Menu Close

India Nepal Relations

India Nepal Relations UPSC
Nepal is surrounded by 5 Indian states, and China to its north


In many respects, Nepal is a unique neighbour of India. Nepal and India share deep geographical, civilizational, historical, economic as well as geostrategic links, and there is large people-to-people contacts.

Geographically, Nepal is a land-locked country, surrounded by India from three sides. It shares around 1850km border with five Indian states that include Uttarakhand, Uttar Pradesh, Bihar, West Bengal and Sikkim. In the North, Nepal shares its boundary with China.  A huge number of rivers also flow through Nepal to India.

Culturally, India and Nepal are intricately intertwined. The Lichhavis from India went to Nepal in 300 AD. In 16th century, the first Gorkha rule was established in Nepal under Driya Shah who was a Sisodia Rajput from Rajasthan.  Like India, Hindus constitute the majority in Nepal. According to Hindu legend, Lord Ram, the prince of Ayodhya, married Sita, the princess of Janakpur, which is in present day Nepal. Nepal remained the only Hindu state for a long time till 2008, when it was declared to be a secular state.

Buddhism originated and flourished in Nepal and India. Gautama Buddha was born in Lumbini, a city in present day Nepal and got enlightened in India. Thus, the historical, cultural and civilizational ties between the two neighbours are deep-rooted.

In the words of Jagat S Mehta, India’s former foreign secretary, “the overarching Himalayas, the monsoon and the southward flowing rivers gave the subcontinent its civilizational unity; we can prosper or self-destruct together.”

Significance of Nepal to India

Despite being a small nation, the geography, cultural affinity and deep-rooted people-to-people contacts between India and Nepal, make it an important factor in India’s foreign policy.

To start with, Nepal is strategically placed between two regional powers India and China. It is right in the middle of India’s ‘Himalayan frontiers’. Along with Bhutan, the nation acts as a buffer state against any possible aggression from China. Thus, India needs amicable relations with Nepal to check the expansionist tendencies of its neighbour.

Further, Nepal is also important for India’s internal security. India and Nepal share an open border that boosts economic relations between the two countries. There has been a long tradition of free movement of people across the border. However, the open border is also exploited for illegal activities such as the circulation of counterfeit Indian currency, human trafficking, NARCO trafficking, and infiltration of terrorists backed by ISI, Pakistan etc. These issues can be tackled only when there is internal stability in Nepal and the governments of both countries work in tandem.

Brief History of Nepal

In mid 18th century, after the weakening of Mughal rule in India, Nepal came under a strong Gorkha rule. The Gorkhas expanded their territory and got control over several parts of present-day India, including Sikkim, Terai region (Awadh), Kumaon and Garhwal (Uttrakhand) regions.  This led to the Anglo-Nepal war where the Gorkhas were defeated and the Treaty of Sagauli (1816) was signed. Under the treaty, Nepal renounced all claims to the conquered regions. It remained independent but received a British resident in its court.

In December 1923, Britain and Nepal formally signed a Treaty of Perpetual Peace and Friendship superseding the Sugauli Treaty and upgrading the British resident in Kathmandu to an envoy.

With various internal developments, in 1950, the political structure of Nepal was Monarchy. While King Tribhuvana was the ruler, he was under the captivity of Ranas, who exercised real power. In the general public, king was more popular than Ranas.

By 1950-51, the Ranas were ousted by an anti-Rana revolution and King Tribhuvan became head of Nepal in 1955. Same year, Nepali Congress government was established, and a constitution was drafted. Nepal also became a member of the United Nations and was keen to establish diplomatic relations with other countries.

This made India uncomfortable as India was worried about the region’s as well as her own security considerations. Besides, it wanted a bigger role for itself in the region. However, Nepal’s leaders convinced Nehru that Nepal’s interaction with other countries wouldn’t hamper India’s geopolitical interests.

In 1958, Nepal settled its boundaries with China, and in 1962, Mahendra became the king with death of Tribhuvana. The new king of Nepal who deposed Nepali Congress, abolished Constitution and reasserted control. During this time, after a demoralising defeat from China, India could not oppose Mahendra. The king, meanwhile, started playing China card against India and whipped up nationalist sentiments against India.

In the 1970s, Nepal made a fundamental shift in its foreign policy approach: It established a Zone of Peace for the region of Nepal. This was an attempt to assert its sovereignty in the face of Indian domination. India, however, did not accept it, suggesting that the whole South Asian region is a Zone of Peace.

