The recent Agreement on Transit Transport between Nepal and China that deals with railway connectivity and trade and transit routes, among others, did not go down well with New Delhi. India, however, does have an agreement with China to expand border trade through the Lipulekh Pass (Nepali territory), while the Indian state of Sikkim adjoining eastern Nepal already connects to Tibet through the Nathula-Sikkim highway. Thus, India does not mind connecting with China, but Nepal’s linkages with its northern neighbour have always been a matter of concern for the Indian government. 

India might have reservations about the recent agreement between Nepal and China because future expansion of Chinese trade in South Asia through railway connectivity via Nepal might be a concern for it. Security concerns might be another reason. As road and railway connectivity between Nepal and China increases, the Himalayas, which have strategic importance for Indian security, will be breached. Moreover, if the agreement does materialise, Nepal will come out of India’s security umbrella as Indian political and economic monopoly over Nepal will decline.

However, India is neither supporting this Nepal-China deal, nor directly opposing it. Maybe the agreement caught India off guard. But it has nothing to worry about the Chinese railway to Nepal in the long run, as it is not meant to be against India. It could be even be useful to India to enter the Chinese market.

Transit routes

Increased connectivity with South Asia is a declared long-term plan of the Chinese and access to the Indian market through Nepal is significant for them. By 2020, Chinese railway would arrive at the Nepal-China border; thereafter, it will expand up to the Nepal-India border in Lumbini. Even for Nepal, railway connection up to the Chinese border could be an accomplishment. Now with the  Agreement on Transit Transport in place, Nepal might not only gain access to Chinese ports but also get to use ports in Myanmar and road and train connections to and from Central Asia and Europe through Chinese territory.

But the Chinese are well aware of Nepal’s complex relations with India. During Prime Minister Oli’s visit to China, the Chinese foreign ministry spokesperson expressed concerns that closer Nepal-China ties might affect Nepal-India ties. He said that the three neighbours form a community of shared destiny, so stable development in Nepal serves both China and India. 

New challenges

The ball is in Nepal’s court and Nepali leaders have to be responsible, foresighted and dedicated to capitalise on this opportunity and implement the recent agreement with China—something that the Nepali people want as well. Nepalis have long suffered from poverty, underdevelopment, scarcity and conflict; they also know the price of being dependent on a single nation. It would not be easy for any future government of Nepal to go against the will of the Nepali people to connect with their northern neighbour.

India has also realised that the blockade of Nepal was counterproductive for it. It is the right time for the Indian ruling class to change their Nepal strategy. But the recent Indian activities supporting the restart of the Madhes agitation could pose more difficulties and challenges to stabilise Nepal. India could support the Madhes agitation, but it would be impossible to block the Nepal border again. Another diplomatic failure with respect to Nepal could be far costlier for India than imagined.

Change in mentality

The people in the Tarai have suffered a lot during the Indian blockade and are fully aware of India’s intention to ‘divide and rule’. They are in no mood to support the Madhes agitation and block the border points again. With this changed context in Nepal, non-interference in Nepali activities would be beneficial for India. Otherwise, India is going to lose the Roti (bread) and Beti (daughter) relationship with Nepal.

There are strong voices in Nepal to regulate the open border with India and introduce work permits for Indian labourers. There are hopes that the Eminent Persons Group—a group that the two countries agreed to form in 2014 to review the whole gamut of India-Nepal relations—would recommend a review of all unequal treaties between Nepal and India since 1950.

In today’s time, no country can stop the march of globalisation and liberalisation by restricting other countries. India should recognise this reality. It would also be better for it to prepare to enter the Chinese market. Trying to block China in the name of security might prevent India from taking advantage of the promises of globalisation and liberalisation. Moreover, India should try to improve relations with its neighbours if it wishes to be a future regional and world power. It should respect the sovereignty of all its smaller neighbours. Cooperation with China might help accomplish this goal.

Shrestha was an under-secretary in the Ministry of Finance and has been associated with the United Nations Development Program in Sierra Leone and South Sudan