The recent upheaval in Nepal’s political landscape is a scenario not unfamiliar to New Delhi. Historically, India has engaged deeply with Nepal due to their shared borders, intertwined economic interests, and ethnic ties. Consequently, India has consistently monitored developments across the border to safeguard its strategic interests, particularly in the face of growing Chinese influence.
For India, changes in Nepal’s political arena carry profound implications for trade, security, and regional stability. With Nepal forging closer ties with China, India has initiated diplomatic efforts to recalibrate its relationship, striving to maintain a balance in a rapidly shifting geopolitical landscape.
Despite these dynamics, India’s foreign policy toward Nepal has largely remained unchanged. The fundamental tenet persists: a stable neighborhood is vital for India’s security, especially given the porous border and significant ethnocultural connections. Indian political parties recognize that a cooperative approach to mutual prosperity and security will foster a more beneficial bilateral relationship. India’s broader global strategy will inevitably continue to shape its foreign policy, yet the recent geopolitical developments, including a fragmented electoral outcome at home, add complexity to the strategic decisions ahead.
India has traditionally viewed Nepal as a key ally, but shifts toward China threaten to alter the power dynamics in South Asia. If Nepal embraces initiatives like the Belt and Road Initiative (BRI), it could undermine India’s historical influence.
Recently Nepal’s increasing imports from China, particularly in the realm of electric vehicles (EVs), alongside a decline in imports from India, has concerned New Delhi. The decline in imports from India, primarily due to food export restrictions, highlights vulnerabilities in their trade relationship, prompting India to reconsider its policies and seek renegotiation to maintain market access. Increased reliance on Chinese goods may further shift Nepal’s political landscape toward Beijing.
The trend of economic cooperation increasingly favoring China raises urgent questions about Nepal’s future foreign alignment and its implications for regional stability. New Delhi is treating this issue with utmost caution as it seeks to protect its geopolitical interests.
Recently, a senior official from the Communist Party of Nepal-Unified Marxist-Leninist (CPN-UML), now part of the ruling coalition, indicated that Nepal intends to adopt a neutral foreign policy, aimed at safeguarding its national interests and integrity. This approach also seeks to address critical issues such as border disputes and trade imbalances, marking a significant shift in Nepal’s diplomatic strategy. As these developments unfold, it remains to be seen how India will navigate this evolving relationship and ensure that its influence in the region is not irrevocably compromised.
The return of CPN-UML’s K.P. Sharma Oli to power is viewed with concern from India’s perspective, as reflected in Indian news coverage. His previous tenure as prime minister was characterized by contentious border disputes that heightened tensions with India. Despite these challenges, Oli has demonstrated an understanding of the importance of economic ties. During his previous term, he visited New Delhi twice, met with Indian Prime Minister Narendra Modi, and initiated one of the largest hydropower projects in the region. This indicates an awareness of the need for cooperation, even amid political friction.
However, India is likely to proceed with caution in its dealings with Nepal this time around, particularly given the unexpected coalition between the CPN-UML and the Nepali Congress. While the Nepali Congress is frequently perceived as pro-India, it has played a notable role in promoting China’s BRI. This shift complicates the geopolitical landscape, as the Nepali Congress has frequently altered its position within the coalition framework. The evolving dynamics between these two parties will undoubtedly influence India’s strategic calculations in the region.
India is likely to adopt a diplomatic and strategic approach in its interactions with Nepal during this new political phase. However, it is worth noting that since 2015, the nature of diplomatic engagement has softened; the diplomatic mission no longer exerts the same influence it did prior to that year. Things have certainly changed. Whether in terms of the bilateral partnership or personal relationships, India-Nepal ties aren’t the same – especially amid an increase in aggravated political polarization.
The Bharatiya Janata Party’s lack of an outright majority in the new Parliament places the Indian government in a particularly delicate position, given the Janata Dal (United) party’s role in the coalition. The JD(U) is rooted in Bihar and connected through long-standing ties with Nepal’s Madhesh region. Nepal holds significant importance for Bihar, as most of its rivers flow into the Ganges in Bihar, and an estimated 200,000 Biharis are employed in Nepal’s construction industry, factories, service sector, and trade.
The Telugu Desam Party (TDP), another notable coalition partner, is unlikely to remain passive, either. TDP president N. Chandrababu Naidu played a pivotal role in the Vajpayee government from 1999 to 2004, actively engaging with foreign governments to attract investments. Often regarded as India’s commercial diplomat, Naidu became one of the most prominent faces of India’s economic reforms and growth narrative.
India’s ruling coalition may struggle to streamline foreign policy goals due to potential clashes of interest and divergent policies.
Meanwhile, Nepal’s ruling coalition faces its own balancing act. The CPN-UML alliance is particularly vulnerable from an ideological perspective, given their ethical differences. Issues such as power-sharing, political discontent, ideological rifts, and underperformance are likely to arise over time, considering their political history and strategic moves for advantage. A reconfiguration of alliances would not be surprising.
New Delhi seems to acknowledge the instability of power dynamics in Kathmandu. However, India will have to work with the government in power at the moment – and establishing a productive working relationship with the CPN-UML and Nepali Congress coalition presents significant challenges. The CPN-UML is often perceived as advocating for closer ties with China, aligning with its ideological stance and ultra-nationalistic outlook – which is largely seen as anti-India. This complicates New Delhi’s efforts to engage effectively with the Kathmandu administration, as the dynamics are confusing and unpredictable.
The emergence of a new government in Nepal indicates a shift in policy dynamics that could impact the priorities of both nations and influence regional geopolitics amid evolving geoeconomic trends, with Nepal continuing to be insatiable and India’s approach somewhat lacking. New Delhi is likely to monitor Kathmandu’s political maneuvering closely, adopting a proactive strategy to safeguard its interests in the region.
Providing some balm to India, the Foreign Ministry of the Nepali Congress is now led by Arzu Rana Deuba, a familiar leader who is also the wife of a former prime minister from the Nepali Congress, Sher Bahadur Deuba. Her appointment undoubtedly reflects a nuanced strategy aimed at balancing power dynamics and fostering appeasement within the ruling coalition. Nonetheless, considerable challenges remain. The coalition may well diverge on foreign policy and its implementation.
The decisions made by the government in Kathmandu will be pivotal in shaping Nepal’s future and influencing the region’s evolving geopolitical landscape. The CPN-UML-Nepali Congress coalition will face significant challenges in maintaining a strategic balance with New Delhi and Beijing in a shifting geopolitical landscape, further complicated by the unpredictability of the upcoming elections in the United States. Nepal must initiate various diplomatic efforts with a focus on trade, cultural exchanges, and diplomatic channels. However, to date it has yet to fully capitalize on its strategic location in the Himalayas.
Balancing the competing interests of India and China while also pursuing the Nepali government’s own domestic objectives will be no simple task. The current political flux and unpredictable alliances could further complicate this delicate balancing act, potentially influencing Nepal’s geopolitical trajectory in unforeseen ways and affecting its developmental goals. Nepal must tread cautiously, considering the broader South Asian context.