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Oscillating between periods of cooperation and setbacks, the India-Nepal bilateral relationship is considered ‘special’ and ‘unique’ by all who observe their dynamics. Thus, the failure of the two sides to maximize their potential and fully capitalize on the factors that make this partnership different is often criticized. In the past decade, under India’s ‘Neighbourhood First’ policy, the focus of the Indian leadership has been on working on the convergences, while preventing the issues of contention from casting a shadow on progress. This approach has found a receptive audience in Nepal as well, with the two sides increasing cooperation. Even as China strives to solidify its presence in the country, Nepal, owing to its strategic location, has (in)voluntarily become a part of the geopolitical churning that is taking shape in South Asia. As the current government in India completes its second stint in power, the timing is opportune to briefly reflect on the trajectory that the bilateral relationship has taken up in the past decade and the course it will adopt in the coming years.

Unprecedented developments

For India, Nepal is an integral part of its ‘Neighbourhood First’ policy. New Delhi has consistently supported Nepal in its developmental endeavors and is the country’s top development partner. This year’s budget saw InRs 700bn earmarked as developmental assistance for Nepal, the second highest amount followed by Bhutan. Beginning with the Indian Prime Minister’s visit to the country in 2014, the two sides have seen a flurry of high-level visits throughout the decade. This is a testament to the consensus on both sides regarding the need to build the relationship further and also a response to the change in the geopolitical environment and the growing cleavages between India and China.

While the decade began on a positive note with the Prime Minister’s visit, a multitude of factors derailed the progress that was made at the time. The devastating earthquake in Nepal, followed by concerns regarding how Indian media portrayed the aid delivery, the adoption of a new constitution in 2015, the subsequent protests and the alleged economic blockade placed by India cumulatively dented the goodwill that was generated the previous year. At around the same time, China’s expanding presence in the country also complicated the dynamics between the two countries.

Fast forward 2024, while some endemic issues of contention have persisted between the two sides, the priorities have significantly altered for both countries. There is a subtle shift in how both Kathmandu and New Delhi want the relationship to move forward—a focus on pragmatic considerations and working together to enhance cooperation in connectivity and economic integration. Back in 2014, India committed to supporting Nepal with the ‘HIT’ model i.e. the construction of highways, information ways and transmission lines. In the last few years, India has refocused its attention on these aspects of the relationship.

For both India and Nepal, the complementarity that they share in terms of hydropower, i.e. Nepal’s willingness to export it and India’s need for energy has been one avenue in which the two sides have cooperated extensively. At present, as per some estimates, Indian companies have licenses for the generation of 4000 MW of hydropower. Starting in November 2021, India also began to buy Nepal’s hydropower with the latter selling Rs 11bn worth of hydropower to its neighbor between June and Dec 2022. On his maiden visit to India, Prime Minister Dahal oversaw the signing of memorandums of understanding (MoU) on the Arun Hydroelectric Project and the Upper Karnali project. A project development agreement was also signed for the 669 MW Lower Arun Hydroelectric Project. The two sides also inaugurated and laid the foundation stones for new integrated checkposts.

The signing of a power trade agreement during India’s EAM S. Jaishankar’s visit to the country in January this year, under which Nepal will export 10,000 MW of power to India over the next 10 years, is considered a major landmark in the growing partnership between the two countries. This was also discussed during Prime Minister Pushpa Kamal Dahal’s visit to the country along with the Nepal-Bangladesh power-sharing agreement, which will be facilitated by India. Another manifestation of connectivity has been in the sphere of digital connectivity with Indian nationals now able to make payments through the Unified Payments Interface (UPI) starting Feb 2024. This, as evidenced by some analysts, will smoothen the flow of remittances and also give a push for increased tourism in the country.

In trade, India is Nepal’s biggest trading partner with the total volume of bilateral trade reaching
Rs 1,134.53bn in the fiscal year 2022-23. It also has the highest FDI stock in the country, close to 33 percent of the overall volume. The transit trade agreement between the two sides was also renewed, revised and signed by the two last year. India’s High Impact Community Development Programs also completed 23 years last year, with New Delhi successfully finishing 475 of the 535 projects that it took up. India’s lines of credit were pegged at $1.65 as of Aug 2023 and 73 percent of the assistance offered by India goes into infrastructure development.

