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India – Nepal Relations

2024 MAY 10

Mains   > International relations   >   India and Neighbours   >   India- Nepal


GS 2> International relations   >   India and Neighbours   >  India- Nepal


  • Recently, Nepal's cabinet decided to include a map on its Rs 100 currency note that depicts certain areas administered by India in Uttarakhand as part of its territory. This move prompted External Affairs Minister S Jaishankar to state that such "unilateral measures" by Kathmandu would not alter the reality on the ground.


The India-Nepal border issue primarily revolves around the Kalapani-Limpiadhura-Lipulekh trijunction, where the borders of India, Nepal, and China meet. This dispute has deep historical roots that date back to the early 19th century during the British colonial rule in India and the Kingdom of Nepal.

The Treaty of Sugauli (1816)

  • The Treaty of Sugauli was signed in 1816 following the Anglo-Nepalese War (1814-1816). Under this treaty, Nepal lost significant territories to the British East India Company, including the areas west of the River Kali. The treaty stipulated that the Kali River would demarcate the boundary between India and Nepal, but differing interpretations and subsequent maps have caused disagreements over its precise course.

The Shift in River Course and Maps

  • Multiple British-era maps have shown varying origins and courses for the Kali River. Maps from 1819, 1821, 1827, and 1856 indicate the river starting at Limpiadhura, but a map in 1879 introduced a different stream as the Kali, complicating the issue. The last British map in 1947 reverted to showing the Kali originating from Limpiadhura, supporting Nepal's claims based on historical cartographic evidence.

Modern Developments

  • In recent years, the dispute has intensified with Nepal's new map in 2020 including the disputed territories, which was followed by the decision to place this map on the Nepalese Rs 100 currency note in 2023. This move has been termed as "cartographic aggression" by India, which insists on solving the issue through diplomatic channels based on historical evidence and agreements.

Strategic Significance

  • The disputed area's strategic importance is underscored by its location near the India-China border, making it significant for India's security, especially following the Indo-China war of 1962. Nepal, under King Mahendra, had permitted India to use the area for defense purposes, a point of contention in later years.

Recent Bilateral Talks

  • Despite several high-level discussions and agreements to resolve the dispute diplomatically — including promises from Indian leaders like I.K. Gujral and Atal Bihari Vajpayee to reconsider the territorial claims if presented with evidence — little progress has been made. The issue remains a point of friction in bilateral relations, exacerbated by events like the economic blockade of Nepal by India in 2015, and Nepal's subsequent outreach to China for economic partnership and border security agreements.

Differing Perspectives

  • British India's surveys in the 1870s depicted Kalapani as part of India on a 1879 map. The Indian government asserts that this map should define the India-Nepal border, rather than earlier maps cited by Nepal. While Nepal bases its claim on historical maps and treaties, India’s stance has been influenced by strategic needs and administrative control since the mid-20th century. The absence of clear, unambiguous historical evidence and the shifting courses of natural landmarks like rivers have further complicated the resolution process.


  • Founded on the age-old connection of history, culture, tradition and religion, Nepal and India enjoy excellent bilateral ties.
  • Nepal shares a border of over 1850 km with five Indian states – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand.
  • The India-Nepal Treaty of Peace and Friendship of 1950 forms the bedrock of the special relations that exist between India and Nepal.


