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Why Nepal can't ignore India despite cozying up to China

by Rajeev Sharma  Jul 9, 2013 20:34 IST

#China   #diplomacy   #India   #Nepal   #Ram Baran Yadav   #Salman Khurshid  

Nepal has played China card with India much too often, though it is a well known fact that on no other country is Nepal is so much dependent for financial aid and developmental assistance as India. And yet India’s far-abroad diplomacy will come to a naught if its near-abroad diplomacy with contiguous neighbours like Nepal is not managed well.

This was the main template for External Affairs Minister Salman Khurshid as he visited Nepal on Tuesday (9 July) at the invitation of his Nepalese counterpart Madhav Prasad Ghimire and also met President Ram Baran Yadav and Chairman of the Council of Ministers of Nepal, Khil Raj Regmi.

Union External Affairs Minister Salman Khurshid. Image courtesy PIB

Union External Affairs Minister Salman Khurshid. Image courtesy PIB

Khurshid’s discussions with his Nepalese interlocutors covered vast gamut of bilateral relations and had a sharp focus on Nepal’s Constituent Assembly-cum-Parliament election scheduled for 19 November 2013. The Ministry of External Affairs said Khurshid told leaders of Nepal that India was "strongly committed to the success of Nepal’s peace process and institutionalisation of democracy in Nepal in a constitutional and multi-party framework".

To facilitate Nepal conduct free and fair elections, India has accepted Nepal government’s request for help and agreed to provide all the logistical support for the security agencies and Election Commission of Nepal. As part of the election-related Indian assistance to Nepal, India pledged to deliver by October this year 764 different types of vehicles costing approximately 800 million Nepali Rupees and the two sides exchanged documents to this effect.

India continues to be in the forefront of Nepal’s all-round development as it shares an 1850-km-long open border with this predominantly Hindu nation. Five Indian states—Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand—share borders with Nepal.

India has thus far funneled in over Rs 3,600 crore as assistance to Nepal and is currently engaged in more than 370 developmental projects across Nepal with a total outlay of Rs 402 crore. India is Nepal’s largest trading partner. India accounts for nearly two-thirds of Nepal’s foreign trade, 70 percent of Nepal’s exports, and almost half of its foreign direct investments. Around 40percent of Nepal’s tourists come from India and more than 5 million Nepalese find employment in India.

India is proactively involved in upgrading Nepal’s infrastructure and improving Indo-Nepal road and rail connectivity. India has been a part of Nepal’s growth story all these years in such diverse areas as water resources, human resource development, health, power, civil aviation, tourism, and agriculture. But now the Indo-Nepal cooperation has turned over a new leaf with the much-needed focus on physical infrastructure.

India’s upcoming high-priority connectivity projects in Nepal include construction of over 600 km of roads in the Terai region, setting up two integrated check-posts and two cross-border railway links over the next three years. In the second phase, additional 800 kms of roads, three cross-border railway links and two integrated check-posts would be constructed which would provide big boost to trade, investments and people-to-people contacts between the two countries.

India is already engaged in building up massive cross-border connectivity and infrastructure projects, which include construction of four Integrated Check Posts (ICPs) for trade promotion and facilitation, 1450 kms of Terai roads, and cross-border rail links at five locations. In the first phase, works have been taken up in two of the four ICPs (grant assistance of 4.32 billion NRs for the segment falling in Nepal), six segments of Terai Roads Project (totaling 605 kms entailing grant assistance of 11 billion NRs) and two of the five rail connections (grant assistance of 10.4 billion NRs). Of the 425 projects undertaken, 218 have been completed. The current year’s outlay for these development projects is 6.08 billion NRs.

Now have a look at the breathtakingly intense and wide-ranging Indian assistance to Nepal in key and diverse areas.

During his brief visit to Kathmandu, Khurshid reviewed with his Nepalese counterpart a wide gamut of Indo-Nepal bilateral cooperation in such fields like water resources, power, trade and defence. The MEA said Khurshid and Ghimire reviewed the joint efforts against flood-related disasters, including the repair and maintenance works at major border rivers, especially Kosi and Gandak.

Besides activating all the existing bilateral consultative mechanisms and maintaining the embankments of Kosi and Gandak under the respective bilateral agreements, India has provided grant assistance of 2.543 billion NRs during the past three years for protection works on the Kamala, Lalbakya, Khando and Bagmati rivers. For the current year, an amount of 256.94 million NRs has been released for this purpose, and a further amount of 374.47 million NRs will be made available later in the year. In addition, India has committed grant assistance of 181.37 million NRs under the bilateral small development projects for flood protection works along Trijuga, Lkahndehi, Sunsari, Kankai, and Kaligandaki rivers and 95.2 million NRs along Gagan river.

India is also a major electricity supplier to Nepal. To augment electricity supply from India to Nepal, particularly during the lean season, India has already implemented short-term grid connectivity projects (grant assistance of 124.6 million NRs), resulting in Nepal importing an additional 80 MWs of electricity through 14 different upgraded exchange points in the last lean season. A further medium-term grid upgradation project (amounting to grant assistance of 464 million NRs) has been tendered which will enable a further drawing of between 120 – 175 MWs of electricity from India, whenever required.

To supplement financing of the long-term cross-border grid connectivity from Muzaffarpur to Dhalkebar, India’s Eximbank is contributing $13.2 million. As recently as last month, specific approvals have been obtained for Phase II of the Rahughat Hydroelectric Project, 220 KV Kosi Corridor Transmission Line Project, 132 KV Solu Corridor Transmission Live Project, and the 132 KV Modi Leknath Transmission Line Project, for utilising $175 million or 15.8 billion NRs out of the existing $250 million Exim bank’s Line of Credit for Nepal.

Approvals for utilisation of the balance amount, for the construction of roads within Nepal, are in the pipeline.

Trade was another high point of Khurshid’s talking points with the Nepalese leaders. Though Indo-Nepal bilateral trade is well below its true potential and is barely touching $3 billion, Khurshid had an in-depth discussion with Ghimire on promoting trade bilaterally and with third countries to optimize opportunities for Nepal’s economic growth.

To achieve this the two ministers discussed several measures, including finalising legal and administrative arrangements for additional transit routes, revision of the rail services agreement to enable the implementation of the long-standing Nepalese request for the movement of open box wagons and transit of bulk cargo movement on flat wagons, finalisation of the Motor Vehicles Agreement, energy banking and power trading, currency conversion facilitation, new routes for increased air-connectivity, and strengthening Nepal’s capacity for certification for food and agriculture products exports by establishing testing and lab facilities along the India-Nepal border.

Defence cooperation has been a sensitive issue for India, particularly since Nepal’s royal massacre of 1 June, 2001. India had suspended its military supplies to Nepal after this bloodbath and allowed a partial resumption only four years later.

The issue of Indian defence supplies also came up during talks between Khurshid and Ghimire. India has agreed to accede to Nepal’s request for imports of stores and equipment for Nepal Army worth 1.76 billion NRs and India will be sending the supplies to Nepal in the coming months.

If despite all this Nepal plays the China card with India, the people of Nepal should question their leaders about it. The Nepalese need to ask their leaders what China has done so far for improving the lot of the common Nepali. India will win such a competition hands down.

The writer is a Firstpost columnist and a strategic analyst who can be reached at bhootnath004@yahoo.com.