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Straining the relationships

Government led by communists in Nepal introduces new currency note featuring the map with Indian territories, straining diplomatic relations
12:00 AM May 25, 2024 IST | K.S.TOMAR
straining the relationships

The Treaty of Sugauli, signed on December 2, 1815, between the representatives of East India Company (Lieutenant Colonel Paris Bradshaw) and the Kingdom of Nepal (Raj Guru Gajraj Mishra, assisted by Chandra Shekhar Upadhyay), and ratified on March 4, 1816, delineated the boundaries between the Himalayan kingdom and colonial India.


This treaty followed the Anglo-Nepalese War, ended in Nepal’s defeat and the cession of territories including Sikkim to the east and Kumaon and Garhwal to the west, along with the basins of the Gandaki and Karnali rivers.


The Kali River was established as the boundary, though disputes like those over Lipulekh, Limpiyadhura, and Kalapani have persisted and fuelled by a plethora of maps published between 1816 and 2024, complicating the situation despite various boundary commissions’ futile efforts.


Tension escalated recently when Nepal’s communist government took the unilateral step of issuing a new Rs. 100 NPR currency note featuring a controversial map that includes Indian territories such as Lipulekh, Limpiyadhura, and Kalapani as part of Nepal.


This provocative move risks straining the long-standing relationship and could lead to an open confrontation. Experts feel that with one stroke, communists have been successful in spreading Anti India propaganda right up to village level which may diplomatically prove suicidal as it will be against the interests of people of Nepal.


India may need to adopt a flexible stance to maintain ties with Nepal. Prime Minister Narendra Modi has actively sought to strengthen these relations, visiting Nepal more than five times in ten years including a notable trip to Lumbini in May 2022, where he emphasized the universal relevance of Buddha and discussed expanding bilateral cooperation in technology, science, and infrastructure. However, the current communist government’s intent in Nepal appears to damage these ties, which would be detrimental to the people of both nations.


The Prachanda government in Nepal is comprehensively influenced by China hence resumed old tactics to provoke India. This includes the recent decision to print the new map on the NPR 100 currency note, a move that Indian External Affairs Minister, S. Jaishankar has criticized, stating that unilateral actions will not alter the on-ground realities. Jaishankar asserted that discussions are in progress through established diplomatic channels. India has dismissed Nepal’s territorial claims, which are viewed as both historically inaccurate and contrary to the spirit of the Treaty of Sugauli.The situation may be further complicated by strategic issues such as China’s Belt and Road Initiative (BRI) and India’s security concerns stemming from the open 1,770 km border with Nepal.


 Nepal’s Economic Reliance on India

Despite the political tensions, Nepal’s economy heavily relies on India for essential commodities starting from salt to petroleum products. In January 2024 alone, substantial trade took place, with India exporting goods worth $539M to Nepal and importing $62.1M, thus maintaining a significant trade surplus. This economic interdependence presents a strategic leverage point for India, underscoring the importance of maintaining a balanced and nuanced diplomatic approach.

 Potential Stability in Energy Cooperation

Despite the political flux, the trilateral power treaty among Nepal, India, and Bangladesh—facilitating the trade of up to 10,000 MW of electricity—stands as a beacon of beneficial cooperation. This arrangement not only promises substantial revenue for Nepal but also secure energy for India and Bangladesh. Observers suggest that the current government is unlikely to disrupt such a mutually advantageous agreement.

 The Future of Agneepath: Nepal’s Participation in Question

India’s Agneepath scheme, launched on June 15, 2022, and extended to Nepal, remains mired in controversy and indecision within the Himalayan Kingdom due to various reservations. Despite the flaws, many unemployed youths are eager to join as Agniveers scheme which has faced consistent delays by previous governments, and the current dispensation seems likely to follow suit.

 The Dynamics of Nepal’s Political Landscape

The current Nepalese government, a coalition of pro-China factions led by Prachanda’s CPN (Maoist Centre) and Ex PM, KP Sharma Oli’s CPN-UML (Unified Marxist-Leninist), reflects a significant sway of communist ideology. Oli, with a dominant parliamentary presence, seems to be steering the coalition, potentially coercing Prachanda into policy positions that could strain Nepal’s relations with India.

 Strategic Challenges Ahead

With China’s influence expanding in the region, as seen in the Maldives and now potentially Nepal, India faces critical diplomatic and strategic challenges. It is imperative for India to engage these nations with restraint and flexibility, ensuring dialogue which will prove fruitful to safeguard regional stability and counteract China’s assertive.


Experts opine that a refined approach may help clarify the strategic dynamics and the various forces at play in the region, providing a clearer picture of the ongoing challenges and opportunities.

 Writer is political analyst and has got six year experience of covering the transition of democracy

in Nepal