Observers see India’s relationship with Nepal on a strong footing, as the three important components of India’s relationship—security, economy and connectivity—have all seen progress in the past decade. But while there is optimism about the trajectory of the relationship, there is also some caution, with calls for ‘strategic reformulation’ and discarding the ‘roti-beti’ lens of looking at the country. This is because of how the world and the region around them is in a constant state of flux.

The impediments

Despite the progress made in enhancing economic integration and connectivity between the two countries, certain bilateral issues have persisted. The degree to which they can affect the positive momentum in the relationship depends on multiple factors. Recently, a cabinet meeting in Nepal decided to have a picture of the country’s map on the new Rs 100 notes. The map was the one that the then Prime Minister Oli released in 2020, showing the Kalapani, Lipulekh and Limpiyadhura regions as a part of the country. At that time the relations hit a new low. India deemed the decision as  ‘unilateral actions which don’t alter the reality on the ground.’ While there is no denying that the issue won’t have any immediate adverse impact on the positive momentum of ties between the two countries, the act itself and its timing indicate how long-standing issues can suddenly prop up with the potential to dampen the relationship. In a recent lecture, Nepal’s Foreign Minister articulated commitment to resolving bilateral issues through bilateral consultative mechanisms that have been set up for that purpose, based on historical facts. India’s External Affairs Ministry also highlighted that the issues are being discussed through established platforms. So, while the consensus is there on both sides to take this up mutually, the delay allows certain sections to use them for the perpetuation of their power or for making a political point, more often for a domestic audience.

The calls for the revision of the 1950 Treaty of Peace and Friendship, the boundary issue as mentioned above, the report of the Eminent Persons’ Group, and the opening of new air routes are all issues, which have propped up in the conversations between the two countries in the past decade. While for the time being it seems prudent to focus on the positives and create enough trust and goodwill that can then help in addressing the more contentious issues—as has been the sentiment in Nepal as well—a long-term approach will require active engagement on these issues.

With China’s growing presence in Nepal, there is a need for New Delhi to recalibrate its options and further push in areas where it has already achieved significant progress. The obstacles that delay the completion of projects like the Pancheshwar Multipurpose Project, other concerns related to delay in implementing projects on loans granted by the Exim bank, and assuaging Nepal’s concerns about the rising trade deficit are all issues that should be taken up with the other side. As Nepal’s then Prime Minister had articulated in 2016, remarking on the country’s ‘historic tilt’ toward India, security and development can’t progress in isolation.

As the growing cleavages between China and the US start playing in the neighborhood, for India and Nepal to strengthen their partnership, it is imperative to rejig the bilateral relationship. The two countries have the potential to build on the positives and adopt a pragmatic approach. However the rather quick changes in government in Nepal and the limits that it imposes on adopting a consistent foreign policy toward India does affect progress. With India on the cusp of concluding the voting for the general elections, one hopes that the two countries sustain the progress that they have made in the last decade and become more open in resolving the issues that plague the relationship.

Mountains are an important source of water, energy, biological diversity, key resources such as minerals, forests, agriculture, and recreation. Mountain environments represent major ecosystems essential to the global ecosystem’s survival. About 10 percent of the world’s population depends directly on mountain resources, and a much larger percentage draws on mountain resources, especially water. However, with rapid urbanization and global warming, many mountain areas around the world are experiencing environmental degradation.

As increasing mountain degradation continues due to climate change impacts, the mountain agenda for Himalayan nations like Nepal needs to be discussed and addressed in a sustainable way. The key agendas encompass sustainable development, environmental conservation, climate resilience, cultural preservation and international cooperation. It should prioritize protecting mountain ecosystems, managing water resources, reducing disaster risks, preserving indigenous cultures, promoting sustainable tourism, diversifying livelihoods, and fostering collaboration among neighboring countries and international partners. These efforts should aim to ensure the well-being of mountain communities and the sustainability of mountain ecosystems in the face of growing challenges posed by climate change and environmental degradation.