  • Political:
    • There are regular exchanges of high-level visits and interactions between India and Nepal. 
    • For example, Prime Minister Narendra Modi has visited Nepal five times since 2014, including a recent trip to Lumbini in May 2024, to celebrate Buddha Purnima, promoting India's 'Neighbourhood First' policy.
    • Parliamentary exchanges: Members and officials of Nepal’s Parliament often conduct study tours to India.
  • Diplomatic: Government of India has its Embassy in Kathmandu and a Consulate General in Birgunj (south-central part of Nepal).Government of Nepal has its Embassy in New Delhi and a Consulate General in Kolkata.
  • Economic:
    • Trade: India remains Nepal’s largest trade partner, with bilateral trade crossing USD 7 billion in FY 2019-20. India provides transit for almost the entire third country trade of Nepal. Nepal’s main imports from India include petroleum products; motor vehicles, other machinery & parts and medicine. Nepal imports all fossil fuel energy from India.
  • Investment: Indian firms are among the largest investors in Nepalaccounting for more than 30% of the total approved foreign direct investments.
  • Defence: 
    • India has been assisting the Nepal Army in its modernisation by supplying equipment and providing training. Assistance during disastersjoint military exercises and bilateral visits are other aspects of India’s defence cooperation with Nepal. 
    • Example,  The Indo-Nepal Joint Military Exercise SURYA KIRAN is conducted alternately in India and in Nepal. The Gorkha regiments of the Indian Army are raised partly by recruitment from hill districts of Nepal.
  • Disaster management:
    • Following the devastating 2015 earthquake, India swiftly dispatched National Disaster Response Force (NDRF) teams and special aircrafts with rescue and relief materials to Nepal. India is also providing grants to support reconstruction. During the Pandemic, India provided one million doses of Oxford-AstraZeneca’s Covishield vaccine to Nepal as grant assistance. A medical oxygen plant was installed in Nepal to aid in pandemic response efforts.
  • Connectivity and Developmental partnership:
    • India’s development assistance to Nepal focuses on creation of infrastructure in the areas of connectivity, health, water resources, education and rural & community development. Examples: B.P. Koirala Institute of Health Sciences, Dharan
    • Border infrastructure: In recent years, India has also assisted Nepal in development of border infrastructure. Example: Integrated Check Post at Birgunj (Nepal)
  • Railway: India financed Kurtha-Jayanagar passenger railway.
  • Water resources:
    • A three-tier bilateral mechanism was established in 2008 to discuss issues relating to cooperation in water resources, flood management, inundation and hydropower between the two countries.
  • Energy cooperation:
    • Power Trade Agreement: An important Power Trade Agreement was signed between the two countries in 2014 paving way for the power developers of the two countries to trade electricity across the border without restrictions.
  • Electricity trade: Nepal achieved energy surplus status in July 2021 and began selling 39 MW of electricity to India via the Indian Energy Exchange.
  • Joint Vision Statement on Power Sector Cooperation: Focuses on developing cross-border transmission infrastructure and bi-directional power trade based on market demand. Enabled Nepal to export an additional 325 MW of electricity to India from July 2022.  Serves as a foundation for sub regional energy trade among the BBIN countries  (Bangladesh, Bhutan, India, and Nepal).
  • Collaborative projects: The two countries have undertaken various collaborative projects such as the Lower Arun Hydropower Project, Upper Karnali and Trishuli Hydropower Station.
  • Cooperation in oil: Marked by South Asia’s first cross-border petroleum products pipeline, constructed by Indian Oil Corporation, connecting Motihari, India to Amlekhgunj, Nepal.
  • Human resource development:
    • Visa-free entry promotes extensive people-to-people contact, with scholarships and training programs underpinning educational exchanges.India 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.
  • Culture:
    • B.P. Koirala India-Nepal Foundation:It was set up in 1991 to foster educational, cultural, scientific and technical cooperation between India and Nepal.
  • Swami Vivekananda Centre for Indian Culture: It was set up in Kathmandu in 2007 to showcase the best of Indian culture.
  • Other cultural agreements:
  • Besides these, Agreements have been signed between cultural institutions such as Sahitya Kala Akademi and Nepal Academy, and between Doordarshan and Nepal TV.
  • Connecting Hindu culture:
  • Nepali Prime Minister Sher Bahadur Deuba visited Varanasi. Varanasi, a Hindu holy city, is the foremost religious and political center of Nepal outside the borders of Nepal.
  • Diaspora:
    • Around 6,00,000 Indians are living in Nepal and 8 million Nepalis work in India.
    • Nepalese citizens avail facilities and opportunities on par with Indian citizens in accordance with the provisions of the Indo-Nepal Treaty of Peace and Friendship of 1950.
  • Multilateral and Regional Fora:
    • Both Nepal and India have common approach to regional and multilateral institutions and hence, work in tandem in the United Nations, Non-Alignment Movement and other international fora. Furthermore, both the countries have been deeply engaged in the regional and sub-regional frameworks of SAARC, BIMSTEC and BBIN.


