Indo-Nepal Relations: Consolidating the Civilisational Legacy

          India and Nepal have shared 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.  The civilisational and cultural ties rooted in history have always defined the bilateral relations between the two neighbours.

          It is notable that India and Nepal share a border of over 1850 kms which span five Indian States including Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand. Nepal also shares its border in the north with the Tibet Autonomous Region of the People's Republic of China, which has often been an important factor between the bilateral ties of the two countries.

          Historically, the two neighbours entered into the treaty of Peace and Friendship (1950) over mutual security concerns, against an aggressive China. Nepal, which was under the rule of the monarch, was anxious over the Chinese expansion towards Tibet. Because of the long civilisational and cultural ties, Nepal preferred to strengthen its multi-sectoral cooperation with India including in the field of defence and security. It’s the common threat perception emanating from China that brought them closer.  

          Thus, the 1950 Indo-Nepal Treaty of Peace and Friendship 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 and privileges in India, availing facilities and opportunities at par with Indian citizens, something not available to any national of any other country. It is notable that nearly six million Nepali citizens live and work in India.

          In spite of the 1950 agreement, by early 1960s, Nepal had started moving away from India to shift its foreign policy towards China in a bid to assert its strategic and diplomatic independence. The traditional scepticism towards Beijing was replaced by tactical pragmatism. On the other hand, India’s military defeat at the hand of China brushed away the idealism of the Non Aligned Movement (NAM). The Indian paranoia against an increasingly assertive China has often resulted in ugly confrontation with Nepal, with India often expecting its Himalayan neighbour to be more receptive to Indian concerns.

          It is noteworthy that India welcomed the roadmap laid down by the historic Comprehensive Peace Agreement of November 2006 towards political stabilization in Nepal, through peaceful reconciliation and inclusive democratic processes. India, 2006, had played an important role in striking a peace deal between the Maoist leadership and the Nepali government thereby helping Nepal’s peaceful political transition.

          India’s facilitating role was critical in Nepal’s transition from a feudal monarchy to a republican democracy including the extension of the relevant technical help in drafting its democratic Constitution. India has consistently responded to the needs of the people and Government of Nepal in ensuring the not only the success of the peace process but also the institutionalization of multi–party democracy through the framing of a customised Constitution by a duly-elected Constituent Assembly.

          The strong historical ties between the two countries have also been the basis of a deeper bilateral economic cooperation. A free trade area has always existed between the two countries with free movement of capital, goods and people between almost open borders. Since 1996, Nepal’s exports to India have grown more than eleven times and bilateral trade more than seven times.

          The bilateral trade that was 29.8% of Nepal’s total external trade in 1995-96 reached 66% in 2013-14. Exports from Nepal to India increased from INR 230 crore in 1995-96 to INR 3713.5 crore (US$ 605 million) in 2013-14. IIndia’s exports to Nepal increased from INR 1525 crore in 1995-96 to INR 29545.6 crore (US$ 4.81 billion) in 2013-14. The balance of trade has always been in India’s favour sheer because of the latter’s size, scale and economic diversity.

          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, softwares, threads and chemicals. The main items of exports from Nepal to India are polyester yarn, textiles, jute goods, threads, zinc sheet, packaged juice, cardamom, GI pipe, copper wire, shoes and sandals, stones and sand.

          Indian firms are the biggest investors in Nepal, accounting for about 38.3% of Nepal’s total approved foreign direct investments. Till July 2013, the Government of Nepal had approved a total of 3004 foreign investment projects with proposed FDI of Rs. 7269.4 crore. There are more than 150 operating Indian ventures in Nepal engaged in manufacturing, services (banking, insurance, dry port, education and telecom), power sector and tourism industries.

          Power sector has been one of the very key areas of bilateral cooperation between the two neighbours. India has suitably harnessed Nepal’s hydrological resources to the advantage of both the countries. Many successful ventures have been operational which not only supplement India’s deficient power supplies but the also provides Nepal with an important source of revenue.

          A three-tier mechanism established in 2008 to discuss all bilateral issues relating to cooperation in water resources and hydro-power has been working well. Regular meetings are held to hammer out various operational issues. In the area of river training and embankment construction, India has been providing assistance to Nepal for strengthening and extension of embankments along Lalbakeya, Bagmati and Kamla rivers. It is proposed to extend this assistance for construction of embankments to other rivers as well.

          India has from time to time provided substantial financial and technical development assistance to Nepal. The same has related to a broad-based programme on the creation of the much-desired infrastructure in critical sectors. This has resulted in the implementation of various projects in the areas of infrastructure, health, water resources, education, rural and community development.

          In recent years, India has been assisting Nepal in development of border infrastructures through upgradation of roads in the Terai areas, development of cross-border rail links and establishment of Integrated Check Posts. The total economic assistance extended under ‘Aid to Nepal’ budget in FY 2014-15 was Rs. 300 crore.

          Apart from the grant assistance, India has also extended three Lines of Credit of USD 100 million, USD 250 million and USD 1 billion to Government of Nepal in 2006- 2007, 2011-12 and 2013-14 respectively for undertaking infrastructure development projects. India and Nepal have instituted several bilateral institutional dialogue mechanisms, including the India-Nepal Joint Commission co-chaired by External Affairs Minister of India and Foreign Minister of Nepal. There are many such bodies and agencies created for policy coordination and multi-sectoral cooperation in different issue areas.