The United Nations Conference on Environment and Development in Rio de Janeiro in 1992 declared “Program of Action for Sustainable Development” as ‘Agenda 21’, which is a landmark document in mountain sustainability. This comprehensive action plan, adopted by 178 governments, outlines strategies and measures to foster sustainable development globally in the 21st century. Rooted in the principles of integration, equity, and collective responsibility, Agenda 21 emphasizes the urgent need for international cooperation to address interconnected social, economic, and environmental challenges. Chapter 13 of this report focuses on managing fragile ecosystems: sustainable mountain development and addresses the unique challenges faced by mountain regions worldwide, emphasizing their significance as key ecosystems and their vulnerability to environmental degradation, climate change, and unsustainable development practices. It calls for urgent action to promote the sustainable management and conservation of mountain ecosystems, recognizing their crucial role in providing essential ecosystem services, supporting biodiversity, and sustaining livelihoods for millions of people.

The United Nations declared 2022 as the International Year of Sustainable Mountain Development to raise awareness about the importance of mountains and their ecosystems whereas the Second Committee of the 77th UN General Assembly unanimously approved Tajikistan’s proposal to designate 2025 as the International Year of Glaciers’ Preservation and to mark March 21 as World Day of Glaciers, beginning in 2025. This initiative underscores glaciers’ crucial role in the hydrological cycle and the severe repercussions of their rapid melting on climate, ecosystems, human health, and sustainable development. Originating from Tajikistan's President at the Water and Climate Leaders’ Call for Action in March 2021, it was subsequently included in the Water and Climate Leaders Action Plan during the Dushanbe meeting in June 2022. All UN Member States, entities, international organizations, civil society and stakeholders are encouraged to participate. UNESCO and WMO, in collaboration with governments and relevant entities, are tasked with organizing activities, including establishing a global cryosphere information system. The declaration also highlights the collaborative efforts of global leaders in integrating the water and climate agenda, acknowledging their invaluable contributions.

In response to the UN Declaration of the International Year of Glacier Preservation, the Cryospheric Society of Nepal-CSN, a group of glaciologists, has initiated the celebration of World Glacier Day in collaboration with Kathmandu University and other relevant stakeholders to raise awareness of climate change and glaciers in Nepal. On March 21, it was celebrated as a warm-up celebration by organizing a one-day symposium on cryosphere, where relevant stakeholders shared their activities and plans for cryosphere monitoring. It has helped to collaborate among like-minded institutions within Nepal and for international collaboration.

In addition, mountains were included in the global stocktake documents of the COP28 held in UAE. The global stocktake emphasizes the need for action, urging Parties and encouraging non-party stakeholders to heighten ambition and strengthen adaptation efforts to mitigate climate impacts on ecosystems and biodiversity. It advocates for accelerating ecosystem-based adaptation and nature-based solutions, emphasizing the management, enhancement, restoration and conservation of various ecosystems, including the protection of mountains.

In the last 30 years, the recognition of mountains has become a vital component of the global environment; however, mountain ecosystems characterized by their fragile geology, rugged topography, rich biodiversity and unique ecological features are susceptible to environmental disturbances and are experiencing rapid changes due to human activities and global warming. Most of Nepal’s land is located in high mountains and is facing a critical challenge as its glaciers rapidly retreat, endangering freshwater resources. This trend, consistent with global patterns, threatens water security and exacerbates scarcity issues. Studies project significant glacier volume reductions by 2050. A recent report highlights a 65 percent increase in glacier mass loss in the Hindu Kush Himalayan region between 2000 and 2019, alongside a negative trend in snow cover extent, indicating seasonal shifts. Compounding the problem, thawing permafrost destabilizes mountainsides and accelerates the formation of hazardous glacial lakes.