In the late 80s, a huge protest broke out in Nepal against the monarchy. India refused to sell arms and in violation of the treaty, Nepal bought weapons from China.

Finally, following Jan Andolan II, the monarchy was abolished in Nepal in 2008. Since then several constitutions have been framed in Nepal, with the country presently guided by the Constitution of 2015.

The present political system of Nepal is very similar to India. It functions within the framework of a parliamentary republic with a multi-party system. The executive power is exercised by the Prime Minister and their cabinet, while legislative power is vested in the Parliament. The President acts as the head of the state, a largely ceremonial position.

In December 2022, former Maoist guerilla chief, Pushpa Kamal Dahal aka Prachanda, became Nepal’s new prime minister after the general election.

Indo-Nepal Treaty of Peace and Friendship 1950

Post Indian independence, India and Nepal signed Treaty of Peace and Friendship in 1950. The treaty was signed due to the fear of Chinese expansion. The Five Fingers Policy being pursued by China threatened Nepal as well as India. The then leader of China, Mao Zedong envisioned that Tibet is the right hand of China with Ladakh, Nepal, Bhutan, Sikkim and Arunachal Pradesh being its five fingers. According to him, it was China’s duty to ‘liberate’ these areas.

This treaty laid down the foundation of India-Nepal relations. It enables Indian and Nepali citizens to move freely across the border without passport or visa. They can live, work, own property, do trade or business in either countries. Under the treaty, Nepalese citizens avail facilities and opportunities on par with Indian citizens. The treaty also allows Gorkhas to be inducted in the Indian army as it used to happen in British India. Currently (2024), around 8 million Nepalese citizens live and work in India.

The Indo-Nepal treaty also ensures collaboration on matters of defence and foreign affairs and gives Nepal access to weaponry from India. All these provisions has enabled Nepal to overcome the disadvantages of being a land locked country and ensured that it remains out of growing Chinese sphere of influence.

Criticism of the Treaty of Peace and Friendship

Currently, some criticisms are being thrown at this treaty. Many allege that the treaty was signed under the rule of the Ranas, who had kept the King Tribhuvan in captivity. Tribhuvan held more popularity among Nepalese citizens. Thus, the treaty doesn’t hold legitimacy.

Also, they point that the treaty was signed between the Ranas and the Indian ambassador to Nepal, and not the PM of India. This signifies an unequal relationship.

Areas of Cooperation between India and Nepal

As close neighbours, India and Nepal work together in a number of areas, helping each other in achieving their developmental goals.


India is Nepal’s largest trade partner. In 2022-23, India exported goods worth USD 8 billion to Nepal while its imports were at USD 840 million. Indian firms are among the largest investors in Nepal, accounting For more than 30% of the total approved foreign direct investments. Nepal’s main Imports from India are petroleum products; motor vehicles and spare parts, etc.

Apart from that, India provides transit from almost entire third-country trade of Nepal via Kolkata port. A revised Treaty of Transit signed in 2023, will enable Nepal to use Indian ports such as Haldia, Kolkata, Paradip and Visakhapatnam for its third-country trade. It will reduce transportation costs and time for Nepalese exporters and importers.

Connectivity and Development Partnership

India provides financial and technical aid to Nepal’s developmental activities. India has been assisting Nepal in the development of border infrastructure through the upgradation of 10 roads in the Terai area; development of cross-border rail links at Jogbani-Biratnagar, Jaynagar-Bardibas; and the establishment of Integrated Check Posts at Birgunj, Biratnagar, Bhairahawa, and Nepalgunj. The total economic assistance earmarked under the ‘Aid to Nepal’ budget in FY 2019-20 was INR 1200 crore.

Besides, a plan to extend South Asia’s first cross-border petroleum pipeline from Motihari (Bihar) in India to Amlekhgunj in Nepal, by another 69 km up to Chitwan in Nepal has been proposed. Also, a second cross-border petroleum pipeline from Siliguri in India to Jhapa in eastern Nepal will be constructed. India is also linking Sagarmatha-Sagar, a waterway that will provide Nepal access to sea, through Kosi route.

