INDIA – NEPAL RELATIONS
Posted by publishedforscholar on December 18, 2006
INDIA – NEPAL RELATIONS
Compiled by: Kriti (BBA-II, IMS, Bikaner)
Ties with Nepal have consistently been close and reflect the historical,
geographical, cultural and linguistic links between the two nations. The signing of
the India-Nepal Treaty of Peace and Friendship in 1950 established the framework
for the unique ties between the two countries. The treaty, which provides for
‘national’ treatment for each others’ citizens in matters of entry, movement and
business in their respective territories, is a reflection of the unique relationship.
India has enjoyed good relations with successive governments in Nepal since the
restoration of democracy in April 1990. Regular high level visits between the
countries also highlight the closeness of the relationship of the two countries. The
following visits have taken place in the last four years:
From India to Nepal
Minister for Human Resources Development, Dr. Murli Manohar Joshi attended a
high level UNICEF meeting from May 22-24, 2001.
Minister of External Affairs, Shri Jaswant Singh paid a “Goodwill” visit to Nepal from
August 17-19, 2001.
Prime Minister, Shri Atal Bihari Vajpayee attended the XII SAARC Summit in
Minister for External Affairs, Shri Yashwant Sinha, visited Nepal in August 2002 to
attend the SAARC Ministerial level meeting. The meeting was followed by India-
Nepal bilateral talks.
Minister of Agriculture & Cooperative, Shri Ajit Singh attended the 6th Cooperative
Ministers Conference (August 3-7, 2002).
Chief of Army Staff, General N.C. Vij visited Nepal at the invitation of General P.J.
Thapa, COAS of Nepal from April 22-25, 2003. During the visit he was conferred
the honorary rank of General of the RNA by His Majesty the King of Nepal.
Foreign Secretary, Shri Kanwal Sibal visited Kathmandu in July 2003 to attend
SAARC standing committee meeting. The meeting was followed by India – Nepal
FS level bilateral talks.
Minister for Disinvestments, Communication and Information Technology, Shri
Arun Shourie visited Nepal on 10-11 September, 2003 to inaugurate United
Telecom Ltd., which is a joint venture between MTNL, VSNL, TCIL and Nepal
Ventures Private Ltd.; the company offers WLL telephone service.
Foreign Secretary, Shri Shashank visited Kathmandu on 22-25 February, 2004 for
FS Level bilateral talks. The Motor Vehicles Agreement was initialled during the
Minister of External Affairs, Shri K. Natwar Singh visited Kathmandu on 4-5 June,
2004. During the visit he had an audience with the King and called on the Prime
Minister, Sher Bahadur Deuba.
Minister of State for External Affairs Rao Inderjit Singh (MOS-RIS) visited Nepal on
29 Nov – 1st Dec, 2004 to attend the inaugural function of the 2nd World Buddhist
Summit held in Lumbini on 1st December 2004. Prime Minister Sher Bahadur Deuba
inaugurated the Lumbini Museum in presence of MOS-RIS.
From Nepal to India
Foreign Secretary, Narayan S. Thapa visited India for the Foreign Secretaries Level
bilateral talks (January 29-February 1, 2001).
Prime Minister Sher Bahadur Deuba paid an official visit to India from March 20-24,
The King paid a State visit to India from June 23-28, 2002. This was the first to a
foreign county by King Gyanendra after he became the King of Nepal in June 2001.
King Gyanendra paid an official visit to India from March 19-30, 2003. Though the
visit was to attend the 50th Anniversary of the Ascension of Kanchi Mathadipath,
King visited Delhi and had meetings with PM, DPM, EAM and Defence Minister.
Minister for Information and Communication & Health, Kamal Thapa attended the
South East Asian Regional Conference of WHO on September 7-9, 2003 in New
Minister for Information and Communication & Health, Kamal Thapa attended the
SAARC Information Ministers’ meeting on November 11-12, 2003 and SAARC
Health Minister’s Meeting from November 14-15, 2003 in New Delhi.
