Nepal’s international relations are largely based on its neighboring countries. India is Nepal’s main trading partner, with most of its exports and imports coming through Indian ports. Despite close ties between Nepal and its bigger neighbors, the country has sought to maintain a foreign policy of equidistance from both India and China. This policy has gained more traction in recent years. This strong economic bond has been further strengthened by centuries-old cultural ties and shared religion. Moreover, New Delhi provides Kathmandu with generous financial assistance for economic development projects.
Historically, Nepal maintained close associations with India and China due to geographical proximity, which meant that they were both key trading partners. But during the monarchy period, China and India both sought to gain geopolitical influence over Nepal. This rivalry between the two nations was a source of tension for the Nepali government, as both countries influenced Nepal’s economy, foreign policies, and overall development.
India and Nepal share a long border of over 1,850 km, and the two countries have a long history of cultural and economic ties. India is Nepal’s largest trading partner, and Nepal relies heavily on India for its supply of essential goods such as fuel and medicine. Nevertheless, since becoming a republic, Nepal’s ties with both India and China have rapidly improved. Nepal and India share an open border, allowing for the free passage of goods and people, while Nepal and China signed an agreement in 2016 to cooperate on a range of issues, including infrastructure and trade. Nepal also participates in major regional organizations like the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation.
However, the relationship between the two countries has been strained in recent years due to various issues, including border disputes, the alleged interference of India in Nepal’s internal affairs, and the construction of dams on shared rivers. In 2015, Nepal adopted a new constitution that was seen as discriminatory towards the Madhesis, a community with close ties to India. India responded by imposing an unofficial blockade on goods entering Nepal, causing severe shortages of essential goods and leading to a deterioration of the relationship between the two countries.
India and Nepal have strong historical and cultural ties, as they share similar languages, religions and traditional customs. At present, India is Nepal’s largest trading partner and donor. India has been involved in various large infrastructure projects in Nepal, such as the construction of the Nepal-India Friendship Bridge, which connects Kathmandu to the Indian states of Bihar and Uttar Pradesh. Apart from economic assistance, India has also given military aid to Nepal in times of need.
On the other hand, China has increased its influence in Nepal since 2014, when there was a change of government in favor of the Communist Party of Nepal (CPN). China has provided financial assistance and has invested in many infrastructure projects like the Kathmandu-Pokhara railway. It is also building the China-Nepal cross-border economic cooperation zone, which will increase trade between the two countries. Nepal’s relationship with China has been growing stronger in recent years. China has been investing heavily in Nepal’s infrastructure, including roads, bridges, and hydropower projects. In 2017, China and Nepal signed a memorandum of understanding to build a trans-Himalayan railway, which would connect Nepal with China’s Tibet Autonomous Region. China sees Nepal as an important partner in its Belt and Road Initiative, which aims to connect Asia with Europe and Africa through a network of highways, railways, and ports.
Read more here.