India-Nepal Ties: Energizing the Future

18/01/2015 8:05 AM IST | Updated 15/07/2016 8:24 AM IST
Indian Prime Minister Narendra Modi, left, speaks with Nepalese Prime Minister Sushil Koirala during the 18th summit of the South Asian Association for Regional Cooperation (SAARC) in Katmandu, Nepal, Wednesday, Nov. 26, 2014. The South Asian Association for Regional Cooperation summit, the first since 2011, is meant as a forum to discuss regional issues, but is usually dominated by the rivalry between Pakistan and India. (AP Photo/Narendra Shrestha, Pool)

The Indian Prime Minister's visits to Kathmandu have focused on injecting optimism in ties, articulating a vision for the future, reviving old friendships, and exploring new partnerships. But could this prove to be game-changing for India and Nepal?

A Himalayan Odyssey

In his second visit to Nepal, Indian Prime Minister Narendra Modi inked ten high-impact pacts with the Himalayan nation on the sidelines of the 18th SAARC Summit. These included a $ 1 billion credit line for infrastructure development, a bus service between Kathmandu and New Delhi, and MoUs on tourism, traditional medicine, and twin city agreements between Ayodhya-Janakpur, Lumbini-Bodh Gaya and Varanasi-Kathmandu.

Clearly, the relations between India and Nepal have witnessed a steady transformation over the last few months: Modi's maiden visit in August created tremendous ripples of optimism on both sides, backed by the announcement of high-level collaborative projects across spheres. In his address to Nepal's Constituent Assembly too, Modi struck the right chord by stating, "When an adverse wind blows in Nepal, India too feels cold. Therefore, how can India be happy if Nepal is unhappy?"

India's tangible push for stronger cooperation has certainly diminished the perception that Nepal had dropped off New Delhi's diplomatic radar in the past few years. In fact, Modi has shifted focus from merely strengthening ties to forging new partnerships for mutual benefit--something that has brought the India-Nepal relationship to the forefront of public discourse again. And in the current geopolitical scenario, this presents a win-win scenario for both countries. However, big-ticket deliverables are imperative to infuse fresh energy into the relationship.

Boosting Trade

In 2009-2010, total bilateral trade reached $3.21 billion, with Nepal's imports from India estimated at $2.71 billion, and exports to India at nearly $0.50 billion. Yet, Nepal's trade deficit with India is too much, the import-export ratio being 7:1. India must buy more from Nepal and increase imports to $1 billion rapidly, working to a plan. Increased collaborations in the services sector, particularly in the areas of health, education, textile and telecom, are critical for bilateral trade. Leveraging the Indian Prime Minister's "H.I.T" formula--Highways (H), Information infrastructure (I) and Transmission lines (T)--offers a lucrative framework of opportunity. India's assistance in constructing new highways stands to greatly improve connectivity in Nepal, while cooperation in setting up information hubs can facilitate a digital revolution in the country. Similarly, new transmission lines would boost the exchange of power in both energy-deficient nations. These are all viable avenues for entrepreneur-driven economic growth.

An India-led effort to train emerging Nepalese entrepreneurs can pay rich dividends for both countries. India must help Nepal identify and encourage potential investors, launch entrepreneurship development programs and provide technical, administrative as well as managerial guidance. The two countries should also explore the viability of setting up an India-partnered Skills Development Centre in Nepal, to train young workers and professionals, in sectors such as information technology, computers, sports, mass media and medicine.

Fuelling Hydropower Projects

The hydropower potential of Nepal's rivers has been estimated at 83,000 MW, and the technical feasibility for development could yield an estimated 44,000 MW. Yet, despite its enormous potential, Nepal is energy-deficient and imports power from India. Tapping the potential of hydropower can fundamentally alter Nepal's economy. Towards this end, the agreement between the Nepalese government and India's Satluj Jal Vidyut Nigam Limited to build a $1 billion hydroelectricity plant is a welcome development. However, since establishing large hydropower projects takes time, the focus should now be on setting up medium and mini-hydel projects, which can be quickly operationalized with huge benefits. Interconnected mini-hydropower plants can also meet domestic demands in remote areas of Nepal and India.

Managing Sustainable Development

Investing in renewable technologies is imperative for both nations to mitigate the devastating impact of climate change in the years to come. Collaborations must be explored to make biogas, solar and wind energy and improved cooking stoves more accessible. At the same time, India should provide technical support for ecological conservation and community-based adaptation, especially in the Himalayan region. Setting up a joint research centre aimed at protecting the Himalayan ecosystem through watershed management, soil conservation and re-forestation can be a game-changing step in this direction.

Boosting Border Security

The 1,580-kilometer long open border is a safety-valve for Nepal. Without compromising India's security, the challenge is to turn it into a bridge, not a barrier. Given the precarious nature of open borders, there are bound to be political and security implications for both nations. In the past, terrorists and criminals have misused the open border and issues of smuggling, infiltration, circulation of fake Indian currency, drug and human trafficking have emerged as matters of grave concern. India has long underscored the need to strengthen the bilateral legal framework in order to counter the cross-border security challenges. Since the 1990s, the extent of illegal border activities has decreased, but nonetheless India should continue providing assistance to the security apparatus in Nepal for the development of infrastructure, capacity building, equipment and training of human resources.

Shared history, common goals

A new chapter in India -Nepal relations is not possible without frequent and broad-based political engagement, and closer cooperation. It is extremely critical for India and Nepal to see each other as development partners, and work towards finding viable areas of cooperation. In Kathmandu, the Prime Minister called the relations between India and Nepal "as timeless as the Himalayas and the Ganga." The onus now lies with the two governments, to ensure bilateral relations surge to Himalayan heights, while remaining flexible to accommodate new ideas, like the Ganges.

(Samarth Pathak is Program Officer at the Ananta Aspen Centre. Prepared with inputs from Alina Pokhrel, Avantha Fellow, Ananta Centre. Views expressed are personal.)

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