Over the past decade, there has been a notable increase in the number of potentially hazardous glacial lakes, with approximately 47 identified as posing potential risks. However, to accurately assess and address these risks, ongoing scientific research and monitoring are essential. The dynamic nature of glacial lakes, influenced by climate change and glacial melt rates, underscores the need for regular updates to these datasets. As the number and volume of glacial lakes continue to fluctuate each year, alongside changing triggering factors, updated information is crucial for effective risk reduction strategies.

The looming threat of glacial lake outburst floods (GLOFs) underscores an urgent need for proactive risk reduction measures. Downstream communities and vital infrastructure are particularly vulnerable to the devastating impacts of these floods. By integrating scientific research findings into risk assessment frameworks, policymakers can develop targeted strategies to mitigate the risks posed by glacial lakes. This approach involves leveraging advanced monitoring technologies and predictive modeling to anticipate potential hazards and implement timely interventions. Ultimately, prioritizing scientific research and risk reduction efforts is essential for enhancing resilience to GLOFs and safeguarding vulnerable communities and infrastructure downstream of glacial lakes.

Urgent action necessitates collaborative efforts to manage not only risks related to glacial lakes but all the issues, including those related to water resources, infrastructure sustainability, ecosystem, biodiversity, and mountain tourism, to enhance disaster preparedness and promote sustainable development practices. Such measures are vital for safeguarding vulnerable populations and mitigating the impacts that the mountain and its people are facing. It is essential to promote sustainable mountain development, enhance scientific research and monitoring, strengthen institutional capacities, technology transfer, promote community participation, and foster international cooperation. It emphasizes the importance of adopting holistic strategies considering the interconnectedness of mountain regions' social, economic and environmental factors. The country needs to maintain transparency in financing through climate finance and loss and damage mechanisms with adequate policies and their implementation for climate-resilient mountains.

India and Nepal are deeply connected through natural resources, cultural heritage, and the shared philosophy of Sanatan Dharma. Their integrated people-to-people relations stand as a testament to a living culture and heritage. The significant trade and commerce through open border check posts underscore their economic relationship and its potential for growth via Indian territory.

Despite these factors defining their geo-strategic relationship, the India-Nepal dynamic hasn't seen the bold transformation observed in India-Bangladesh relations. Both Bangladesh and Nepal are set to graduate from Least Developed Country (LDC) status in 2026. Attention is now on their preparedness and ability to leverage opportunities with regional leaders like India, which is on track to become the world’s fourth-largest economy. 

The post-Covid Bangladesh showcases an economic success story, collaborating closely with India. The development of markets, demographic dividends, institutional growth, the Matarbari deep-sea port, and linking industrial value chains with North-East India are testaments to Bangladesh’s political will and strategic alignment with India, garnering support from Prime Minister Narendra Modi. This robust partnership has led to Bangladesh’s thriving supply chains, GDP growth, and overall progress.

In contrast, Nepal’s political instability hampers its potential. Since the general elections of November 2022, the government has been formed three times, with a fourth vote of confidence for the prime minister imminent. Mainstream political parties seem more focused on power struggles than on harnessing Nepal’s economic potential. A pressing concern is the exodus of Nepali youth seeking opportunities abroad, reflecting a domestic business environment marked by stagnation and lack of investment. The phenomenon of "shutter down" businesses indicates widespread disillusionment.

A critical question needs to be asked as to why there is a domestic lull, why the prime minister hasn’t called for an emergency meeting to discuss closure of businesses, up-and-running businesses fear of going bust, and young population leaving the country in droves. 

Despite these challenges, Nepal recently hosted the Third Investment Summit in Kathmandu on April 28-29, featuring over 50 countries, 800 foreign delegates, and 2200 domestic leaders. The summit began with enthusiastic statements from international diplomatic leaders and investment partners. However, domestic business leaders appeared detached, awaiting substantial reforms in domestic laws and regulations. The reliance on ordinances for partial legal amendments undermines sustainable growth and highlights the fragility of Nepal’s business ecosystem.

The Confederation of Nepalese Industries (CNI), one of the chambers of commerce, had called for amendments to 28 laws and regulations to encourage businesses and investors, but the government addressed only a part of their demand through ordinances just ahead of the summit. Ordinance-driven changes mar the momentum of sustainable growth and cannot be seen as a constructive step. 

