India - Nepal Relations

Introduction

India and Nepal share a unique friendship as neighbouring states. The two countries are bound together by an open border, deep-rooted kinship and shared culture, and a long tradition of people crossing freely to live, work and worship.

Nepal shares an approximately 1850-kilometre-long border with five Indian states: Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand.

The India-Nepal Treaty of Peace and Friendship of 1950 forms the bedrock of the special relationship between the two countries. Under the Treaty, Nepalese nationals enjoy many of the same rights and privileges as Indian citizens.

Around 8 million Nepalese citizens live and work in India, one sign of just how closely the two societies are woven together.

Areas of India-Nepal cooperation

Bilateral relations

India and Nepal have many institutional frameworks for dialogue, including the India-Nepal Joint Commission, which is co-chaired by India's External Affairs Minister and Nepal's Foreign Minister. The Fifth Joint Commission Meeting took place in Kathmandu on 21 and 22 August 2019.

Parliamentary exchanges: From 8 to 16 July 2016, a 13-member delegation from the Parliamentary Committee for Development of Nepal's Legislature-Parliament visited India on a study tour. A second Nepalese parliamentary delegation visited from 20 to 31 August 2016, and from 5 to 12 March 2017 a 13-member team from Nepal's International Relations and Labour Committee visited New Delhi and Gujarat on a goodwill mission.

In May 2019, the Federal Parliament of Nepal established the Nepal-India Parliamentary Friendship Group, made up of nine members drawn from both the House of Representatives (Lower House) and the National Assembly (Upper House).

Defence cooperation

The two countries share a strong defence relationship. India has long assisted the Nepal Army in modernising, supplying equipment and training.

Disaster assistance, joint military exercises, adventure activities and bilateral visits are all part of this cooperation, and Indian Army training sites host many Nepal Army specialists.

Surya Kiran: The Indo-Nepal battalion-level joint military exercise Surya Kiran is held every two years, alternating between the two countries. The 14th edition took place in Saljhandi, Nepal, from 3 to 16 December 2019. Since 1950, India and Nepal have conferred the honorary rank of General on each other's Army Chiefs as a mark of mutual respect.

The Gorkha regiments of the Indian Army are largely recruited from Nepal's hill districts. Around 32,000 Nepalese Gorkha soldiers currently serve in the Indian Army.

Two Pension Paying Offices, in Pokhara and Dharan, along with 22 District Soldier Boards across Nepal, work under the Indian Embassy's Defence Wing to manage pensions and welfare for ex-Gorkha soldiers and their families.

Disaster assistance

After a devastating 7.8 magnitude earthquake struck Nepal on 25 April 2015 (followed by a severe 7.4 magnitude aftershock on 12 May 2015), India promptly sent National Disaster Response Force (NDRF) teams and aircraft loaded with rescue and relief supplies.

Indian relief assistance came to around US$ 67 million. At the International Conference on Nepal's Reconstruction in Kathmandu on 25 June 2015, India announced a US$ 1 billion post-earthquake reconstruction package, made up of a US$ 250 million grant and a US$ 750 million concessional line of credit.

In March 2018, India signed partnership agreements with the United Nations Development Programme and the United Nations Office for Project Services to provide socio-technical support to housing beneficiaries in Nepal's Gorkha and Nuwakot districts.

Of the 50,000 earthquake-affected families assigned to the Government of India, over 45,000 supported houses (about 90 per cent of the total) have been built in the Gorkha and Nuwakot districts. On 21 January 2020, the Prime Ministers of India and Nepal remotely reviewed the progress of this housing project.

Development

India's development assistance to Nepal is a broad-based programme focused on grass-roots infrastructure, with projects in health, water resources, education, and rural and community development.

In recent years India has helped upgrade Nepal's border infrastructure by renovating eleven highways in the Terai region, developing cross-border rail links between Jogbani and Biratnagar, and building Integrated Check Posts at Birgunj, Biratnagar, Bhairahawa and Nepalgunj.

