India accounts for nearly two-thirds of Nepal’s trade and is the sole supplier of fuel. But this scenario is rapidly changing

Chinese President Xi Jinping literally put the famous Chinese proverb into action, “The journey of a thousand miles begins with one step”, when he became the first Chinese head of state to visit Nepal last week after a gap of 23 years.

This was reason enough for India to sit up and take notice of how China’s long-standing plan of ‘encircling India’ is coming to fruition slowly and surely under President Xi.

But in its zeal to have an “informal” dialogue with Beijing, the outcome of which has been so far nothing, New Delhi lost an opportune moment to apprise Xi Jinping of its concerns on the growing Chinese influence in India’s immediate neighbourhood.

In a span of seven days, the Chinese president had formal dialogues with two of India’s immediate neighbours – Pakistan and Nepal – signing agreements and communique. In contrast, Xi Jinping held just an informal dialogue with Narendra Modi, which too was shrouded in secrecy.

Bid To End India’s Overarching Influence

The biggest takeaway from Xi’s visit to Nepal, which India has tried to downplay, is China’s assertion that it will safeguard the Himalayan nation’s “independence, sovereignty and territorial integrity” and that Nepal should choose its social system and development “independently”.

This was a clear hint by the Chinese side at India’s growing interference in Nepal’s sovereign matters, something that Nepal has also firmly stated, especially under Prime Minister K.P.S. Oli. Nepal has made it clear that it wants to free itself from India’s overarching influence in its domestic matters. However, there are still some challenges in the China-Nepal relationship, like the delay in signing the extradition treaty that has reportedly upset Xi.

Nepal, nevertheless, continues to depend on India economically. India accounts for nearly two-thirds of Nepal’s trade and is the sole supplier of fuel. But this scenario is rapidly changing.

Border Blockade A Foreign Policy Disaster

If not anything, Xi’s visit was Beijing’s answer to the 2015 border blockade for which Nepal blamed India. Although India denies Nepal government’s accusations that the border blockade was planned by New Delhi, it is a fact that the Modi government was upset with Nepal’s then-newly promulgated constitution and had even suggested that changes be made to it so as to satisfy the Madhesis and Janjatis.

The way India handled the 2015 border blockade was probably the Modi government’s biggest foreign policy disaster in its first tenure. During the unprecedented blockade, shipments of fuel, food, medicines and other essential items from India to Nepal were stopped.

The border blockade also happened at a time when Nepal was just getting back on its feet after a devastating earthquake and needed India’s support more than ever.

Relationship between India and Nepal has always been special. Both share a working border and people from both countries travel for work and tourism, seamlessly.

However, after a prolonged Maoist revolution and overthrowing of the monarchy, when Nepal finally rolled out its own constitution in September 2015, New Delhi was anything but happy.

Nepal Boxed In A ‘Neighbourhood First’ Corner

The fight between India and China over Nepal is not new but when the Modi government came to power, it announced that ‘Neighbourhood First’ will be the cornerstone of India’s foreign policy. PM Narendra Modi even made a state visit to Nepal in August 2014 and gave a speech at the country’s Constituent Assembly. “My visit is focused on development and a new beginning between the two countries,” Modi had said.

In 2018, when Modi went for his third bilateral visit to Nepal, the objective, not surprisingly, remained the same. It was all about bringing substance and seriousness to the relationship. It was all about words and there was no visible signalling from Nepal that it would consider India’s sensitivities.

In fact, the big jolt for India came when Nepal joined China’s mega infrastructure plan, the Belt and Road Initiative (BRI), even as New Delhi dragged its feet on the regional connectivity project BBIN (Bangladesh-Bhutan-India-Nepal) Motor Vehicles Agreement (MVA) after Thimpu rejected it.

A landlocked nation, Nepal was under considerable pressure from India to not join the BRI. But contrarily, Nepal was never given the leeway by India to stand on its own feet even as New Delhi continued to harvest its influence in Nepal’s internal socio-political theatre.

China is now doing all that. It is building roads and ports in Nepal and has given the country access to its seaports in Tianjin, Shenzhen, Lianyungang and Zhanjiang, as well as dry ports in Lanzhou, Lhasa and Xigatse, under a trade and transit agreement.

Very soon, Kathmandu will be connected to the Chinese border in the north while a separate rail link will bring Nepal’s capital and Tibet much closer.

In 2011, China had announced a $3 billion project to transform Lumbini, Gautam Buddha’s birthplace, into a major pilgrimage and tourist centre in Nepal. It seems, so far, a stupa has been built while several other projects to develop Lumbini are underway.

Nepal is also upset with India over its lack of enthusiasm to move on regional initiatives like the South Asia Association for Regional Cooperation (SAARC).

Growing China-Nepal Defence Ties

Nepal is increasingly looking at China for greater defence cooperation. In June this year, Nepal’s Army chief Purna Chandra Thapa visited China where he reiterated Kathmandu’s adherence to the “one China” policy.

Strategically, India is losing the ground on Nepal and ceding the space to China. It has not been able to complete the projects in Nepal on time, neither has it been able to enhance its security and defence relationship with the neighbour. New Delhi knows that a stable Nepal is in India’s interest, given the porous border the two countries share.