Despite the three mainstream political leaders—Pushpa Kamal Dahal, Sher Bahadur Deuba and KP Sharma Oli—speaking in one voice about political consensus on Nepal’s readiness to receive foreign investment, the ordinance route amendments betrays the fragility of the country’s business ecosystem.

The summit did showcase success stories, notably India’s steady commitment and investment. Indian Minister Piyush Goyal’s endorsement of global investment in Nepal highlighted the potential for shared progress. Nepali leaders acknowledged India’s role in helping Nepal meet its Net Zero Commitments and assisting with clean energy exports. The potential export of clean energy to Bangladesh via India and the opening of Bangladeshi ports through North East India could be transformative for Nepal. However, realizing these opportunities requires robust connectivity, infrastructural development, a conducive business environment, and unrestricted access to resources and talent.

The question remains how Nepal’s political leadership will capitalize on the trust and strategic partnership with India to foster domestic growth and attract foreign investment. The future of Nepal’s economic and regional integration hinges on its ability to create a stable, business-friendly environment supported by both domestic and regional players.

New Nepal political map 2020 

On 25 April 2024, Nepal’s Cabinet approved printing of the new 100 rupee note with the new Nepal political map. The decision was not made public until 3 May 2024. 

Let’s relook at the recent developments relating to the India-Nepal boundary row: 

1. Nearly 98 percent of the boundary between India and Nepal has already been delineated.

2. In a unilateral move, bypassing the existing bilateral mechanism of boundary resolution with India, Nepal’s Parliament unanimously approved the new Nepal Political Map in June 2020 tabled by then KP Sharma Oli-led government.  

3. The new Nepal Map included the territories of Lipulekh, Limpiyadhura and Kalapani, the point of contention between India and Nepal.

4. When the Lower House of Nepal’s Parliament approved the new Map, India conveyed its readiness to talk and noted “that the onus is on the K P Sharma Oli government in Nepal to create a “positive and conducive atmosphere” for talks to resolve the row over Kalapani-Lipulekh region.”

5. Nepal overlooked Indian Statement of openness to talk after the Lower House approval and went ahead and tabled instead at the Upper House which then approved unanimously.

6. In the same year 2020, Nepal minted new coins Rs 1 and Rs 2 Coins with New Nepal Map. Similarly, there were news updates that the new Map was introduced in the school curriculum.

7. Repeatedly, the Indian Government expressed readiness to discuss the boundary issue under the existing bilateral framework. The results of the progress under the bilateral mechanism on this issue are not evident enough on social media.

8. In the meantime, the boundary issues did not stall both sides from pursuing the shared progress agenda.

9. During the Joint Presser of Prime Minister Dahal and Prime Minister Narendra Modi on 1 June 2023 at the time of Nepal’s Prime Minister Dahal’s visit to India, Prime Minister Modi said, “We will continue to work to take our relations to the height of the Himalayas. And in this spirit, we will resolve all the issues, be it the boundary issue or any other issue. I am happy to share that the partnership between India and Nepal has been a super hit.” The collaborative spirit also led to the mega announcement of Nepal exporting 10,000 MW to India over a period of 10 years. Such a cross-border energy trade partnership is expected to correct the trade deficit between India-Nepal and also foreseen to pave the way for Nepal’s clean energy export to Bangladesh and others in the long term.

10. In March 2024, the third time government post 2022 General Elections formed in Nepal (with five coalition partners namely CPN (Maoist Centre), NCP (UML), RSP, CPN (US), JSP under the prime ministership of Dahal. In specific, the coalition partners announce their “Minimum Policy Priority and Common Program” which includes “to further strengthen the geographical integrity, sovereignty, independence and freedom of Nepal, to advance effective diplomatic efforts to take back Nepali lands such as Limpiyadhura, Lipulekh, Kalapani, Susta, and to effectively manage the border”.

