29 September 2022 – The Hindu

India Nepal Ties

The Historical Ties:

• Because of the geographical, historical, cultural, and economic ties that go back centuries, Nepal is a significant neighbour of India and holds a special place in its foreign policy.
• Given that Buddha was born in Lumbini, which is today’s Nepal, Hinduism and Buddhism have parallel ties to India and Nepal.
• The two nations have close bonds through marriages and familial ties, popularly known as Roti-Beti ka Rishta, in addition to sharing an open border and allowing unrestricted movement of people between them.
• The foundation of the unique ties that exist between India and Nepal is the India-Nepal Treaty of Peace and Friendship of 1950.

What exactly is the 1950 Treaty of Peace and Friendship?

• In the two nations, Indian and Nepali citizens are to be treated equally in terms of residence, property, business, and movement, according to the treaty.
• Additionally, it establishes national treatment for firms in both India and Nepal (i.e., once imported, foreign goods would be treated no differently than domestic goods).
• Nepal now has access to Indian-made weapons as well.

What is Nepal’s Importance to India?

• Uttarakhand, Uttar Pradesh, West Bengal, Sikkim, and Bihar are the five Indian states with which Nepal shares a border. Consequently, a significant hub for commercial and cultural interchange.
• There are two ways to look at the significance for India:
• Their strategic value for the national security of India.
• Their position in the perspective of India’s function in world politics.
• Nepal, along with Bhutan, serves as a northern “borderland” flanks and functions as a buffer state against any potential assault from China. Nepal is located directly in the heart of India’s “Himalayan boundaries.”
• In terms of biodiversity and potential for hydropower, rivers that originate in Nepal feed the enduring river systems of India.
• Nepal is a popular pilgrimage destination for many Indians since it has a huge number of Hindu and Buddhist sacred sites.

What are the areas where the two countries cooperate?

• Trade and Economy: India is Nepal’s major trading partner, the largest source of foreign investment, and it serves as a transit country for nearly all of Nepal’s trade with third countries.
• The total value of bilateral trade in 2018–19 was INR 57,858 crore ($8.27 billion). While Nepal exported INR 3558 cr (US$ 508 mn) to India in 2018–19, India exported INR 54,300 cr (US$ 7.76 bn) to Nepal.
• Indian companies working in the manufacturing, banking, insurance, dry port, power, tourism, and other sectors.
• Connectivity: Tibet, which has very little road connectivity, is open on one side of landlocked Nepal, which is also encircled by India on three sides.
• In order to strengthen inter-personal connections and foster economic growth and development, India and Nepal have launched a number of connectivity initiatives.
• For the construction of an electric rail route connecting Kathmandu with Raxaul in India, MOUs have been signed by the two governments.
• Within the framework of trade and transit agreements, India is attempting to create inland canals for the flow of freight, giving Nepal more access to the sea under the name “connecting Sagarmatha (Mt. Everest) with Sagar” (Indian Ocean).
• Development Assistance: The Indian government helps Nepal grow, concentrating on building infrastructure at the local level.
• Infrastructure, health, water resources, education, and rural and community development are among the areas of aid.
• Defense Cooperation: Through the provision of equipment and training, bilateral defence cooperation helps the Nepalese Army modernise.
• The Indian Army’s Gorkha Regiments are partially staffed via recruiting in Nepal’s hill areas.
• Since 2011, India and Nepal have participated in a joint military exercise called Surya Kiran.
• Cultural: Initiatives have been made to encourage interpersonal connections between various local organisations in Nepal in the fields of academia, media, and art & culture.
• For the twinning of Kathmandu-Varanasi, Lumbini-Bodhgaya, and Janakpur-Ayodhya, India has signed three sister-city agreements.
• Nepal continues to be the largest beneficiary of humanitarian aid from India since it is located in an ecologically fragile area where earthquakes and floods can cause significant damage to property and human lives.
• Indian Community: There are a significant number of Indians living in Nepal, including entrepreneurs, traders, physicians, engineers, and workers (including seasonal and migrant workers in the construction industry).
• Multilateral Partnership: Bangladesh, Bhutan, India, and Nepal (BBIN), the Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation (BIMSTEC), the Non-Aligned Movement, and the South Asian Association for Regional Cooperation are just a few of the multilateral forums that India and Nepal are members of.

What recent developments have there been?

