 
in the areas of infrastructure, health, water resources, education and rural & community development.  
•
In recent years, India has been assisting Nepal in development of border infrastructure through 
upgradation of roads in the T erai areas. 
•
The total economic assistance earmarked under ‘Aid to Nepal’ budget for FY 2017-18 was Rs. 375 crore. 
A total of Rs. 650 crore was allocated under the ‘Aid to Nepal’ budget head for FY 2018-19, registering 
an increase of 73% over the previous year. 
•
Apart from grant assistance, Government of India has extended Lines of Credit of USD 1.65 billion for 
undertaking development of infrastructure, including post-earthquake reconstruction 
Defence Cooperation 
•
India and Nepal have wide-ranging cooperation in the defence sector. India has been assisting the Nepal 
Army (NA) in its modernisation by supplying equipment and providing training 
•Assistance during disasters, joint military exercises, adventure activities and bilateral visits are other 
aspects of India’s defence cooperation with Nepal 
•A number of defence personnel from Nepal Army attend training courses in various Indian Army training 
institutions. The ‘Indo- Nepal Battalion-level Joint Military Exercise SURYA KIRAN’ is conducted twice a 
year alternately in India and in Nepal 
•The Gorkha regiments of the Indian Army are raised partly by recruitment from hill districts of Nepal. 
Currently, about 32,000 Gorkha Soldiers from Nepal are serving in the Indian Army 
Power 
•India and Nepal have a Power Exchange Agreement since 1971 for meeting the power requirements in 
the border areas of the two countries, taking advantage of each other's transmission infrastructure 
•
An Agreement on ‘Electric Power Trade, Cross-border Transmission Interconnection and Grid 
Connectivity’ between India and Nepal was signed on 21 October 2014 
?The Agreement is aimed at facilitating and further strengthening cross-border electricity 
transmission, grid connectivity and power trade between Nepal and India 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
! 
?The Agreement provides a framework for power trade between the two countries, import by Nepal 
from India until it becomes power surplus and subsequent import by Indian entities from Nepal, on 
mutually acceptable terms and conditions 
Education 
Over the years, India’s contribution to the development of human resources in Nepal has been one of the 
major aspects of bilateral cooperation. GoI provides around 3000 scholarships/seats annually to Nepalese 
nationals for various courses at the Ph.D/Masters, Bachelors and plus–two levels in India and in Nepal. These 
scholarships cover a wide spectrum of subjects including engineering, medicine, agriculture, pharmacology, 
veterinary sciences, computer application, business administration, music, ?ne arts, etc 
Culture 
•GoI initiatives to promote people-to-people contacts in the ?elds of art & culture, academics and media 
include cultural programmes, symposia and events organized in partnership with different local bodies 
of Nepal, as well as conferences and seminars in Hindi 
•
Familiarization visits to India by Nepalese journalists/editors and short term training in India for 
Nepalese editors/journalists/experts/of?cials in the ?eld of print & electronic media and archaeology are 
also arranged 
•
Assistance is also provided to several India-Nepal Friendship Organizations working to promote Indian 
culture and India-Nepal bilateral relations. India is establishing an e-library system across Nepal 
•
The Nepal–Bharat Library was founded in 1951 in Kathmandu. It is regarded as the ?rst foreign library in 
Nepal. Its objective is to enhance and strengthen cultural relations and information exchange between 
India and Nepal 
Indian Community 
Around 6,00,000 Indians are living/domiciled in Nepal. These include businessmen and traders who have 
been living in Nepal for a long time, professionals (doctors, engineers, IT personnel) and labourers (including 
seasonal/migratory in the construction sector) 
Points of Contention 
Political 
•Proactive and partisan role of Indian state in Nepali politics: The Indian strategy right from the rule of 
the monarch has always been two-fold 
?to identify such political groups in the country that are willing to produce changes that are suitable 
to Indian interests 
?or to side with political elite in the Himalayan nation 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
! 
In both cases, India had shown little trust on the capability of political leaders in Nepal. In such an 
arrangement, whenever there is a change in political actors on either side, it opens up the possibility 
of con?ict. 