Cultural Ties

The most striking feature of India-Nepal relations is the deep cultural link and P2P contact. Both the neighbours have signed three sister city agreements for the twinning of Kathmandu-Varanasi, Lumbini-Bodhgaya and Janakpur-Ayodhya. Besides, The Swami Vivekananda Centre for Indian Culture was set up in Kathmandu in August 2007 to showcase the best of Indian culture. Also in 2022, PM Modi inaugurated the construction of India International Centre for Buddhist Culture and Heritage in the Lumbini Monastic Zone, Lumbini, Nepal.

Defence Cooperation

India and Nepal have wide-ranging defence cooperation. India equips the Nepalese army and assists in its advancement on modern lines. Besides, Indian army trains a number of defence personnel from the Nepal army (NA). According to the Treaty of Friendship of 1950, Nepal can buy arms from India.

Indian and Nepalese Army conduct a  joint military exercise known as ‘Surya Kiran’. It is conducted every year alternatively in India and in Nepal. Besides, the Gorkha regiment of the Indian Army is raised partly by recruitment from hilly districts of Nepal. Also, since 1950 India and Nepal have been awarding each other’s Army Chiefs with the honorary rank of General in recognition of the mutual harmonious relationship between the two armies.

Multilateral engagements

India and Nepal are members of several multilateral forums. These include BBIN Corridor(Bangladesh, Bhutan, India, and Nepal), BIMSTEC (Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation), Non-Aligned Movement, and SAARC (South Asian Association for Regional Cooperation) etc.

Humanitarian Aid

In 2015, Nepal was hit by a devastating 7.8 magnitude earthquake. Within 6 hours, Indian assistance reached Nepal. It included material goods as well as NDRF troops. Since then, India has provided 1.54 billion Nepalese Rupees (INR nearly 96 crore) to Nepal as part of its commitment towards assistance and rehabilitation after the 2015 earthquake.

In Nov 2023, another earthquake of 6.4 magnitude hit Nepal. India was again quick to respond with 9 tonnes of relief material, and much more over period of time.

Major Challenges in India–Nepal relations

Like any bilateral relations, India-Nepal relations too are marred with multiple contentious issues. The major challenges between India and Nepal emerge from two fronts: the internal politics of Nepal, and a resurgent China with its ever-expanding South Asian strategic profile.

The Madhesi Issue

In 2015, Nepal adopted a new Constitution, replacing the interim Constitution of 2007. The provisions of the new Constitution created widespread resentment among Madhesis. Madhesis are an ethnic group, living in the central and eastern Region of Nepal. Owing to geographical contiguity, they have linguistic, religious, cultural, and matrimonial links with India.

Madhesis accused that the new Constitution failed to grant them adequate representation in the Parliament. Therefore, they held a blockade along the open border with India causing disruptions in the supply of food and fuel. This five-month-long blockade right after a devastating earthquake unleashed havoc on the local populations. This further flamed anti-India sentiments as it was perceived that the blockade had the tacit support of India. 

Later, Nepal’s Constituent Assembly introduced a few amendments. But for the protestors these amendments were insufficient. Nonetheless, the blockade was finally called off in 2016 when it was announced that the then Nepalese PM Oli would visit India to discuss the matter. The visit was successful in rebuilding mutual trust. Upon his return to Kathmandu, PM Oli held that he tried to clear the ‘misconception’ regarding the new Constitution. Meanwhile, India described the two amendments as ‘positive developments.’

Meanwhile, since the Chinese Communist Party consolidated its hold in Tibet and offered assurances to Nepal, Kathmandu’s balancing impulses are back in play.

In the words of V. P. Haran, Ambassador  (retd.), “Nepal’s internal politics is divisive; relations with India are a highly political issue and India is a convenient scapegoat for Nepal.” Anti-India sentiments is sometimes flamed for political benefits in Nepal. For example, the surfacing of the Kalapani issue was seen as an attempt by the then-Oli government in Nepal to divert people’s attention from the ongoing political crisis there.

Border Dispute with Nepal (Kalapani Dispute)

After the abrogation of article 370 in Kashmir, the Indian government issued a map showing the changed political map of Kashmir. Nepal raised objections to this new map, accusing India of portraying certain regions of Nepal as Indian territory. They claimed that the strategically important areas of Kalapni, Lipulekh and Limpiadhura were part of Nepal. In June 2020, the parliament of Nepal voted unanimously to amend the Constitution to redraw the country’s new political map. Meanwhile, in 2020, India inaugurated new road to Mansarovar from the Kalapani region to cut short the time and distance through Lipulekh pass.

