Nepali Prime Minister Sher Bahadur Deuba’s three-day visit to India on April 1-3 was a mixed bag, but it saw progress on some issues that were uppermost on his agenda.
This was his first visit abroad since becoming prime minister last year; he was scheduled to visit India to attend the Vibrant Gujarat Summit in early January, but the visit was cancelled due to surging COVID-19 cases. It has been customary for Nepali prime ministers to make New Delhi the destination of their first official visit abroad, underscoring the close relations between the two countries.
Deuba’s visit comes at a critical juncture. Nepal’s relations with India have been on a low ebb for the last few years. There has been little high-level communication between the two countries in recent years. Moreover, Nepal is caught in the middle of a geopolitical tussle between China and the United States.
There are several outstanding issues in India-Nepal relations that require immediate attention.
First, efficient connectivity with India is topmost on Nepal’s agenda. Connectivity needs to improve in air and land transport, as well as energy. During his visit, Deuba and his Indian counterpart, Narendra Modi, virtually inaugurated the India financed Kurtha-Jayanagar passenger railway. The railway is to be extended to Dhalkebar in Nepal.
Another critical item on the agenda for Nepal is air connectivity. Nepal requested India to provide three additional entry routes and also requested an agreement on near-border operation for the Gautam Buddha International Airport. The airport, located less than 10 kilometers from the Indo-Nepali border, will start operations from May 20.
Nepal became an energy surplus country (during monsoon) in July 2021. As a result, it started selling 39 MW of electricity to India via the Indian Energy Exchange. However, there is an “unprecedented opportunity” to expand mutually beneficial bilateral cooperation in the power sector. Nepal and India signed a Joint Vision Statement on Power Sector Cooperation in this context. The agreement highlights development of cross-border transmission infrastructure, and bi-directional power trade based on market demand. Based on this, India has allowed Nepal to export an additional 325 MW of electricity from July 2022.
Energy trade is mutually beneficial to both countries. The trade enables Nepal to sell the surplus energy it produces and opens up an opportunity for it to reduce the burgeoning trade deficit with India. It also ends Nepal’s asymmetric dependence on India for energy. Nepal imports all fossil fuel energy from India. In the first six months of the current fiscal year 2021/22, Nepal imported around $1 billion worth of diesel, petrol, and liquefied petroleum gas. This accounted for 12 percent of Nepal’s total imports and was crucial in increasing Nepal’s $5 billion trade deficit with India.
The International Energy Association expects India’s energy demand to increase by 35 percent by 2030. Complicating India’s energy demand is its commitment at COP26 to reach net-zero emissions by 2070. As India moves away from coal, it is searching for a massive supply of clean and renewable energy. In this context, the additional supply from Nepal could help India bridge the gap.
The Joint Vision Statement on Power Sector Cooperation, which was issued during Deuba’s visit, could also form a key stepping stone to subregional energy trade between Bangladesh, Bhutan, India and Nepal (BBIN).
Another important item on the agenda during Deuba’s visit was the border dispute. Relations between the two countries had soured in 2019, when Nepal, then under Prime Minister Khadga Prasad Sharma Oli, amended the constitution to include the disputed territories of Kalapani, Limpiyadhura, and Lipulekh in a map of Nepal. The relationship has not recovered yet. Therefore, there was little expectation that the dispute would be resolved during Deuba’s India visit.
However, it was important from Nepal’s point of view for Deuba to bring up the issue in his meeting with Modi. Though Modi did not mention it in his press conference, Indian Foreign Secretary Harshvardhan Shringla confirmed that the territorial dispute was discussed briefly.
India, which has adopted a delaying tactic on the border dispute, benefits from having de facto control over the disputed territory. Though the border issue may not be ripe for resolution, the summit succeeded in looking beyond the dispute and addressing some practical issues. Nevertheless, it was important for Nepal to raise it.
Third, India was curiously absent from the geopolitical debate in Nepal in the last couple of years. The toxic debate on the Millennium Challenge Corporation (MCC), a $500 million grant from the U.S. to improve Nepal’s power and road networks, brought the Sino-American global competition to the fore, casting a shadow on other interests.
Indo-American interests do not converge as much in dealing with small South Asian countries as they converge in their concern of rising China. Thus, India has concerns about increased US. influence in Nepal, as it could lead to a relative decline in its influence. Deuba’s New Delhi visit has returned the geopolitical debate to normalcy.
Fourth, Nepal and India had formed an eight-member (four from each country) Eminent Persons’ Group (EPG) in 2016. The Group was tasked to study outstanding issues in India-Nepal relations and offer suggestions for the way forward. Although the EPG submitted its report in 2018, Modi has consistently refused to receive it. Some analysts such as Amit Dhakal argue that this is a reflection of India’s reluctance to accept Nepal as a sovereign equal and an indication of its interest in continuing the unequal relations based on the 1950 Treaty of Peace and Friendship.
Deuba should have urged Modi to receive the report and state any differences the latter might have regarding the way forward. But, instead, the Nepali prime minister preferred to maintain a silence on the issue altogether.
In Nepal, Deuba’s itinerary made headlines for several reasons. First, Deuba did not meet former Nepali prime ministers or leaders of opposition parties, as is customary, before embarking on a state visit. Over the years, this practice had practically become an empty ritual. Now, even the pretense of a forging a common minimum understanding with opposition parties on foreign policy is over.
Second, Deuba’s visit to India came at a time when Nepal is in the throes of local elections, to be held in mid-May. His visit to India was poorly timed as it could be construed as inviting India’s influence in Nepal’s local elections.
His visit to the ruling Bharatiya Janata Party’s headquarters, the first by any Nepali prime minister, further fueled this argument. On top of that, Deuba did not meet any former Indian prime ministers or leaders of the Indian National Congress. Historically, the Congress parties from the two countries have had close relations. Deuba’s snub shows the political fall of the Congress in India. However, it could be too risky for Nepal to put all its eggs in the BJP basket.
Some analysts have pointed to the close relations between the chief of the BJP’s foreign affairs cell, Vijay Chauthaiwale, and Deuba’s spouse, Arjoo Deuba. During Chauthaiwale’s visit to Nepal in 2021, Arjoo Deuba tied a rakhi around the former’s wrist, signifying a close brother-sister bond between the two according to Hindu custom.
Either way, Deuba’s visit to BJP headquarters bodes poorly for Nepali politics.
Finally, Deuba visited Varanasi and met with Uttar Pradesh Chief Minister Yogi Adityanath, a firebrand Hindu nationalist touted to be a potential successor to Modi. Uttar Pradesh is probably the most consequential Indian state that affects India-Nepal relations, while Varanasi, a Hindu holy city, is the foremost religious and political center of Nepal outside the borders of Nepal. It is also Modi’s constituency.
The visit to Varanasi was a shrewd political move. It was calibrated to address rising Hindu nationalism in Nepal; Adityanath has been a vocal supporter of reinstating Nepal as a Hindu nation. But, on the other, it could help soften criticisms from the main opposition, the Communist Party of Nepal – United Marxist Leninist (CPN-UML). CPN-UML supremo Oli had earlier used Hindu nationalism to bolster his support in Nepal.
Deuba’s visit to India produced mixed results but at the least, it has restarted high-level political engagement between the two countries. It has also brought normalcy to Nepal’s geostrategic debate by bringing India back into the fold.