[Editorial] An opportunity to repolish India-Nepal ties

Context

• The visit of Nepal’s Prime Minister to India

Nepal’s relations with India

The economic blockade of 2015

• Nepal’s relations with India, which plummeted to a historic low after the Indian blockade in September 2015, has yet to recover as Nepalis do not see relations with India improving any time soon.

Demonetized bills and the report submitted by the EPG

• India’s refusal to accept demonetised bills with the Nepal Rastra Bank and the unknown fate of the report submitted by the Eminent Persons Group (EPG) has not helped in securing a better image in Nepal.

Perception of trust

• The passengers boarding flights from Nepal to India are still subjected to a pre-boarding security check even over 20 years after the hijack of an Indian Airlines aircraft, which determines the perception of trust of India in Nepal.
• This is despite thousands of Nepalis serving in the Indian Army and Nepali villages expressing grief whenever violence escalates in India as many lose their lives defending a country that is not their own.

Geopolitics: A complicated challenge for Nepal

Between India and China

• Geopolitics is a complicated challenge for Nepal, whose geography requires it to make the best use of its position between China and India.
• With relations between India and the United States further complicated by the China factor and India abstaining on the Russia vote in the United Nations even as Nepal voted in favour of it, the problems have continued to mount.
• The recent visit by the Chinese Foreign Minister to Nepal has resulted in a situation that everyone in Nepal is trying to decipher.
• Analysts also suggest that the Chinese Foreign Minister did assure his Indian counterpart that Nepal should work out its internal equations with India and that China would stay out.
• But in reality, the Chinese engagement has been very deep as seen in the anti-MCC campaign.
• S. grant and investment activities are seeing a revival post the Millennium Challenge Corporation (MCC) ratification and India does not want to see other powers active in Nepal.

What can be the priorities for India and Nepal?

Power Trade Agreement

• The power trade agreement needs to be such that India can build trust in Nepal.
• Despite more renewable energy projects (solar) coming up in India, hydropower is the only source that can manage peak demand in India.
• For India, buying power from Nepal would mean managing peak demand and also saving the billions of dollars of investments that would have to be invested in building new power plants, many of which would cause pollution.

Trade and Transit agreements

• While trade and transit arrangements go through the usual extensions, it is time to undertake a complete rethink as the sales of goods and payments move through electronic platforms — this can provide many new opportunities for businesses on both sides of the border.

The Bilateral Investment Promotion and Protection Agreement (BIPPA)

• The Bilateral Investment Promotion and Protection Agreement (BIPPA) signed between India and Nepal needs more attention from the Nepali side.
• A commitment from Nepal to implement this would attract more foreign investments from Indian investors.

Need of the hour

A new Nepal

• It is for Nepal to provide the confidence that Nepal is keen to work with India while at the same time making it clear that it cannot take on India’s pressure to ignore China or the U.S.
• In the context of Nepalis currently living in 180 countries, India must note that it is a new Nepal it has to deal with from now.

Practice Question for Mains

1. The Nepal prime minister’s visit to India should be used as a chance to recast power and trade links. Comment. (250 words, 15 Marks)