•In Nepal, India is perceived to have acquired an advantageous position in bilateral ties, and in India the 
actions of the Indian government are seen as some sort of help to the disadvantageous nation. T ake, for 
instance, the case of hydropower generation in Nepal. The common perception is that not only it bene?ts 
India disproportionately as compared with Nepal but also that it will enable India to control Nepal’s 
water resources 
•Instead of acknowledging that there is a knowledge-gap between the two nations, leaders on both sides 
had tried to further deepen bilateral ties on the rhetoric of commonality and shared culture. In fact, the 
idea that the two countries share common culture itself is mythical, as Nepal has its own distinctive 
culture, and such an assertion only leads Nepal to be perceived in the Indian public mind as a cultural 
extension of India 
Religious 
•
Timely attempts made by the Hindutva forces to declare Nepal a Hindu state: The Rashtriya 
Swayamsevak Sangh (RSS)-Bharatiya Janata Party (BJP) parivaar has been transplanting Hindutva even 
before they came to power. Similar emotions are evoked form the right-wing parties in Nepal 
Psychological 
•
Dependency-Dominance Relation: In a dependency-dominance relationship, the importance of both 
nations to each other is not symmetrical due to which their respective response to each other’s policy 
varies signi?cantly. The dependency-dominance attitude originates from at least three basic variables: 
?Nepal’s location between India and China, which has military-strategic implications and signi?es an 
obvious limitation for the smaller nation 
?Power asymmetry, which signi?es that Nepal is weaker partner in the relationship  
?The historical dependence of Nepal on India in terms of trade and commerce and dominance of 
Delhi in these key areas 
This sense of dependence on the one side and dominance on the other generates polar opposite 
perceptions, which ultimately affects the pattern of negotiation on various issues. The contesting 
perceptions between two neighbours are operated mainly in the areas of security, trade, energy, 
border, water sharing and migration 
Security 
•
The major issue between India and Nepal is the security dialogue that has hardly played to the tune of 
shared strategic interest. Historically, the two neighbours entered into the treaty of Peace and 
Friendship (1950) over the mutual security concerns, against the aggressive neighbour China. In spite of 
the agreement, by early 1960s, Nepal had shifted its foreign policy towards China. The traditional 
scepticism towards Beijing was replaced by pragmatism. On the other side, the military defeat of India at 
the hand of China brushed away the idealism of the Non Aligned Movement (NAM). The design of Indian 
foreign policy became more pre-occupied with the security concerns in the South East Asian region, 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
!
Page 5


 
India-Nepal Relations 
Introduction 
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. It shares a border of over 1850 kms in the east, 
south and west with ?ve Indian States – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand – and in 
the north with the Tibet Autonomous Region of the People's Republic of China.  
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. Nearly 6 
million Nepali citizens live and work in India 
India and Nepal don’t just share an open border; they have shared the deepest military links, with both 
countries traditionally awarding each other’s Army chiefs the honorary rank of General. 
Political 
•India has consistently responded with a sense of urgency to the needs of the people and Government of 
Nepal in ensuring the success of the peace process and institutionalization of multi–party democracy 
through the framing of a new Constitution by a duly elected Constituent Assembly.  
•
India has always believed that only an inclusive Constitution with the widest possible consensus by 
taking on board all stakeholders would result in durable peace and stability in Nepal. 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 
Economic 
•Nepal tops the list of countries in terms of India’s border trade with its neighbours, leaving more  
populous countries Pakistan and Bangladesh behind 
•
The main items of exports from India to Nepal are petroleum products, motor vehicles and spare parts, 
machinery and spares, medicines, hot rolled sheets, wires, coal, cement, threads and chemicals 
•
The main items of exports from Nepal to India are polyester yarn, textiles, jute goods, threads, zinc sheet, 
packaged juice, cardamom, G.I. pipe, copper wire, shoes and sandals, stones and sand 
Water Resources 
•
A three-tier mechanism established in 2008 to discuss all bilateral issues relating to cooperation in 
water resources and hydropower has been working well. A Development Authority was set up in 
September 2014 to carry out the Pancheshwar Multipurpose project 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
! 
•India and Nepal signed an agreement on “Electric Power Trade, Cross-Border Transmission 
Interconnection and Grid Connectivity"  popularly known as the Power Trade Agreement (PTA) in 
October 2014  
•A Power Development Agreement (PDA) for the 900 MW Arun-III hydroelectric project between India’s 
Satluj Jal Vidyut Nigam Limited and the Investment Board of Nepal (IBN) was concluded in November 
2014 
India’s Development Assistance to Nepal 
•
Government of India’s development assistance to Nepal is a broad-based programme focusing on 
creation of infrastructure at the grass-roots level, under which various projects have been implemented 
in the areas of infrastructure, health, water resources, education and rural & community development.  
•
In recent years, India has been assisting Nepal in development of border infrastructure through 
upgradation of roads in the T erai areas. 