Prime Minister Surya Bahadur Thapa visited India from November 23-25, 2003 for
customary consultation at the end of term of Nepal as the SAARC Chairman.
Minister for Information and Communication & Health, Kamal Thapa visited India to
attend 2nd Asian IT Ministers Summit held in Hyderabad from January 12-13, 2004.
Crown Prince Paras paid an official visit to India from January 18- February 1,
Prime Minister Sher Bahadur Deuba paid an official visit to India from Sept 8-12 ,
Chief of the Army Staff (COAS) General Pyar Jung Thapa visited India on 28-30
November. On 29/11, he participated in the passing-out ceremony of cadets of the
National Defense Academy (NDA).
Minister for Foreign Affairs, Ramesh Nath Pandey visited India on 7-9 March, 2005.
Economic Cooperation between India and Nepal:
Objective: The objective of the Indian Co-operation Programme has been to
supplement the efforts of His Majesty’s Government of Nepal (HMGN) in the
development of Nepal’s economy. These efforts manifest themselves in enhanced
co-operation between the people of the two countries. The projects implemented
under the cooperation programme are mutually beneficial, encourage increased
interaction at all levels between India & Nepal and strengthen bonds of friendship.
Background: Indian assistance for the economic development of Nepal has
witnessed significant growth over the years. It extends to various sectors such as
infrastructure, water resources, education, health and sanitation, etc. When Nepal
started on the road to planned economic progress in the year 1951, India came
forward to share its experience and to cooperate with Nepal. Projects such as the
Tribhuvan Airport, and the Tribhuvan Raj Path, the first road to link Kathmandu
Valley with the outside world, were taken up, and the services of advisers were
made available in various fields. Some landmark projects of India-Nepal
cooperation are most sections of the East-West Highway, Bir Hospital, Trishuli and
Devighat irrigation projects, the General Post Office and Library at Tribhuvan
University. Apart from extending cooperation in the development of physical
infrastructure India also imparted training in key sectors of agriculture, irrigation,
civil engineering, forestry, telecommunications, etc.
In January 2002 India committed IRs.50 crores (Nepali Rupees 800 million), for
executing small projects in the health, education and community development
sectors in Nepal. To facilitate implementation of small projects an MOU was signed
between the two governments on November 7, 2003. Under the Agreement, small
projects of value not exceeding NRs.3.00 crores are considered at the request of
private individuals, organizations, NGOs and autonomous bodies linked to HMGN. A
fast track mechanism has been evolved for implementing such projects. The
implementation is through local bodies of HMGN. The areas of focus under the
scheme are Public Health, Education and Community Development. The Agreement
provides for GOI to implement projects of the value of NRs. 800 million over 2
years. The project is executed under the supervision of local bodies of HMGN.
The Economic Co-operation Programme of Government of India has proved to be
the bedrock of goodwill between two close neighbours.
India-Nepal economic cooperation is progressing well and is likely to be stepped up
significantly in the coming years. Presently, more than 90 projects, big and small,
involving an outlay of IRs.800 Crores (NRs.12.8 billion) are being implemented or
are under consideration.
Government of India Aided Projects in Nepal:
A. Big Projects
1. Assistance to the Salt Trading Corporation Ltd. to strengthen the Goiter
control programme in Nepal.
2. Establishment of Eye Hospital in Kapilbastu District.
3. Bir Hospital Expansion Project: A 200-bed Emergency & Trauma Centre, to
be set up adjacent to the Bir Hospital, Kathmandu.
4. B.P. Koirala Institute of Health Sciences, Dharan : Extension of GOI
technical assistance upto the year 2009.