  • Anti-India sentiments:
    • Criticism over India’s “Big Brother” behaviour, border disputes, India’s criticism of Nepal’s 2015 constitution and subsequent blockade, supplemented by narratives from China-backed political parties have created strong anti-Indian sentiments. This trust deficit hinders effective cooperation.
  • China factor:
    • China has been actively pursuing outreach with the political parties and has begun to play a visible role in Nepal’s domestic politics. Its economic weight positions it as a potential development partner and Nepal has enthusiastically joined in the Belt and Road Initiative.
  • Border dispute: 
    • A sustainable resolution of border dispute is crucial for regional stability and the long-term relationship between India and Nepal, given their deep cultural and historical ties. 
  • Nepal is caught in the middle of a geopolitical tussle between China and the United States:
    • Nepal is at the center of geopolitical rivalry between China and the United States.
    • Millennium Challenge Corporation (MCC): The debate on the MCC, a USD500 million U.S. grant for Nepal's infrastructure, highlighted the Sino-American competition. While Indo-American interests align against a rising China, India is cautious about increasing U.S. influence in Nepal, fearing a potential decline in its own influence.
  • India’s reluctance to engage:
    • Nepal and India had formed an eight-member (four from each country) Eminent Persons’ Group (EPG) in 2016. The Group was tasked to study outstanding issues in India-Nepal relations and offer suggestions for the way forward.
    • Although the EPG submitted its report in 2018, Prime Minister of India has consistently refused to receive it. Some argue that this is a reflection of India’s reluctance to accept Nepal as a sovereign equal and an indication of its interest in continuing the unequal relations based on the 1950 Treaty of Peace and Friendship.
  • Internal security concerns:
    • With Nepal and India sharing a porous border, India has always been suspicious about the possibility of terrorists and traffickers using the border to cause harm to India.
  • Political instability:
    • With 28 governments in the past 32 years, Nepal continues to remain hostage to petty party politics, which has prevented the realization of any significant developmental progress. 
  • Delayed completion of projects:
    • The issues between Nepal and India are affecting the implementation of various Indian-aided projects in Nepal. Example: The recent border dispute has cast a shadow on the future of the proposed Pancheshwar multipurpose dam project.


  • Address boundary disputes: A Joint Boundary Demarcation Committee could be appointed by both the countries to scientifically study the Maps and come to a conclusion diplomatically.
  • Encourage balance relations: Nepal’s dependence on India is more than India’s dependence on Nepal. To increase India’s dependence on Nepal, it is necessary to place the increase in trade and economic activities at the forefront.
  • Increase energy trade: Energy trade between Nepal and India is mutually beneficial, enabling Nepal to sell its surplus energy and reduce its trade deficit with India, while lessening its dependence on Indian fossil fuels. With India's energy demand projected to increase by 35% by 2030 and its commitment to net-zero emissions by 2070, India is shifting from coal to renewable energy sources. In this context, Nepal's additional clean energy supply could help India meet its growing energy needs.
  • Adhere to non-interference: India should maintain the policy of staying away from Nepal’s internal affairs should refrain from actions that antagonise the people of Nepal.
  • Invest in hydropower: Current hydroelectric power generation in Nepal is at 650 MW per annum, which is less than one percent of the proven potential.  To utilize this and meet India’s rising demand for clean energy, investments in hydroelectric power needs to be made.
  • Leverage regional platforms to foster cooperation: Regional platforms like the BIMSTEC and the SAARC could be leveraged to foster cooperation in common areas of interest like technology-driven agriculture.
  • Economic support: To deepen its engagement with the Nepal, India needs to encourage its private sector enterprises (such as telecom and power) to increase investment in the region.
  • Security cooperation: Both countries should strengthen cooperation in areas of counter-terrorism, counter-radicalisation and drug trafficking, through measures like regular intelligence sharing and frequent joint security exercises.
  • Improve connectivity: Efficient connectivity with India is topmost on Nepal’s agenda. Connectivity needs to improve in air and land transport, as well as energy.


Q. “Nepal-India relations are deep, wide-ranging, and unique, but also fraught with complexities”. Discuss. (15 marks, 250 words)