Nepal and India have been living as close neighbours of South Asia since the existence of the two countries. The relationship between the two countries is bound by history, geography, economic cooperation, socio-cultural ties and people-to-people relations. The bilateral relationship, which is marked by mutual trust, good will and cooperation, has been moving forward with the increased interactions and close cooperation between the two countries with the passage of time.
A number of mechanisms exist between Nepal and India for bilateral cooperation covering various aspects of bilateral relations ranging from trade and economic cooperation to security and water resources. Post the visits from Nepal to India at the level of Prime Minister after Nepal got transformed into a democratic republican country in 2008, both the countries agreed to reactivate the bilateral mechanisms. Consequently, interactions have taken place on cooperation related to security, water resources, trade and commerce, customs, etc. at different levels. There has been a renewed interest in both the sides to make the bilateral relationship more interactive and fruitful.
India is Nepal’s important trade partner. Trade relations between the two countries are growing year after year, though it is in India’s favour. India is also a major source country of Nepal’s foreign direct investment. A good number of joint venture projects with Indian investment are in operation in Nepal. Due to geographical proximity, socio-cultural linkages and increased interactions between the two peoples, trade, commerce and economic cooperation have been expanding along with the growth in other aspects of bilateral relationship.
On the economic side, India has cooperated with Nepal in the construction of various projects, especially in the sectors of infrastructure, health, education and other technical fields. There are other projects that benefit both the countries. Some projects, including relating to cross-border connectivity, are in the pipeline. Development of infrastructure, communication and technological capabilities of Nepal facilitates mutual gains through commercial, economic and technical cooperation between the two countries.
India’s sustained economic growth and development can be an energizing factor for the economy of other neighbouring countries like Nepal. Having been closely interconnected economic ties, the growing Indian economy can provide space for stimulus to Nepal’s drive towards faster economic growth. It would also open up broad areas of cooperation for the two countries.