11. On 25 April, 2024, the Cabinet of Nepal Government passed the decision to print new 100 rupees notes with the new Nepal Map. The Cabinet decision was announced on 3 May 2024. 

The week in Nepal-India relations 

Let’s take a closer look at the period April 25–May 3 in Nepal-India relations:

1. The decision of the Cabinet meeting held on April 25 was made public only on May 3.

2. Some of the key events during the period April 25-May 3 included the Third Nepal Investment Summit held on April 28-29 which witnessed mega success stories on Indian Investment into Nepal; official Visit of G Murmu, the Comptroller Auditor General of India and signing of MoU with Toyam Raya, the Auditor General of Nepal on enhancing cooperation between the two Supreme Audit Institutions on May 2; and on May 3, the Chief Justice of India, DY Chandrachud arrived in Kathmandu for a 3-day visit at the invitation of Chief Justice of Nepal, Bishwambhar Prasad Shrestha.

Conclusions

In view of the above developments in India-Nepal relations, including a peek into the key week with announcements demonstrating political will, government decisions, high-level visits, success stories in multifaceted India-Nepal relations leaves me with following 10 conclusions:

1. India remains by the far the most strategic partner for Nepal, be it due to civilizational linkages, integrated People-to-People lives, largest trade partnership and importantly can help Nepal achieve its Net Zero Commitments by facilitating the export of clean energy from Nepal. India is also a key regional leader that can influence, support and navigate any global agenda for securing and safeguarding Mountain, River and Sea economies between Himalayas to Bay of Bengal. The high-level visits from Judiciary, Constitutional Agencies, Business Leaders show the spirit of collaboration and partnership as foreseen by Prime Minister Modi to take the India-Nepal relations to the “height of Himalayas” earlier at the Joint presser with Prime Minister Dahal in June 2023.

2. There is a boundary dispute between Nepal and India which calls for diplomacy and dialogue without any further delay. The Political Statements by Prime Minister Narendra Modi and Prime Minister Dahal have set the track in motion which must be followed in letter and spirit.

3. In the wake of the above, the political leadership in Nepal appears vague and unclear as to what they want by changing the goalposts year upon year with their most strategic partner. How does one reconcile the same Prime Minister Dahal at the Presser with Prime Minister Modi in June 2023 speaking of the “solid foundation built on the one hand by rich tradition of civilizational, cultural and socio-economic linkage and on the other by the firm commitment of the two counties to the time-tested principle of sovereign equality, mutual respect, understanding and cooperation”, acknowledging Indian investment in Nepal as a keynote success story at the Nepal Investment Summit on April 2024 while his cabinet then approves new Rupees 100 Banknotes with “unilateral” new Map and announces in May 2024. Is there leadership void to pursue National Issues and development agenda in Nepal? If Bangladesh can achieve both with Neighbourhood First spirit, where does Nepal default and why?

4. One may also question here how effectively did the Nepal Government evaluate India-Nepal partnership potential during the launch of “minimum policy priority and common program” in March 2024. Did Prime Minister Dahal convince his coalition partners of the understanding achieved with India and how he intends to leverage this relationship with Prime Minister Modi for the welfare of the people of Nepal. Prime Minister Dahal could have focused on seeking investment and support in technological sector, engagement with Indian Corporate as Tech Mahindra, TCS, Infosys, Wipro for the youth of Nepal, agreed for Skills related investments along the borders, sought Indian support for three AIIMS level Healthcare Institutions in Nepal (West, Centre and East) and secured a guaranteed seat with prime educational institutions as IITs/ IIMs/ors. for the top brightest students of Nepal.

5. Did Prime Minister Dahal fall for an agenda of “nationalism” for his own survival? Or did the coalition partners like former Prime Minister KP Sharma Oli, whose national appeal thrives on call for “nationalism”, dissuaded him from the development agenda for the people of Nepal? The two communist leaders of Nepal have taken each other for a ride and still continue to do so at the cost of National Interest. In the frenzy of domestic vote bank scoring and outsmarting each other, both have jeopardized the gains during their respective tenure with India which they could have leveraged for welfare of Nepali people and thus strengthened their foothold in Nepal.

