Unique Indo-Nepal Ties: A Background

India and Nepal have shared a long history of cultural, economic and political engagements
like two members of an extended family, separated by chance. Nepal has strategic
importance for India as it is placed as a buffer state between the two Asian giantsIndia
and China. Nepal shares a border of over 1850 kms to the south 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 landlocked status of Nepal
demands her close relations with India in favour of her economic as well as security
interests. Nepal is a small landlocked country with a population of 29 million and is also one
of the four Least Developed Countries in South Asia. The ongoing political instability has
added to her disadvantages in the process of economic development.
The Treaty of Peace and Friendship signed in 1950 provided the basic framework of
relationship between the two countries. The 1950 treaty provided that 'neither government
shall tolerate any threat to the security of the other by a foreign aggressor' and obligated
both sides 'to inform each other of any serious friction or misunderstanding with any
neighbouring state likely to cause any breach in the friendly relations subsisting between
the two governments.'
The treaty also provided that it shall not be mandatory for the Indian and Nepali people to
have Work permit for any economic activity such as work and business related activity in
each other's territory. These provisions are intended to outline a special relationship'
between the two countries. It granted Nepal a preferential economic treatment and
provided Nepalese citizens in India the same economic and educational opportunities and
benefits as Indian citizens enjoy in India. The citizens of two countries are not required visa
to visit either country. India does not have this special relationship with any other country.
India is the largest trading and investment partner of Nepal. It provides transit facility to
Nepal's trade to outside world as she is a land locked country. India has played a significant
role in the development of Nepal. At present, India has launched 420 small development
projects in Nepal. India has been wary of Chinese influence in Nepal due to her security
concerns. As Nepal is passing through a democratic transition, relations between the two
countries are not moving in faster lane. However, as soon as Nepal finds a stable democratic
path, the relations between the two countries are likely to get a new momentum.

Current Developments
1. India-Nepal Joint Commission was revived
2. $ 1billion line of credit to Nepal
3. Construction of multi-lane motorable bridge over Mahakali river: access to N india
4. Railway line at 5 border points and 4 integrated checkpost
5. Revive Treaty of Peace & Friendship, 1950
6. Nepal: FDI flow
7. 1
st
Power Development Agreement likely to be inked
+ve aspects
1. Recent visit of Indian PM
2. Both sides agreed to conclude Power Trade Agreement
3. The process of India-Nepal Joint Commission has already started
4. Both agreed to revive the Treaty
Needed Foreign Policy
1. Strengthen SAFTA
2. A neutral approach towards Monarchy & Democracy as well as Maoist and Non-
Maoist parties
3. Show presence in resolving regional conflicts
4. Reduce Chinese effort to encircle India