•
The total economic assistance earmarked under ‘Aid to Nepal’ budget for FY 2017-18 was Rs. 375 crore. 
A total of Rs. 650 crore was allocated under the ‘Aid to Nepal’ budget head for FY 2018-19, registering 
an increase of 73% over the previous year. 
•
Apart from grant assistance, Government of India has extended Lines of Credit of USD 1.65 billion for 
undertaking development of infrastructure, including post-earthquake reconstruction 
Defence Cooperation 
•
India and Nepal have wide-ranging cooperation in the defence sector. India has been assisting the Nepal 
Army (NA) in its modernisation by supplying equipment and providing training 
•Assistance during disasters, joint military exercises, adventure activities and bilateral visits are other 
aspects of India’s defence cooperation with Nepal 
•A number of defence personnel from Nepal Army attend training courses in various Indian Army training 
institutions. The ‘Indo- Nepal Battalion-level Joint Military Exercise SURYA KIRAN’ is conducted twice a 
year alternately in India and in Nepal 
•The Gorkha regiments of the Indian Army are raised partly by recruitment from hill districts of Nepal. 
Currently, about 32,000 Gorkha Soldiers from Nepal are serving in the Indian Army 
Power 
•India and Nepal have a Power Exchange Agreement since 1971 for meeting the power requirements in 
the border areas of the two countries, taking advantage of each other's transmission infrastructure 
•
An Agreement on ‘Electric Power Trade, Cross-border Transmission Interconnection and Grid 
Connectivity’ between India and Nepal was signed on 21 October 2014 
?The Agreement is aimed at facilitating and further strengthening cross-border electricity 
transmission, grid connectivity and power trade between Nepal and India 
www.YouTube.com/SleepyClasses 
www.SleepyClasses.com 
! 
?The Agreement provides a framework for power trade between the two countries, import by Nepal 
from India until it becomes power surplus and subsequent import by Indian entities from Nepal, on 
mutually acceptable terms and conditions 
Education 
Over the years, India’s contribution to the development of human resources in Nepal has been one of the 
major aspects of bilateral cooperation. GoI provides around 3000 scholarships/seats annually to Nepalese 
nationals for various courses at the Ph.D/Masters, Bachelors and plus–two levels in India and in Nepal. These 
scholarships cover a wide spectrum of subjects including engineering, medicine, agriculture, pharmacology, 
veterinary sciences, computer application, business administration, music, ?ne arts, etc 
Culture 
•GoI initiatives to promote people-to-people contacts in the ?elds of art & culture, academics and media 
include cultural programmes, symposia and events organized in partnership with different local bodies 
of Nepal, as well as conferences and seminars in Hindi 
•
Familiarization visits to India by Nepalese journalists/editors and short term training in India for 
Nepalese editors/journalists/experts/of?cials in the ?eld of print & electronic media and archaeology are 
also arranged 
•
Assistance is also provided to several India-Nepal Friendship Organizations working to promote Indian 
culture and India-Nepal bilateral relations. India is establishing an e-library system across Nepal 
•
The Nepal–Bharat Library was founded in 1951 in Kathmandu. It is regarded as the ?rst foreign library in 
Nepal. Its objective is to enhance and strengthen cultural relations and information exchange between 
India and Nepal 
Indian Community 
Around 6,00,000 Indians are living/domiciled in Nepal. These include businessmen and traders who have 
been living in Nepal for a long time, professionals (doctors, engineers, IT personnel) and labourers (including 
seasonal/migratory in the construction sector) 
Points of Contention 
Political 
•Proactive and partisan role of Indian state in Nepali politics: The Indian strategy right from the rule of 
the monarch has always been two-fold 
?to identify such political groups in the country that are willing to produce changes that are suitable 
to Indian interests 
?or to side with political elite in the Himalayan nation 
www.YouTube.com/SleepyClasses 
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In both cases, India had shown little trust on the capability of political leaders in Nepal. In such an 
arrangement, whenever there is a change in political actors on either side, it opens up the possibility 
of con?ict. 