6. Now let’s turn towards India—the Indian media frenzy with Nepal’s Cabinet decision of new banknotes with new Nepal map was dramatic and sensationalism driven. Their overkill of imagination can be seen with two potential conclusions, a) Nepal is hostile towards India and India-Nepal relation at its worst, b) Nepal is in China’s lap and that the communist leaders are being controlled and manipulated by China. Unless and until, the importance of domestic mileage in Nepali politics is understood and appreciated, such hasty conclusions will lead to more provocation and not resolution.

7. To begin with, one shouldn’t forget that Nepal’s Parliament already approved the New Nepal Map in 2020 and thus its implementation is an internal matter of Nepal. Nepal had already minted Nepali Coins of denomination Rs 1 and Rs 2 in 2020. Whether they decide and mint/ print 10/20/100 or more is an internal matter! The issue should have been the timely resolution after the statement of Prime Minister Modi at the Joint Presser in June 2023. Media overaction with China linkages mar dialogue and diplomacy in India as in Nepal. 

8. Indian media and Nepali media should have mentioned about the embarrassment caused to the leadership at the Judiciary and Constitutional Agencies of both India and Nepal when such a Cabinet decision was made public. (Referring to the visits of CAG Murmu and CJI DY Chandrachud to Nepal in May 2024)

9. Last but not least, while India remains focused on people-to-people and economic relations in Nepal and is also well aware of the domestic politics compulsions driving behavior of the Nepali leaders, it must therefore work with rigor to remove the irritants in matters of national consideration to Nepal. It is imperative that India is seen as more indifferent to political constitutions. The pace of developments and economic interventions from India should be driven by welfare and progress of Nepali people. Access to essentials such as electricity, onions, tea or trade and commerce related approvals shouldn’t become a one step forward and two steps back decision. It is also time to upscale the HICDP intervention to move away from school buildings to big ticket investment in skills and vocational institutes, healthcare institutions at the Province level and IIT/IIM at the capital level. It is only timely and relevant that Modi 3.0 has a reinvigorated Nepal policy that takes Nepal along in #Amritkaal and not let domestic politics compulsions of Nepal dent the spirit of Neighbourhood First

10. The two countries are duty bound to preserve and nurture their unique shared heritage of Vasudhaiva Kutumbakam where human and nature’s coexistence can be seen as a way of life in a family and society, in the decision making and governance at the State level. It is imperative for both India-Nepal to recognize their richness of Sanatan Dharma and strive together to protect and nurture its core principles of plurality and freedom of expression. Man-made political boundaries do not and cannot split the custodians of Dharma—as seen in the lives of SitaRam or Machendranath and Gorakhnath, or in the journey of Buddha.

It is time to correct the course and revive Kathmandu to Kashi understanding before it’s too late. 

The author is New Delhi-based financial, geopolitical and security analyst. Views are personal

The US Indo-Pacific Strategy (IPS) was a hotly debated topic in political and diplomatic circles from 2019 to 2022, though discussions have subsided somewhat since then. In Nepal, discourse on the IPS has been dominated by its security and strategic components, with support for this initiative often viewed as joining the US-led military alliance.

In a veiled reference to IPS, Nepali leaders often say that Nepal cannot and should not join any military alliances as it goes against the country’s long-standing commitment to the non-alignment policy. Bolstering Indo-Pacific security is a key part of the IPS which faced stiff opposition in Nepal after the country was mentioned in the 2019 Indo-Pacific Strategy Report by the US Department of Defense.

Additionally, some US documents claimed that Nepal had joined the State Partnership Program (SPP), prompting Nepal to reportedly request for removal from the SPP. Some SPP documents, however, still include Nepal. Nepali leaders also briefly put off the Millennium Challenge Corporation (MCC) project, stating that it was part of the IPS. Discussions on the IPS in Nepal are framed around these two issues, but the strategy encompasses much more.

