India–Nepal Relations

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Overview
1. As close neighbours, India and Nepal share 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. Nepal has an area of 147,181 sq. kms. and a population of 29 million. It shares a
border of over 1850 kms in the east, south and west with five Indian States – Sikkim, West
Bengal, Bihar, Uttar Pradesh and Uttarakhand – and in the north with the Tibet Autonomous
Region of the People's Republic of China. The India-Nepal Treaty of Peace and Friendship of
1950 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 in India,
availing facilities and opportunities at par with Indian citizens. Nearly 6 million Nepali citizens
live and work in India.
2. There are regular exchanges of high level visits and interactions between India and
Nepal. Nepalese Prime Minister Shri Sushil Koirala visited India to attend the swearing-in
ceremony of Prime Minister Shri Narendra Modi on 26 May 2014. In 2014, Prime Minister Shri
Narendra Modi visited Nepal twice – in August for a bilateral visit and in November for the
SAARC Summit – during which several bilateral agreements were signed. India and Nepal
have several bilateral institutional dialogue mechanisms, including the India-Nepal Joint
Commission co-chaired by External Affairs Minister of India and Foreign Minister of Nepal.
3. When a devastating 7.8 magnitude earthquake struck Nepal on 25 April 2015 (followed
by a powerful aftershock of 7.4 magnitude on 12 May 2015), the Government of India swiftly
dispatched National Disaster Response Force (NDRF) teams and special aircrafts with rescue
and relief materials to Nepal. India’s assistance, which reached Nepal within six hours of the
earthquake, included 16 NDRF teams, 39 IAF aircraft sorties with 571 tons of relief material
including rescue equipment, medical supplies, food, water, tents, blankets and tarpaulin.
Medical teams from India were deployed in various parts of Nepal. India helped in restoring 3
power sub–stations in Kathmandu valley. The total Indian relief assistance to Nepal amounted
to approx. US$ 67 million. At an International Donors’ Conference organized by the
Government of Nepal in Kathmandu on 25 June 2015 towards post-earthquake reconstruction,
External Affairs Minister Smt. Sushma Swaraj announced Indian assistance of US$ 1 billion to
Nepal, one-fourth of which would be as grant.
Political
4. Beginning with the 12-Point understanding reached between the Seven Party Alliance
and the Maoists at Delhi in November 2005, Government of India has 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 has consistently responded with a sense of urgency to the needs of the
people and Government of Nepal in ensuring the success of the peace process and
institutionalization of multi–party democracy through the framing of a new Constitution by a
duly elected Constituent Assembly. 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.
5. Nepal’s second Constituent Assembly promulgated a Constitution on 20 September
2015 amid protests by Madhes-based parties and other groups. The Government of India has
expressed grave concern regarding the ongoing protests and has urged the Government of
Nepal to make efforts to resolve all issues through a credible political dialogue.
Economic
6. 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 and India’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 main items of exports from India to Nepal are petroleum products, motor vehicles and
spare parts, m.s. billets, machinery and spares, medicines, hot rolled sheets, wires, coal,
cement, threads and chemicals. The main items of exports from Nepal to India are polyester
yarn, textiles, jute goods, threads, zinc sheet, packaged juice, cardamom, G.I. pipe, copper
wire, shoes and sandals, stones and sand.
7. Indian firms are the biggest investors in Nepal, accounting for about 38.3% of Nepal’s
total approved foreign direct investments. Till 15 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 about 150 operating Indian ventures in Nepal engaged in manufacturing, services
(banking, insurance, dry port, education and telecom), power sector and tourism industries.
Some large Indian investors include ITC, Dabur India, Hindustan Unilever, VSNL, TCIL, MTNL,
State Bank of India, Punjab National Bank, Life Insurance Corporation of India, Asian Paints,
CONCOR, GMR India, IL&FS, Manipal Group, MIT Group Holdings, Nupur International,
Transworld Group, Patel Engineering, Bhilwara Energy, Bhushan Group, Feedback Ventures,
RJ Corp, KSK Energy, Berger Paints, Essel Infra Project Ltd. and Tata Power etc.
Water Resources
8. A three-tier mechanism established in 2008 to discuss all bilateral issues relating to
cooperation in water resources and hydropower has been working well. Regular meetings are
being held on and off site. In the area of river training and embankment construction,
Government of 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 on other rivers as well. Started in 2008, with the
present assistance, the total grant assistance already disbursed for embankments construction
along these rivers stands at NRs. 3,670.66 million.
9. A Development Authority was set up in September 2014 to carry out the Pancheshwar
Multipurpose project. India and Nepal signed an agreement on “Electric Power Trade, CrossBorder
Transmission Interconnection and Grid Connectivity" popularly known as the Power
Trade Agreement (PTA) in October 2014. A Power Development Agreement (PDA) for the 900
MW Arun-III hydroelectric project between India’s Satluj Jal Vidyut Nigam Limited and the
Investment Board of Nepal (IBN) was concluded in November 2014. Also, a PDA for the 900
MW Upper Karnali hydroelectric project was concluded between IBN and M/s GMR in
September 2014. There are more than twenty 132 KV, 33 KV and 11KV transmission
interconnections which are used both for power exchange in the bordering areas and power
trade. A 400 KVA cross-border transmission line between Muzaffarpur-Dhalkebar and two 132
KVA lines between Kataiya-Kushaha and Raxaul-Parwanipur are under construction.
