Chance to improve power and trade links with Nepal

(Mains GS 2 : India and its Neighborhood- Relations.)

Context:

• Nepalese Prime Minister Sher Bahadur Deuba will pay a three-day visit to India from April 1 to inject a new momentum in bilateral ties, especially in areas of trade, investment, healthcare and connectivity.
• It will be Deuba’s first bilateral visit abroad after becoming prime minister in July last year for a fifth time following a spell of political turmoil.

“Roti Beti” relationship:

• Nepal is important for India in the context of its overall strategic interests in the region, and the leaders of the two countries have often noted the age-old “Roti Beti” relationship.
• The country shares a border of over 1850 km with five Indian states - Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand.
• Land-locked Nepal relies heavily on India for the transportation of goods and services as Nepal’s access to the sea is through India, and it imports a predominant proportion of its requirements from and through India.

Historic low: 

• The India-Nepal Treaty of Peace and Friendship of 1950 forms the bedrock of the special relations that exist between India and Nepal.
• However, Nepal’s relations with India, which plummeted to a historic low after the Indian blockade in September 2015, have yet to recover.
• Ties between India and Nepal came under severe strain after Nepal published a new political map in 2020 that showed the three Indian territories - Limpiyadhura, Kalapani and Lipulekh - as part of Nepal.

Complicated geopolitics:

• Geopolitics is a complicated challenge for Nepal, whose geography requires it to make best use of its position between China and India.
• Complications were reflected recently when the Nepalese Parliament ratified a U.S.$500 million grant assistance-Millennium Challenge Corporation (MCC) pact; there were street protests and big-time social media campaigns supported by China. 
• With relations between India and the United States further complicated by the China factor and India abstaining on the Russia vote in the United Nations even as Nepal voted in favour of it, the problems have continued to mount.

Priorities relationship:

• Despite more renewable energy projects (solar) coming up in India, hydropower is the only source that can manage peak demand in India. 
• Thus, for India, buying power from Nepal would mean managing peak demand and also saving the billions of dollars of investments which would have to be invested in building new power plants, many of which would cause pollution.
• While trade and transit arrangements go through the usual extensions, it is time to undertake a complete rethink as the sales of goods and payments moves through electronic platforms. 
• The Bilateral Investment Promotion and Protection Agreement (BIPPA) signed between India and Nepal needs more attention from the Nepali side as implementing this would attract more foreign investments from Indian investors. 

Conclusion:

• A normal relationship where India and Nepal ensure credibility, peace, security along with prosperity ensure a generous partnership as well as will be a better foundation for “neighbourhood first” in the 21st century.