For the US and international strategic community, the 2022 Indo-Pacific Strategy unveiled by the Biden administration serves as the guiding document on IPS and its execution. The Trump administration had placed the military component as the central pillar of the strategy which landed it in controversy. So, the Biden administration introduced a new Indo-Pacific Strategy (IPS), which has now entered its third year of implementation. US officials are currently occupied with compiling progress reports on a country-by-country basis. Contrary to the Trump administration’s confrontational approach toward China, the Biden administration’s IPS adopts a different stance. It consists of five pillars: promoting a free and open Indo-Pacific, fostering connections within and beyond the region, driving Indo-Pacific prosperity, enhancing Indo-Pacific security, and building regional resilience to 21st-century transnational threats.  Biden’s IPS focuses more on economic cooperation, capacity building of regional partners, and the view that US resources alone are insufficient. 

A frequently asked question in Nepal is whether the country is already a part of the IPS. This is a tricky question and the answer can be both yes and no. Those who view the IPS solely through the prism of security and military cooperation say Nepal is not involved. However, considering all components of the strategy and its implementation, Nepal can be seen as a part of the IPS. US officials and experts have often clarified that the IPS is an overarching framework outlining how the US, as a superpower, envisions the Indo-Pacific region. Nepal, being the landlocked country situated between India and China, is a high priority in the region. US officials have stated in documents that ‘Nepal can play a vital role in the Indo-Pacific region’ and that Nepal is ‘a valued partner in the Indo-Pacific’.

The broader context suggests Nepal is indeed a high priority for the US within its overarching Indo-Pacific policy. In recent years, the US has stepped up diplomatic engagements with Nepal through high-level visits. These visits have focused on increasing US development assistance to Nepal, attracting private investment, promoting democracy and human rights, curbing corruption, and boosting collaboration across sectors. At the same time, the IMF, World Bank and other financial institutions have also intensified their engagements with Nepal. The MCC compact is a case in point.

Looking at how the IPS is being implemented in Nepal through various US agencies like USAID, there are investments “to strengthen democratic institutions for good governance and human rights; foster sustainable, inclusive, transparent economic growth; and improve resilience to health and climate threats” which is the thrust of IPS.

Let’s consider some specific cases now. The first pillar of the IPS is a free and open Indo-Pacific. Targeting the first pillar, the US has been supporting Nepal across domains like governance, democratic values, security and stability. This includes working with Nepal’s media, civil society and key institutions to build capacity, as well as security cooperation with Nepali forces on disaster preparedness, humanitarian assistance, border security, and more.

US agencies are actively engaged in Nepal across other pillars of the IPS. The US closely coordinates with allies and partners, recognizing its resources alone are insufficient for the region's challenges. Hence, allies like Japan, South Korea, India, Australia, and the UK are also expanding their presence and investments aligned with their own Indo-Pacific outlooks.

While the IPS has many facets, discussions and understanding in Nepal have been narrow. Obviously, there are challenges in dealing with the strategic initiatives, but time has come to make an understanding and position about what IPS means to Nepal. In the lack of an official government position, politicians and bureaucrats face difficulties addressing IPS-related issues and projects, particularly with the US.

As Nepal desperately seeks investment across sectors, the US and its partners are exploring opportunities, alongside emerging economies eyeing Nepal. Rather than shying away or viewing the IPS solely as a military strategy, there is a need for open dialogue to build an accurate understanding. The IPS involves US engagement with Nepal on clean energy, climate change, disaster preparedness and facilitating regional power trading agreements. On energy cooperation, the US is working closely with south Asian countries including India, Bangladesh, Bhutan and Nepal. The US also played a vital role in facilitating a regional power trading agreement in South Asia. Regarding climate change, the US partners with various organizations in Nepal, particularly targeting youth engagement—an area where Nepal can greatly benefit as it already faces impacts from climate-induced disasters. Another associated issue is preparedness for disaster response and relief operations. 

There is a need to build an understanding of the IPS to provide clear thoughts and ideas on how to address these challenges. Better comprehension of the multifaceted IPS can offer Nepal significant benefits. However, there are inherent risks if Nepal fails to develop a uniform and consensus-based position on it.