India’s Development Assistance to Nepal
10. Government of India provides substantial financial and technical development
assistance to Nepal, which is a broad-based programme focusing on creation of infrastructure
at the grass-root level, under which various projects have been implemented in the areas of
infrastructure, health, water resources, education and rural & community development. In
recent years, India has been assisting Nepal in development of border infrastructure through
upgradation of roads in the Terai areas; development of cross-border rail links at Jogbani–
Biratnagar, Jaynagar-Bardibas, Nepalgunj Road-Nepalgunj, Nautanwa-Bhairhawa, and New
Jalpaigudi-Kakarbhitta; and establishment of Integrated Check Posts at Raxaul-Birgunj,
Sunauli-Bhairhawa, Jogbani-Biratnagar, and Nepalgunj Road-Nepalgunj. The total economic
assistance extended under ‘Aid to Nepal’ budget in FY 2014-15 was Rs. 300 crore.
11. Currently, 36 intermediate and large projects such as construction of a National Police
Academy at Panauti, Nepal Bharat Maitri Pashupati Dharmashala at Tilganga, a Polytechnic at
Hetauda, and the National Trauma Centre at Kathmandu are at various stages of
implementation. In addition, Government of India’s Small Development Projects (SDPs)
programme in Nepal extends assistance for the implementation of projects costing less than
NRs 5 crore (approx.. INR 3.125 crore) in critical sectors such as health, education &
community infrastructure development. So far, 243 SDPs have been completed and 233 are
under various stages of implementation in 75 districts of Nepal, with a total outlay of over Rs
550 crore. Till date, India has gifted 502 ambulances and 98 school buses to various
institutions and health posts across Nepal’s 75 districts.
12. Apart from our grant assistance, Government of 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.
Education
13. Over the years, India’s contribution to the development of human resources in Nepal
has been one of the major aspects of bilateral cooperation. GOI 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. These scholarships cover a wide
spectrum of subjects including engineering, medicine, agriculture, pharmacology, veterinary
sciences, computer application, business administration, music, fine arts etc.
Culture
14. Government of India initiatives to promote people-to-people contacts in the area of art &
culture, academics and media include cultural programmes, symposia and events organized in
partnership with different local bodies of Nepal, as well as conferences and seminars in Hindi.
Familiarization visits to India by Nepalese journalists/editors and short term training in India for
Nepalese editors/journalists/experts/officials in the field of print & electronic media and
archaeology are also arranged. Assistance is also provided to several India-Nepal Friendship
Organizations working to promote Indian culture and India-Nepal bilateral relations. An MoU
between the Sahitya Kala Akademi (India) and the Nepal Academy is already in operation.
Four more MoUs have been signed between Doordarshan and Nepal TV, Press Council of
India and Press Council of Nepal, Lalit Kala Akademi, India and Nepal Academy of Fine Arts,
and an MoU on Youth Exchange between the Governments of India and Nepal. MoUs
between the Sangeet Natak Akademi, India and the Nepal Academy of Music & Drama, and
between Akashwani (AIR) India and Radio Nepal are under consideration to promote cultural
and information exchanges between the two countries. The Governments of India and Nepal
have signed three sister-city agreements for twinning of Kathmandu-Varanasi, LumbiniBodhgaya
and Janakpur-Ayodhya. India is establishing an E-library system across Nepal. The
setting up of a Light & Sound show at Lumbini with Indian assistance is under process. The
Archaeological Survey of India (ASI) is involved in the renovation of the Pashupatinath Temple
Complex in Kathmandu. Two ASI teams have already visited Kathmandu to assess the work to
be done for conservation/restoration of the Pashupatinath shrine, for which an MoU is under
consideration.
15. An Indian Cultural Centre was set up in Nepal in August 2007 to showcase the best of
Indian culture not only in the capital city but in the areas outside Kathmandu. The Indian
Cultural Centre in Kathmandu has generated considerable goodwill through the various
cultural events it has undertaken in the past. The Nepal–Bharat Library was founded in 1951 in
Kathmandu. It is regarded as the first foreign library in Nepal. Its objective is to enhance and
strengthen cultural relations and information exchange between India and Nepal.
16. The B.P.Koirala India-Nepal Foundation was set up in 1991 through a MoU signed
between the Governments of India and Nepal. The Foundation’s objective is to foster
educational, cultural, scientific and technical cooperation between India and Nepal and to
promote mutual understanding and cooperation through sharing of knowledge and
professional talents in academic pursuits and technical specialization.
Indian Community
17. Around 6,00,000 Indians are living/domiciled in Nepal. These 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). An Indian
Citizens’ Association (ICA) of Nepal was formed on 14 September 1990. ICA is the only
association of resident Indian citizens in Nepal with branches at Pokhara, Damak and
Bhairahawa, and provides a platform for discussion on matters pertaining to the legitimate
interest of resident Indians in Nepal and works for the protection of such interests.