In FY 2019-20, the Aid to Nepal budget provided INR 1200 crore in economic assistance.

During the Nepalese Prime Minister's visit in April 2018, the two Prime Ministers jointly inaugurated the Integrated Check Post in Birgunj, built with Indian cooperation. On 31 August 2018 they jointly inaugurated the Nepal-Bharat Maitri Pashupati Dharmashala in Kathmandu, and on 21 January 2020 they inaugurated the Integrated Check Post in Biratnagar.

Beyond grants, India has extended USD 1.65 billion in Lines of Credit for infrastructure, including post-earthquake recovery projects.

Covid-19 support

India supplied 1 million doses of the AstraZeneca Covishield vaccine to Nepal. India was also the only country to provide Nepal with liquid oxygen, along with other medical aid including ventilators and ambulances.

Water resource cooperation

Cooperation on water resources, especially on shared rivers, is one of the most important areas of the relationship.

A large number of small and major rivers flow from Nepal into India, forming an important part of the Ganges basin. These rivers hold huge potential for irrigation and hydropower for both countries.

A three-tier bilateral framework set up in 2008 discusses water resources, flood management, inundation and hydropower cooperation.

Economic ties

Trade: India is Nepal's largest trading partner. Bilateral trade totalled INR 57,858 crore (US$ 8.27 billion) in 2018-19. Nepal exported INR 3,558 crore (US$ 508 million) worth of goods to India, while India exported INR 54,300 crore (US$ 7.76 billion) to Nepal.

Nepal's main imports from India include petroleum products, motor vehicles and spare parts, rice and paddy, medicines, machinery, electrical equipment, cement, coal and agricultural equipment.

Investment: Indian firms are among the largest investors in Nepal, accounting for more than 30 per cent of total approved foreign direct investment. Around 150 Indian ventures operate in Nepal across manufacturing, banking and insurance, education, telecom, power and tourism. Large investors include ITC, Dabur India, Hindustan Unilever, State Bank of India, Punjab National Bank, Life Insurance Corporation of India, Asian Paints, Berger Paints and Tata Power.

Education

Developing human resources in Nepal has been a significant part of the relationship. Each year the Government of India offers around 3,000 scholarships to Nepalese students for courses at PhD, Masters, Bachelors and plus-two levels, in both India and Nepal.

These scholarships cover a wide range of fields, including engineering, medicine, agriculture, pharmacy, veterinary sciences, computer science, business administration, music and the creative arts.

Culture

Nepalese journalists and editors visit India for familiarisation trips and short-term training in print and electronic media and in archaeology. Several India-Nepal friendship organisations are supported to promote cultural links, and India is helping set up an e-library system in Nepal.

Cultural cooperation is backed by memoranda of understanding between institutions such as:

• Sahitya Kala Akademi (India) and the Nepal Academy
• Doordarshan (India) and Nepal TV
• Press Council of India and Press Council of Nepal
• Lalit Kala Akademi (India) and the Nepal Academy of Fine Arts
• The Governments of India and Nepal, on cooperation in youth affairs
• Sangeet Natak Akademi

Indian community in Nepal

Nepal is home to roughly 600,000 Indians, including professionals such as doctors, engineers and IT experts, as well as labourers, many of them seasonal workers in construction.

The Indian Citizens' Association (ICA) of Nepal, founded on 14 September 1990, is the only association of resident Indian citizens in Nepal, with branches in Pokhara, Damak and Bhairahawa. It offers a forum to discuss and protect the legitimate rights of resident Indians.

Why it still matters

The open border, shared rivers and close trade described above are not just history. Today they are the foundation of a fast-growing clean-energy partnership that is reshaping the whole region.