•In Nepal, India is perceived to have acquired an advantageous position in bilateral ties, and in India the 
actions of the Indian government are seen as some sort of help to the disadvantageous nation. T ake, for 
instance, the case of hydropower generation in Nepal. The common perception is that not only it bene?ts 
India disproportionately as compared with Nepal but also that it will enable India to control Nepal’s 
water resources 
•Instead of acknowledging that there is a knowledge-gap between the two nations, leaders on both sides 
had tried to further deepen bilateral ties on the rhetoric of commonality and shared culture. In fact, the 
idea that the two countries share common culture itself is mythical, as Nepal has its own distinctive 
culture, and such an assertion only leads Nepal to be perceived in the Indian public mind as a cultural 
extension of India 
Religious 
•
Timely attempts made by the Hindutva forces to declare Nepal a Hindu state: The Rashtriya 
Swayamsevak Sangh (RSS)-Bharatiya Janata Party (BJP) parivaar has been transplanting Hindutva even 
before they came to power. Similar emotions are evoked form the right-wing parties in Nepal 
Psychological 
•
Dependency-Dominance Relation: In a dependency-dominance relationship, the importance of both 
nations to each other is not symmetrical due to which their respective response to each other’s policy 
varies signi?cantly. The dependency-dominance attitude originates from at least three basic variables: 
?Nepal’s location between India and China, which has military-strategic implications and signi?es an 
obvious limitation for the smaller nation 
?Power asymmetry, which signi?es that Nepal is weaker partner in the relationship  
?The historical dependence of Nepal on India in terms of trade and commerce and dominance of 
Delhi in these key areas 
This sense of dependence on the one side and dominance on the other generates polar opposite 
perceptions, which ultimately affects the pattern of negotiation on various issues. The contesting 
perceptions between two neighbours are operated mainly in the areas of security, trade, energy, 
border, water sharing and migration 
Security 
•
The major issue between India and Nepal is the security dialogue that has hardly played to the tune of 
shared strategic interest. Historically, the two neighbours entered into the treaty of Peace and 
Friendship (1950) over the mutual security concerns, against the aggressive neighbour China. In spite of 
the agreement, by early 1960s, Nepal had shifted its foreign policy towards China. The traditional 
scepticism towards Beijing was replaced by pragmatism. On the other side, the military defeat of India at 
the hand of China brushed away the idealism of the Non Aligned Movement (NAM). The design of Indian 
foreign policy became more pre-occupied with the security concerns in the South East Asian region, 
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expecting more “obedience” from Nepal. Indian paranoia against China has resulted in ugly confrontation 
with Nepal 
?The fault lies in the historical understanding that treats Nepal more as ‘buffer state’ to protect 
Indian security concern in the Himalayan region. In fact, overt security concern is one of the reasons 
that Indian state can use to explain away any interference in the domestic affairs of Nepal 
•After con?rming its participation in the BIMSTEC military exercises in 2018, Nepalese Army was made 
to withdraw its contingent due to a “political decision” . It sent only an observer mission at the last hour. 
But Nepal’s decision to join China for a 12-day Mt Everest Friendship Exercise in Sichuan province, also 
focused on anti-terrorism drills, drives the wedge in further 
?India’s security concerns in Nepal have accordingly become more subtle and mundane. They now 
relate to the use of Nepali territory to the disadvantage of India, not only by China but any third 
country and non-state actors 
?Issues include the use of Nepali territory due to its unique open border with India by cross-border 
terrorists from Pakistan, cross-border activities of criminal gangs and individuals and anti-social 
elements like smugglers of both India and Nepal, and the ?ow of Indian fake currency in India 
through Nepal 
Proximity to China 
•
China is not only building scores of hydro-electric projects, airports and other infrastructure but also 
investing heavily in opinion building in Nepal 
? Some commentators also suspect a Chinese hand behind Nepal’s thaw in relations with India. 
Beijing can connect Kathmandu by rail from the Northern border but the Belt and Road will be 
incomplete, if not unviable, until India grants connectivity 
?Despite New Delhi signalling its discom?ture with the volume of Chinese investment in hydropower 
and infrastructure and transport projects, Nepal went ahead recently and ?nalised an ambitious 
connectivity proposal that will eventually link Kathmandu to Shigatse by rail; this will give Nepali 
goods access to Chinese sea-ports at Tianjin, Shenzhen, Lianyungang and Zhanjiang, and land ports 
in Lanzhou, Lhasa and Shigatse 
Trade 
•
Indian of?cials suspect that a major part of the third country imports are way above the consumption 
potential of Nepal and is re-routed to India through the long unfenced border and gold tops this list. The 
dependence is highest in services. The Nepalese enjoy equal rights to Indian citizens. They not only join 
the Indian Army; but also the civil services 
Way Forward 
There is no quick ?x to the age-old trust de?cit between Indian and Nepal. There are certain dos and don’ts 
for India.  
•
India would do well to stop patronising political leaders in Nepal by not being tempted by any faction in 
Nepal that might seek Indian intervention 
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