India Nepal Relations UPSC 
PSIR Disputed Kalapani Territory

The issue flamed anti-India sentiments in Nepal. It was suspected that apart from the political crisis at home, there were external forces behind Nepal’s actions. All these happened when India and China were facing a border standoff. Also, the new road to Mansarovar was not built overnight and the Nepal government was aware of and monitoring the situation in the Kalapani region over the preceding years.

However, later the government changed in Nepal and a new party came to power under the leadership of Pushp Kamal Dahal (Prachand). In 2022, the PM of India visited Nepal. Numerous memoranda of understanding were signed giving new boost to the India-Nepal relations.

Internal politics of Nepal

The internal politics of Nepal often determine the nature of India-Nepal relations. Often, anti-India sentiments are flamed for narrow political gains in Nepal.

Vested interests in Nepal have managed to block India-Nepal hydro-power cooperation. Because of this, despite having around 83,000 MW hydro-electricity potential, Nepal remains a net importer of electricity.

Lack of dams on the upper river channels also creates a problem for India. This impedes proper flood management for Indian bordering states, and results in huge loss of human and other capital, almost every year.

Achal Kumar Malhotra, Ambassador (retd), says, “If I were to identify one constant factor in India’s relations with its neighbouring countries, I would describe it as some sort of trust deficit.”

One of the causes for the trust deficit between India and Nepal is the delayed implementation of projects. Some scholars also claim that the trust deficit is due to Nepal’s ‘small state syndrome’. As Haran states, “Our size causes uneasiness to our neighbours. We need to be conscious of this and be sensitive to their concerns.”

Nepal-China Nexus

In addition to internal instability in Nepal, China is also trying to make inroads. In recent years, Nepal has been more inclined towards China.

Currently, China is the largest source of FDI in Nepal. It is also developing a Trans-Himalayan Economic Corridor that will connect China’s Tibet with Nepal. This will bring China closer to India. Besides, China and Nepal have signed a Memorandum of Understanding to cooperate within the BRI framework. Nepal also supports China’s inclusion in SAARC.

To mitigate the threat of China, India first needs to build trust with Nepal by resolving contentious issues like border demarcation. India also needs to invest in key areas like infrastructure development and hydropower projects.

S. D. Muni holds that as economic engagement between India and China is increasing, “the possibilities of evolving a framework for developmental coexistence of India and China in Nepal should be explored.”

Views of Scholars

V. P. Haran

Highlighting that “peace, stability, and prosperity of neighbouring countries are in our national interest,” Haran says that active institutionalization is the key to improving India’s relations with its neighbours. For Instance, annual bilateral meetings at summit levels, even if brief, can ‘generate momentum for expediting ongoing projects and provide an opportunity to clear any misunderstanding.’

S. D. Muni

Muni holds that the geography and people-to-people contacts favour India-Nepal relations. One of the reasons for the breakdown in India’s Nepal policy is that the Indian policy has been driven by “a strong sense of inherent insecurity, bordering on paranoia.” He suggests that India should avoid undue delay in the implementation of its projects in Nepal. Otherwise, it will leave space for China.

Shyam Sharan

There is a paradox that despite having deep-rooted P2P relations, the G2G relations between India and Nepal have lagged behind. Sharan suggests that India should be open to any treaty Nepal is willing to negotiate as India has not much to lose.

C. Rajamohan

On the China issue, Rajamohan suggests that India should adopt ‘Nepal first’ strategy. Although geography and P2P contacts favour India, India cannot take Nepal for granted. India should also avoid repeating past mistakes like interfering in Nepal’s domestic politics and provide reassurance to Nepal through continued political engagements.

Harsh V Pant (ORF Head of Strategic Studies)

Pant believes that India has neglected South Asia. It has failed to consolidate its hold in this region because of structural asymmetry, delayed implementation, and inward-looking policy since the 1990s, and focussed mainly on major powers like the USA.


In the words of former PM Shri Manmohan Singh, “the real test of foreign policy is in the handling of neighbours.” Thus, India should give a renewed focus to its relations with the neighbouring states. Cordial relations between Nepal and India is beneficial not only for both the countries but for the security and peace of the entire region.

Posted in PSIR NOTES

Related Posts

Notify of
Oldest Most Voted
Inline Feedbacks
View all comments
Abhishek Anand

Structured way of writing…. impressive 💯


We are grateful😊 to know that post was impressive for your preparation.
For latest updates follow us: