Nepal and India are intricately intertwined nations, with deep-rooted connections spanning across civilization, history, socio-cultural dynamics, economics, geostrategic positioning, and political landscapes. India has been a significant player in Nepal’s major political transformations, including the overthrow of the Rana regime in 1951, the establishment of democracy in 1959, its reinstatement in 1990, the integration of Maoists into mainstream politics through the Comprehensive Peace Accord in 2007, and various other pivotal moments.As the geopolitical dynamics of South Asia evolve, Chinese interests in the region, particularly in Nepal, have undergone a notable shift. Historically, China’s engagement in Nepal primarily revolved around safeguarding its security interests, particularly concerning issues emanating from Tibet, and pursuing economic gains through bilateral trade. However, in recent times, China has exhibited a growing ambition to challenge India’s dominant position in Nepal by expanding its influence within the country. Concurrently, China aims to counter the increasing presence of the United States in South Asia, including Nepal. Consequently, China has departed from its erstwhile ‘pro-establishment’ stance and embraced a more proactive and interventionist approach in Nepal.
Nepal caught between India-China Competition
India’s initial aid to Nepal was facilitated through the Indian Aid Mission, established in 1954. Contrastingly, the first “Agreement between China and Nepal on Economic Aid” was inked in October 1956. Over the years, India has emerged as a significant development partner for Nepal, contributing to various critical infrastructural projects. Noteworthy investments include the construction of six airports, with Tribhuvan International Airport being the foremost and largest international airport, as well as the development of the Tribhuvan Highway, Nepal’s premier and oldest highway. Additionally, India has played a pivotal role in the establishment of Tribhuvan University, Nepal’s premier and largest educational institution, alongside numerous initiatives encompassing roads, irrigation systems, power, water supply projects, among others.
From the mid-1980s onward, the Chinese government has also actively engaged in supporting Nepal’s development through grant assistance under the Economic and Technical Cooperation Program. This assistance has facilitated the execution of mutually beneficial projects spanning convention centers, hospitals, highways, and various other sectors, contributing to Nepal’s infrastructural and socio-economic advancement.
In a notable development, China has conducted a feasibility study to link Kathmandu, Pokhara, and Lumbini in Nepal with its Qinghai Railway, which currently connects Beijing and Shigatse via Lhasa. This initiative comes at a time when India is actively engaged in extending its railway connectivity to six key points along the India-Nepal border. These include Raxaul, Jogbani, Jayanagar, Nautanwa and New Jalpaiguri in India with Birgunj, Biratnagar, Bardibas and Nepalgunj in Nepal respectively. In April 2018, India proposed to establish an electrified rail line connecting Raxaul in India with Kathmandu, helping in the project. This surge in railway development projects underscores the strategic interests and infrastructure competition between India and China in Nepal, with each vying to enhance connectivity and strengthen ties with the Himalayan nation.
Meanwhile, China has been actively expanding its air connectivity network in Nepal. Currently, Nepal enjoys air connections to several major Chinese cities including Beijing, Shanghai, Lhasa, Guangzhou, Kunming, Chengdu, and Xi’an. In contrast, the number of Indian cities with direct air links to Nepal is relatively limited, primarily comprising Delhi, Kolkata, Mumbai, with occasional flights to Varanasi and Bangalore. With the recent inauguration of two new international airports in Pokhara and Lumbini, there is anticipation that more Chinese cities will establish air connections with Nepal in the near future, further bolstering bilateral ties and tourism exchanges between the two countries.
The enduring cultural and people-to-people bonds between India and Nepal stand as a cornerstone of their relationship, a dimension that China cannot easily supplant. Nevertheless, China has been increasingly active in Nepal, organizing numerous social and cultural events through China-funded NGOs, media outlets, and study centers. These initiatives aim to promote Chinese language and culture, fostering closer people-to-people connections. Similarly, akin to India, China has adopted a proactive approach in engaging with Nepal’s political parties. Media reports suggest that China played a significant role in facilitating the merger of the leftist Communist Party of Nepal-Unified Marxist Leninist and Communist Party of Nepal-Maoist Center, underscoring its growing influence and involvement in Nepal’s political landscape.
India stands as Nepal’s largest trade partner, accounting for 62 percent of Nepal’s total trade in the fiscal year 2019/20, while China follows as the second-largest, contributing to 14 percent of Nepal’s trade. In terms of bilateral development assistance, India ranked third by disbursement in the fiscal year 2019/20, preceded by the United States and the United Kingdom, while China held the fourth position. Moreover, there exists a competitive dynamic between China and India regarding investment in Nepal, with overlapping sectors of interest.
To bolster their economic engagement and enhance trade volumes, China and Nepal have established six trade points along their shared border. Additionally, through the Agreement on Transit and Transport inked in April 2019, China has granted Nepal access to four Chinese seaports located in Tianjin, Shenzhen, Lianyungang, and Zhanjiang, as well as three land ports in Lanzhou, Lhasa, and Shigatse, facilitating third-country imports for Nepal. These initiatives signify efforts by both nations to deepen their economic ties and foster mutually beneficial cooperation.
The competition between China and India extends into the security sector as well, shaping the strategic ties and military-to-military relations between Nepal and India. These relations are deeply rooted in history, with Nepalese Gurkhas having participated in major operations undertaken by the Indian Army since India’s independence. The Chief of Army Staff (CoAS) of the Nepal Army holds an honorary position as CoAS of the Indian Army, and vice versa. India has been a longstanding provider of military aid to Nepal, dating back to 1962, with approximately 70 percent of this assistance provided in the form of grants. Additionally, India has supported the construction of the National Police Academy and various other military infrastructure and training systems in Nepal.
Similarly, China’s assistance to Nepal, particularly in the security sector, has increased significantly since February 2001. This assistance aims to curb ‘pro-Tibetan’ activities in Nepal, as Nepal hosts the second-largest population of Tibetan refugees globally, a matter of concern for China. Notably, in October 2018, China augmented its military support to Nepal by 50 percent to enhance the Nepal Army’s disaster management capabilities and bolster Nepal’s United Nations Peacekeeping Missions. Moreover, in response to joint military exercises between India and Nepal, China initiated the ‘Sagarmatha Friendship’ joint military exercise, marking a significant milestone in bilateral defense cooperation. This move represented a departure from Nepal’s past military exercises with India and the US exclusively.
Conclusion
Nepal is poised to experience heightened geopolitical competition between India and China in the foreseeable future, especially with the growing interest of other global powers such as the United States. The US’s ambition to bolster its influence in the Indo-Pacific region through initiatives like the Indo-Pacific Strategy underscores its expanding role, with implications for countries like Nepal.
The resurgence of the United States’ engagement in Nepal’s altered geopolitical terrain has intensified the rivalry between China and India. China perceives India’s efforts to involve the US in South Asia, including Nepal, as a strategy to counter its influence. This perception adds another layer of complexity to the strategic dynamics in the region, accentuating the competition among major powers for influence and leverage in Nepal and beyond.
About the Author: Dr. Pramod Jaiswal is a Research Director at Nepal Institute for International Coopera- tion and Engagement. He has been a regular and visiting faculty at different universities of Nepal and China.
He is Visiting Fellow at Sandia National Lab- oratories, Cooperative Monitoring Center, Al- buquerque, New Mexico, US; Senior Fellow at the Institute of Peace and Conflict Studies, New Delhi and Researcher at South Asian Studies, In- stitute of Asian Studies, Chulalongkorn Univer- sity, Bangkok.