Context: The recent decision by Nepal’s cabinet to feature a map on its Rs100 currency note, delineating areas administered by India in Uttarakhand as part of its territory, has sparked renewed tensions in the ongoing territorial dispute between the two countries.

• This analysis delves into the historical background, genesis of the issue, diplomatic efforts, and current frictions in bilateral ties surrounding the Nepal-India territorial dispute.

Background

• The territorial dispute is about a 372-sq-km area that includes Limpiyadhura, Lipulekh, and Kalapani at the India-Nepal-China trijunction in Uttarakhand’s Pithoragarh district.

• In 2019, Lipulekh, Kalapani, and Limpiyadhura had been included in India’s map. 

• Tensions between both the nations emerged after Nepal issued a political map in 2020, which included the same territories.

Controversy over Nepal-India border

• Nepal has asserted its claim based on the Sugauli Treaty of 1816, signed between the East India Company and Guru Gajraj Mishra, which resulted in Nepal ceding territory to the East India Company.

• Under the Treaty, the Kali River was marked as Nepal’s western boundary with India.

• According to Nepal the east of the Kali river should begin at the source of the river which is in the mountains near Limpiyadhura.

• While India claims the border begins at Kalapani, where the river begins. 

• The Kali River has changed direction over the years, causing confusion in defining the border.

• The dispute intensified after the Indo-China war in 1962, with conflicting claims and historical cartographic evidence.

Susta Border dispute

• Susta is a disputed territory between Nepal and India. It is administered by India as part of West Champaran district of Bihar.

• Nepal claims the area a part of West Nawalparasi District under Susta rural municipality, alleging that over 14,860 hectares of Nepali land in Susta has been encroached upon by India.

India and Nepal Relations

• Nepal is important for India in the context of its overall strategic interests in the region. There is an age-old ‘roti beti’ relationship, which refers to cross-border marriages between people of the two countries.

• Shared Border: The country shares a border of over 1,850 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 and access to the sea is through India.

• The India-Nepal Treaty of Peace and Friendship: Signed in 1950, it forms the bedrock of the special relations that exist between India and Nepal. 

• Nepalese citizens avail facilities and opportunities on par with Indian citizens in accordance with the provisions of the Treaty.  

• Nearly 8 million Nepalese citizens live and work in India.

• Defense Cooperation: India has been assisting the Nepal Army (NA) in its modernisation by supplying equipment and providing training. 

• The ‘Indo-Nepal Battalion-level Joint Military Exercise SURYA KIRAN’ is conducted alternately in India and in Nepal.  

• The Gorkha regiments of the Indian Army are raised partly by recruitment from hill districts of Nepal. 

• Connectivity and Development Partnership: India has been assisting Nepal in development of border infrastructure through upgradation of 10 roads in the Terai area; development of cross-border rail links at Jogbani-Biratnagar, Jaynagar-Bardibas; and establishment of Integrated Check Posts at Birgunj, Biratnagar, Bhairahawa, and Nepalgunj. 

• Energy Cooperation: India and Nepal have had a Power Exchange Agreement since 1971 for meeting the power requirements in the border areas of the two countries.

• An Agreement on ‘Electric Power Trade, Cross-border Transmission Interconnection and Grid Connectivity’ between India and Nepal was signed in 2014. 

• Trade and Economic: India remains Nepal’s largest trade partner, with bilateral trade crossing US$ 7 billion in FY 2019-20. 

• India’s export to Nepal has grown over 8 times in the past 10 years while exports from Nepal have almost doubled. 

• Nepal is India’s 11th largest export destination, up from 28th position in 2014. 

• In FY 2021-22, it constituted 2.34% of India’s exports. The exports from India constitute almost 22% of Nepal’s GDP. 

• Mahakali River bridge: Recently, a MoU was signed between India and Nepal for the  construction of a motorable bridge across the Mahakali River connecting Dharchula  (India) with Darchula (Nepal), under Indian grant assistance.

• Operation Maitri & post-earthquake reconstruction assistance: In the wake of the 2015 earthquake in Nepal, GoI was the first responder and carried out its largest disaster relief operation abroad (Operation Maitri).

Issues between India & Nepal

• Treaty of Peace and Friendship of 1950: On 31 July 1950, India and Nepal signed a treaty of peace and friendship in an effort to “strengthen and develop these ties and to perpetuate peace between the two countries”.

• As time passed, Nepal believed the treaty was “incompatible with national self-respect”.

• Madhesi Issue: India’s entrenched interests in Nepal suffered a setback in 2015, when a blockade at the borders ensued following protests by Madhesis and some other ethnic groups against marginalization of their interests in the newly-passed Nepalese Constitution.

• Chinese Interference: China’s involvement in Nepal’s infrastructure projects through its Belt and Road Initiative poses a threat to Nepal’s role as a buffer state between India and China.

• Security challenges with Porous borders: The porous and poorly guarded border between India and Nepal allows terrorist groups to exploit it for smuggling weapons, ammunition, trained members and fake currency, which poses a significant security risk to India.

What is the Significance of Nepal for India?

• Nepal shares border with 5 Indian states– Uttarakhand, Uttar Pradesh, West Bengal, Sikkim and Bihar. Hence an important point of cultural and economic exchange.

The importance for India can be studied from two different angles:

• Their strategic importance for India’s national security.

• Their place in India’s role perception in international politics.

• Nepal is right in the middle of India’s ‘Himalayan frontiers’, and along with Bhutan, it acts as a northern ‘borderland’ flanks and acts as buffer states against any possible aggression from China.

• Rivers originating in Nepal feed the perennial river systems of India in terms of ecology and hydropower potential.

• Many Hindu and Buddhist religious sites are in Nepal making it an important pilgrim site for a large number of Indians.

Road Ahead

• India-Nepal has a long history of cultural connections. Nepal is important for India’s economic and strategic interests. Having a friendly and supportive Nepal will serve as a buffer between India and an assertive China.

• To manage border disputes both parties should explore realistic solutions. The successful boundary dispute resolution between India and Bangladesh can serve as a model for the way forward.