On 4 January 2024, Nepal and India signed a long-term power trade agreement. Under it, India will buy up to 10,000 megawatts of electricity from Nepal over ten years, inside a 25-year framework. This turns Nepal's Himalayan rivers, the same rivers covered in the water-cooperation notes above, into one of its biggest exports. By August 2024, India was already importing close to 1,000 megawatts of Nepali power.

The story went a step further on 3 October 2024, when Nepal, India and Bangladesh signed their first ever trilateral power deal. It lets Nepal sell 40 megawatts of electricity to Bangladesh, but the power has to travel across India through the Dhalkebar to Muzaffarpur transmission line. When the first units flowed in November 2024, it was the first time Nepal had ever sold electricity to a third country, and it happened only because India opened its grid.

For a student, this is the key idea: a relationship built on geography and trust is now being used to build a shared South Asian electricity market. If you want to see how borders, rivers and trade connect across the world, explore our Learnacy Hub, read more International Relations study notes, or browse all our study resources.

Sources

1. Kathmandu Post, Nepal signs deal with India to export 10,000 MW power in 10 years (4 January 2024)
2. Kathmandu Post, India raises imports of Nepal's energy to nearly 1,000 MW (20 August 2024)
3. Kathmandu Post, Three-nation deal signed for Nepal to trade power with Bangladesh via India (3 October 2024)
4. Kathmandu Post, Nepal exports power to Bangladesh through India (15 November 2024)

Key takeaways

• India and Nepal share a unique friendship bound by an open border, deep-rooted kinship, and shared culture, with the 1950 Treaty of Peace and Friendship as the bedrock of their special relationship.
• The two countries cooperate through institutional frameworks including the India-Nepal Joint Commission and parliamentary friendship groups, with defence ties featuring joint exercises like Surya Kiran and around 32,000 Nepalese Gorkha soldiers serving in the Indian Army.
• India provided significant disaster assistance after the 2015 Nepal earthquake, including a US$ 1 billion reconstruction package, with over 45,000 houses built in Gorkha and Nuwakot districts.
• Development cooperation focuses on grass-roots infrastructure including border highways, Integrated Check Posts, and cross-border rail links, with India extending USD 1.65 billion in Lines of Credit.
• India is Nepal's largest trading partner, with bilateral trade totalling INR 57,858 crore (US$ 8.27 billion) in 2018-19, and cooperation extends to water resources from rivers flowing from Nepal into India.

Test yourself

When did the devastating earthquake strike Nepal in 2015?

A 7.8 magnitude earthquake struck Nepal on 25 April 2015, followed by a 7.4 magnitude aftershock on 12 May 2015.

How many Nepalese Gorkha soldiers currently serve in the Indian Army?

Around 32,000 Nepalese Gorkha soldiers currently serve in the Indian Army.

What was the value of bilateral trade between India and Nepal in 2018-19?

Bilateral trade totalled INR 57,858 crore (US$ 8.27 billion) in 2018-19.

Frequently asked questions

What is the significance of the India-Nepal Treaty of Peace and Friendship (1950)?

The treaty forms the foundation of the special relationship between India and Nepal, granting Nepalese nationals many of the same rights and privileges as Indian citizens, reflecting the deep-rooted kinship and shared cultural ties.

How do joint military exercises like Surya Kiran contribute to India-Nepal relations?

Joint military exercises such as Surya Kiran, held biennially, enhance defence cooperation, mutual trust, and interoperability between the Indian and Nepalese armies, alternating between the two countries.

What role do Gorkha regiments play in India-Nepal defence cooperation?

The Gorkha regiments of the Indian Army are largely recruited from Nepal’s hill districts, with around 32,000 Nepalese Gorkha soldiers currently serving, symbolizing the long-standing defence partnership.

How do institutional frameworks like the India-Nepal Joint Commission facilitate bilateral relations?

The Joint Commission provides a structured platform for high-level dialogue, co-chaired by the External Affairs Minister of India and Nepal’s Foreign Minister, to address cooperation across various sectors.