​Neighbours first: On India-Nepal ties

I n an exchange of early messages, Prime Minister Narendra Modi and Nepal’s newly- sworn-in Prime Minister Balendra “Balen” Shah said they look forward to “working closely” to take forward bilateral ties. Delhi and Kathmandu are prepared to begin a new chapter in relations, united by familial bonds, a shared culture, open borders, and intertwined politics. Land-locked Nepal has depended on trade and transit through India, with India’s plans for an energy grid in the region an important channel for Nepal’s hydropower exports and revenues. Like many former leaders of Nepal, Mr. Shah studied in India. Familiarity aside, it would be a mistake to assume that his ascension will chart a well-worn and predictable course between the two countries. At 35, he is Nepal’s first Madhesi leader, and upturns the old dominance of the Brahmin-Chettri Pahadi elite. New Delhi must have a greater understanding of the priorities of this new Gen-Z movement that brought down the K.P. Sharma Oli government in 2025. This is a new leadership that has not inherited the old foreign policy understandings of the past generations of leaders that came through the panchayati movement, Congress and Communist parties, or the Maoist movement that overthrew the monarchy. In that sense, the Shah government’s foreign policy, including its ties with China and the U.S., as well as the overarching relationship with India, is yet to be formalised. In the past decade, India has increased its development assistance to Nepal, but it also strained its ties over the constitution, the long blockade on border trade, and territorial issues. As Mayor of Kathmandu, Mr. Shah was known for his overt nationalism, and rejection of the “hegemony” of India and other powers, while his use of a map of “Greater Nepal” had been read with some concern in New Delhi.

The Modi government should tread lightly, and positively, as the Shah government finds its feet, but offer India’s full support in dealing with Nepal’s immediate challenges. Among those are the impacts of the war in West Asia where Nepal will need help with fuel and fertilizer imports. Approximately 14% of Nepal’s population (about 3.5 million) work abroad, and the country is dependent on remittances and tourism revenues. New Delhi could also reconsider requests from previous Nepali governments to allow overflight for new Nepali airports, reduce restrictions on purchasing Nepali power produced with third-country assistance and to update the bilateral friendship treaty. Differences delayed New Delhi’s invitation in 2024 to Mr. Oli, upon his election — he eventually visited Beijing first. It is time to quickly invite Mr. Shah to visit Delhi at the earliest, and for Delhi and Kathmandu to move forward, putting “Neighbours first” in South Asia.