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India- Nepal Relations : The way fwd under the shadow of increasing Chinese influence


The India – Nepal relations are much deeper and goes much beyond the Indo – Nepalese treaty of friendship of the 1950s. These two countries share a unique relationship which is unparalleled in many respects. Geography, polity, society, culture and economy are the factors that have encouraged both the countries to adopt close bilateral relationship. These are also the same very factors, which have caused major irritants and constraints between the two countries. Both, deep-rooted, people to people, informal closeness and formal diplomatic relations have equal importance in India-Nepal relations. Despite the differences in size, population, resources and economy there are numerous causes which bring India and Nepal close to each other and also pulls them apart. The relationship between these two countries off late have taken a down trend with trust deficit highest under the increasing influence of the Chinese influence in the Nepalese polity and economics.

Irritants between these two Nations

Nepal’s policy departure and the increasing Chinese interference: Nepal’s eagerness to engage with China is increasingly leading to India’s discomfort and has been largely interpreted as Prime Minister Khadga Prasad Sharma Oli’s strategy to acquire more from India by taking advantage of its key geostrategic position. And the Oli government’s aim of keeping Nepal’s relationship with China, independent of the one it shares with India is not of much liking to India. India’s woes are not without a basis either. Recent developments like, during Oli’s recent visit to China, South Asia expert in Beijing Hu Shisheng saying, “Our [China’s] policy is clear – if you [India] want to work with us you are welcome, if not, then at least do not obstruct our work.” surely concern India.

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The Chinese interference has reached to such an extent that it can now directly influence the politics of Nepal. For instance, the Chinese ambassador to Nepal, Hou Yanqi, had been holding a series of meetings at different stages of the intra-party crisis with Nepal’s NCP in the recent past and played a decisive role in the formation of the Oli government by quelling factionalism threat of ripping apart the party along Prachanda and Oli factions. Arguably, India was not involved, breaking, off course the existing protocols between the two countries.

The territorial dispute :  The territorial disputes of India and Nepal include Kalapani 400 km2 at India-Nepal-China tri-junction in Western Nepal and Susta 140 km2 in Southern Nepal. Nepal claims that the river to the west of Kalapani is the main Kali river; hence the area should belong to Nepal. But India claims that the river to the west of Kalapani is not the main Kali river, and, therefore the border there should be based on the ridge lines of the mountains Om Parvat to the east of the river. The river borders the Nepalese province of Sudurpashchim and the Indian state of Uttarakhand. The Sugauli Treaty signed by Nepal and British India on 4 March 1816, locates the Kali River as Nepal’s western boundary with India. Subsequent maps drawn by British surveyors show the source of the boundary river at different places. This discrepancy in locating the source of the river led to boundary disputes between India and Nepal, with each country producing maps supporting their own claims. Indian government, however, from 1962 onward, forwarded the argument that border should be based on the ridge lines of the mountain Om Parvat. The Kali River runs through an area that includes a disputed area of about 400 km2 around the source of the river although the exact size of the disputed area varies from source to source. The dispute intensified in 1997 as the Nepali parliament considered a treaty on hydro-electric development of the river. India and Nepal differ as to which stream constitutes the source of the river. Nepal has reportedly tabled an 1856 map from the British India Office to support its position. Kalapani has been controlled by India’s Indo-Tibetan border security forces since the Sino-Indian War with China in 1962. In 2015, the Nepalese parliament objected an agreement between India and China to trade through Lipulekh Pass, a mountainous pass in the disputed Kalapani area, stating that the agreement between India and China to trade through Kalapani violates Nepal’s sovereign rights over the territory. Nepal has called for the withdrawal of the Indian border forces from Kalapani area. In absence of ratification of the claim lines by either sides, the process of completely demarcating the India-Nepal boundary could not be undertaken, despite 98 percent of the boundary having no dispute of any kind.

Trade and transit issues : Nepal being landlocked with its northern borders unviable for trade and transit due to its geography and terrain perched with the formidable Himalayas leaving only its southern frontiers along India for meeting almost all its requirements of supply and trade passage for its limited exports to other countries. India is Nepal’s largest trade partner and the largest source of foreign investments, besides providing transit for almost entire third country trade of Nepal. India accounts for over two-thirds of Nepal’s merchandise trade, about one-third of trade in services, one-third of foreign direct investments, almost 100% of petroleum supplies, and a significant share of inward remittances on account of pensioners, professionals and workers working in India In the year 2017–2018, Nepal’s total trade with India was about US$8.2 billion; Nepal’s exports to India were about US$446.5 million; and imports from India were about US$7.7 billion.


The present leadership of the government of Nepal appears to have a communist orientation. Even if it is so, this would not justify Nepal government acting at the behest of China, since the present Chinese government is not adopting any principles of communism and most of its actions are capitalist oriented.  As a matter of fact, by its economic and industrial policies, the Chinese government is undermining the principles of communism. On the other hand India and Nepal have had deep cultural, traditional and familiar relationships since long. Therefore both the countries have nothing to gain by escalating the conflict. In fact the decision of the Nepal government to unilaterally change its map by inclusion of the Kalapani and Susta Areas is an extremely unwise act, fuelling further downslide of the relationship between these two neighboring countries. The Indian road through Lipulekh pass was not built overnight and the Nepali government was surely aware and monitoring the situation in Kalapani over the preceding months and years. Nepal must realize that with China’s expansionist ambitions, countries like Nepal and Pakistan can become easy prey to it. Pakistan already is a kind of extended territory of China for all practical purposes and there is no way that Pakistan can move out of the grip of China in the foreseeable future.

While the Chinese government would “liberally” provide credit and loan to Nepal for executing the projects like the planned railway line through the Himalayas linking the Tibetan border town of Kerung with Kathmandu but the larger question is whether the government of Nepal would be able to pay back the debt and not fall prey to the Chinese debt trap, which seems extremely difficult for Nepal’s state of economy.

Several countries like Laos, Maldives, Sri Lanka, Bangladesh and Pakistan have already burnt their fingers and are facing huge debt trap with China. The government of Nepal must learn a lesson or two from the experience of these debt-ridden countries, that have developed industrial infrastructure dealings with China.

While Nepal must be made aware of the costs involved in pulling away from the partnership and allowed to reset ties at the same time, India must give more impetus to rebuilding the ties with its old and tested Himalayan ally by addressing its sensitive politico, social and economic needs and working out a mutually agreeable solution to resolve all other irritants, disputes hindering its Bilateral relations. History is testimony, even most hostile states have been able to find innovative solutions to their disputes in other parts of the world and, at one point, even India and Pakistan were close to finding solutions for Siachen or to make borders irrelevant in Kashmir.  Based on its history of friendly relations and driven by pragmatism, it should not be difficult for India and Nepal to think out of the box and find a practical solution but the rider is it must act fast lest it will be too late.

27 Sep 2020/Sunday                                                                      Written by: Fayaz

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