• The cabinet also approved investments totaling 1236 crore for the Arun-3 hydroelectric project in 2019.
• On the Arun River in Eastern Nepal, there is a run-of-river hydroelectric plant called Arun-3 (900 MW).
• Build Own Operate and Transfer (BOOT): A Memorandum of Understanding (MoU) for the project’s execution on a Build Own Operate and Transfer (BOOT) basis for a period of 30 years, including five years of the construction period, was signed between the Government of Nepal and Sutlej Jal Vikas Nigam (SJVN) Limited in 2008.
• India’s International Centre for Buddhist Culture and Heritage is currently being built in the Lumbini Monastic Zone. The India Prime Minister performed the “shilanyas” ritual to kick off construction while he was in town.
• The centre will be a top-notch establishment that will welcome pilgrims and visitors from all over the world to experience the essence of Buddhism’s spiritual qualities.
• The building is designed to serve scholars and Buddhist pilgrims who travel to Lumbini from all over the world.
• Hydropower Projects: The two leaders signed five agreements, including one for the creation and execution of the 490.2 megawatt Arun-4 hydropower project between Satluj Jal Vidyut Nigam (SJVN) Ltd and the Nepal Electricity Authority (NEA).
• Additionally, Nepal asked Indian businesses to contribute to its West Seti hydropower project.
• Establishing a Satellite Campus: India has proposed to establish a Rupandehi-based IIT satellite campus and has forwarded draught memorandum of agreement for signature between Indian and Nepali universities.
• Projects such as the Pancheshwar Multipurpose Project, a crucial component of the 1996 Mahakali Treaty between Nepal and India, and the West Seti Hydropower Project, a reservoir-style project with a projected capacity of 1,200 megawatts, were discussed in Nepal.
• Cross-border Rail Link: The 35-kilometer rail line that runs from Jayanagar in Bihar to Kurtha in Nepal will be operationalized, and it will then be extended to Bijalpura and Bardibas.
• Another project is for the construction of a 90 km long, 132 kV double circuit transmission line that will run from Tila (Solukhumbu) to Mirchaiya (Siraha), not far from the Indian border.
• Multilateral Projects: Other agreements were also struck to ensure continuous deliveries of petroleum products between Indian Oil Corporation and Nepal Oil Corporation and to provide technical cooperation in the railway industry. Nepal was also admitted to the International Solar Alliance.
• What are the difficulties?
• Territorial Issues: The Kalapani boundary dispute is one of the major obstacles to improving relations between India and Nepal. These borders were established by the British in 1816, and in 1947, India took over the territory over which the British had exercised territorial sovereignty.
• While 98% of the border between India and Nepal was marked, Susta and Kalapani were still up in the air.
• In 2019, Nepal published a new political map that included the Uttarakhand regions of Kalapani, Limpiyadhura, and Lipulekh as well as the Bihar region of Susta.
• Problems with the Treaty of Friendship and Peace: The Nepali government requested the 1950 Treaty of Peace and Friendship in 1949 to maintain the unique relations it had with British India, as well as to grant them an open border and the ability to work in India.
• Today, however, it is seen as a manifestation of an unequal relationship and an imposent by Indians.
• Since the middle of the 1990s, it has sometimes and haltingly been mentioned in Joint Statements that it needs to be revised and updated.
• The Irritant of Demonetisation India revoked large value (Rs 1,000 and Rs 500) currency notes totaling Rs 15.44 trillion in November 2016. More than Rs 15.3 trillion worth of new currency has been returned as of late.
• Nevertheless, a large number of Nepalese citizens who were legally permitted to possess Rs 25,000 in Indian money were left out in the cold.
• The central bank of Nepal, the Nepal Rashtra Bank, has assets at Rs 7 crore, while the estimated value of public holdings is Rs 500 crore.
• The undetermined outcome of the report submitted by the Eminent Persons Group (EPG) and India’s unwillingness to accept demonetised currency at the Nepal Rastra Bank have not helped to improve India’s standing in Nepal.
• China’s Intervention: As India’s influence over Nepal has waned in recent years, China has progressively stepped in with loans, investments, and other forms of assistance.
• As part of its broad aspirations to increase international trade, China views Nepal as a crucial partner in its Belt and Road Initiative (BRI) and wants to invest in Nepal’s infrastructure.
• Nepal’s status as a buffer state between China and India may be weakened by growing collaboration between the two countries.
• China, on the other hand, wants to prevent any anti-Chinese sentiment among the Tibetans who reside in Nepal.
• Internal Security: This is a major issue for India because the Indo-Nepal border is largely unguarded and used as a recruiting ground for terrorist organisations and insurgent groups from the country’s North East.
• Differences in ethnicity and trust: Overtime trust deficit has widened between India-Nepal because of the Indian reputation for delaying implementation of various projects.
• There is anti-India feeling among certain ethnic groups in Nepal which emanates from the perception that India indulges too much in Nepal and tinkers with their political sovereignty.

What can be the Way Forward?

• Dialogues for Territorial Disputes: The need today is to avoid rhetoric on territorial nationalism and build the framework for peaceful discourse where both sides demonstrate sensitivity as they investigate what is realistic. India needs to be a sympathetic and giving partner for the neighbourhood first policy to take root.
• The dispute shall be negotiated diplomatically under the framework of International law on Trans-boundary Water Disputes.
• In this scenario, boundary dispute resolution between India and Bangladesh should serve as an example for this.
• Sensitising Towards Nepal: India should engage more aggressively with Nepal in terms of people to people engagement, bureaucracy engagement as well as political engagements.
• In the meantime, India should steer Nepal toward more inclusive discourse in the spirit of friendship while continuing its policy of staying out of Nepal’s domestic affairs.
• Strengthening Economic Relations: India and Nepal must be able to develop trust through the power trade deal. Even if more solar energy projects are being built in India, hydropower is the only energy source that can meet the country’s peak demand.
• By purchasing electricity from Nepal, India would be able to control its peak demand and avoid spending billions of dollars on the construction of new power facilities, many of which would emit pollution.
• Indian investments: Nepal needs to pay more attention to the Bilateral Investment Promotion and Protection Agreement (BIPPA) that was signed between India and Nepal.
• The private sector in Nepal is fighting valiantly against foreign investments, particularly the cartels posing as trade groups.
• It is crucial that Nepal sends the message that it welcomes investments from India.