          When a devastating 7.8 magnitude earthquake struck Nepal on 25 April 2015, the Government of India was prompt enough to despatch National Disaster Response Force (NDRF) teams, medical teams and special aircrafts with rescue and relief materials to Nepal. India also announced Indian assistance of US$ 1 billion to Nepal, one-fourth of which was given as grant. India has always been forthcoming with sundry assistance packages for Nepal in her bid to reinforce the civilisational ties the two countries have carefully nurtured historically.

          Over the years, India’s contribution to the development of human resources in Nepal has been one of the major features of bilateral cooperation. India provides around 3000 scholarships/seats annually to Nepali nationals for various courses at the Ph.D/Masters, Bachelors and plus–two levels in India and in Nepal. Government of India initiatives to promote people-to-people contacts in the area of art and culture, academics and media include cultural programmes, symposia and events organized in partnership with different local bodies of Nepal.

          The Indian Cultural Centre in Kathmandu has generated considerable goodwill through the various cultural events it has organised from time to time. While six million Nepali citizens live in India, around 6,00,000 Indians are domiciled in Nepal. The latter 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). The strong people-to-people contact rooted in matrimonial and cultural ties has only reinforced the bilateral relationship further.

          However, India-Nepal relations have often been hostage to the petty politics of the two countries. In fact, whenever Nepal’s domestic politics gets polarised, India gets blamed for interfering in Nepal’s internal affairs and anti-Indianism rises. In September, 2015, when the Nepali Constitution was passed by Nepal’s Constituent Assembly, the India criticised the same by expressing its concerns over tensions in the border region.

          Indian concerns were mostly in relation to the issue of the Madhesi (persons of Indian origin settled in Nepal) residing in the Terai region and their inclusion and representation in the new Constitution. 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.  Indian suggestions to resolve the outstanding issues through consultation and dialogue did not go down well with Nepal.

          The major demands of Madhesis, mostly of Indian-origin, included re-demarcation of the seven provinces, model of federal structure, inclusiveness and proportionate representation of marginalised groups and ethnic minorities including the Madhesis, indigenous groups and dalits in all the state bodies. Unimpressed by the Constitution, political leaders in Madhes went on to impose a four-month long blockade. The perception in Nepal, however, was that the blockade was backed by India, even though India denied any role-play. Indian government argued that it was not an official blockade, but a result of the deteriorated law and order situation in Nepal in the aftermath of the promulgation of the Nepali Constitution.

          The blockade saw the unleashing of several problems for the Nepali citizens including lack of essential supplies and services from India and souring Indo-Nepal ties. Soon matters were taken to the UN with both nations trading charges. The episode saw the bilateral relations touching a new low with Nepal turning to China for the supply of essentials as an immediate relief during the border obstructions. Nepal had resented a similar 13-month-long economic blockade against it imposed in 1989 by India for showing proximity with China

          Nepal’s the then Prime Minister K P Oli had publicly told India not to ‘interfere in Nepal’s internal politics’. The same was reiterated by the Maoist chief and present Nepali Prime Minister Pushpa Kamal Dahal who said that ‘India ‘s micro-management will not be acceptable’. Nothing illustrates the nature of Indo-Nepal relationship more vividly than the latter’s response to the European Union (EU)-India joint statement issued on March 30, 2016, which urged Nepal to build an “inclusive constitution” in a “time-bound manner”.

          Nepal responded to this by saying, “The constitution making and its promulgation are essentially internal matters of a country...Against this backdrop, the EU-India Joint Statement not only hurts the sentiments of the people of Nepal but also defies the fundamental principle of non–interference in internal affairs of a country in breach of the UN Charter and norms of international law”.         The message was clear to the Indian state that it cannot dictate democratic norms and procedures to Nepal.

          Usual arguments and passionate rants apart, more intense Nepal-China cooperation is often seen in India as a natural manifestation of growing dynamism in relations between the nations in the region including China. China’s economic miracle, manufacturing sector success and the country’s financial might are difficult to ignore. Nepal reaching out to China in times of its need should not irk Indian policymakers. Nepal is well within its right to diversify its foreign relations and trade with different countries as is India.

          India should guard against losing a long-time trusted ally in Nepal by misplaced interference and short-sighted politicking, symptomatic of hegemonic behaviour. According to Sidney Weintraub, such actions are reflective of the dependency-dominance relation as existing between Mexico and the US that has long influenced the official behaviour of the two countries. 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 significantly.

          This proposition helps us to understand the nuances of relationship between Indian and Nepal. The dependency-dominance attitude originates from at least three basic variables: Nepal’s location between India and China, which has military-strategic implications and signifies an obvious limitation for the smaller nation; power asymmetry, which signifies that Nepal is weaker partner in the relationship; and the historical dependence of Nepal on India in terms of trade and commerce and dominance of New 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 conflicting perceptions between two neighbours are operated mainly in the areas of security, trade, energy, border, water sharing and migration.

          It is against this background that India and Nepal need to approach their bilateral relations by appreciating the respective standpoints and perspectives to consolidate upon a historical relationship, reinforced by civilisational commonalities, socio-cultural similarities and economic complementarities. One just hopes that the two countries would further consolidate their multi-sectoral ties to build a common future to play a more assertive role in the international politics without frittering away the legacies of history.