1. Setting up of a Polytechnic in District Morang.
2. Establishment of a Polytechnic at Heatuda, District Makawanpur.
3. Establishment of Nepal-Bharat Maitri Vidyalaya, Pokhara.
4. Assistance to the Bhootpoorva Sainik Kalyankari Samiti, Surkhet for
establishing and running a Secondary School at Birendranagar, Surkhet.
5. Establishment of an Education and Research Centre at Pashupati Area,
Other Infrastructure Projects
1. Upgradation of Road Infrastructure in the Terai Districts of Nepal.
2. Mahendranagar-Tanakpur Link Road Project.
3. Improvement of physical infrastructure at selected border checkposts on
1. Development of farmer-managed deep tube-well irrigation system in the
Terai area of Eastern Development Region of Nepal
Hydro Power & Rural Electrification
1. Rural electrification of two villages Bharse, Gulmi and Katunje, Dhading,
using Solar Photovoltaic Cell Technology.
B. Small Projects
1. Assistance to Nepal Netra Jyoti Sangh, Kathmandu, in carrying out 10,000
cataract operations through Eye Care Camps.
2. Gifting of ambulances to non-profit charitable organizations in Nepal.
1. Establishment of Library at the Triyuga Janata Campus, Gaighat, Udayapur.
2. Construction of School building for the Shri Durga Janata Madhyamik
Vidyalaya, Babarganj, Sarlahi.
3. Construction of building and establishment of Library at the Gauriganj
4. Construction of Girls’ Hostel with Boundary wall in Panchthar Multiple
Campus, Phidim, Mechi.
5. Construction of school buildings for the Saraswati Madhyamik Vidyalaya,
Hajaria, Sarlahi and for the Shree Panch Mahendra Janata Madhyamik
Vidyalaya, Karmaiya, Sarlahi.
6. Construction of Auditorium at the Drabya Shah Multiple Campus, Gorkha.
7. Construction of Classroom block for the Rajeshwor Nidhi High School,
8. Construction of Building and Boundary wall of Shree Saraswati Higher
Secondary School, Pipra Bhalohia, Rautahat.
9. Construction of School Building and Compound Wall and procurement of
necessary equipment, furniture and library books for the Shree Ramsakhi
Mohit Singh Janata Lower Secondary School, Balara, Sarlahi.
10. Construction of building of the Shree Janata Secondary School, Garahiya
11. Construction of classroom block with teachers rooms and library hall and
provision of furniture for the Mahendra Multiple Campus, Dharan, District
12. Construction of Classroom block and upgradation of Physical Infrastructure
of the Pakali Madhyamik Vidyalaya, Pakali Bazar, Tharuhat, Sunsari.
13. Construction of School building and boundary wall of Shree Adarsh
Secondary School, Parasi, Nawalparasi.
14. Construction of the school building for the Shree Sharda Madhyamik
Vidyalaya, Khanar, Sunsari.
15. Construction of Classroom block, hostel and boundary wall of the K.S.H.S.B.
Higher Secondary School, Khajuri Mahuwa ,Dhanusha.
16. Construction of School building with boundary wall of Shree Secondary
School, Nepalganj-Dhamboji, Banke.
17. Construction of School building Science laboratory, Library, boundary wall
and provision of furniture of the Tribhuvan Higher Secondary School,
18. Construction of school building and provision of furniture of the Shree
Pragati Secondary School, Swati, Nawalparasi.
19. Construction of Girl’s hostel with dining hall, boundary wall and provision of
furniture of the Shree Mahendra Bindeshwari Multiple Campus, Rajbiraj,
20. Construction of school building with compound wall at Ratauli, Mahottari.
21. Construction of school building hostel and provision of furniture, computer
and books for library of Shree Janahit Secondary School, Jomsom, District
22. Construction of school building, hostel, Monks quarters, teachers’ quarters
and provision of furniture for Shree Mahakaruna Sakyapa Vidyalaya,
Lomanthang-8, Chhoedhe Gonpa, Upper Mustang, Distt. Mustang.
23. Construction of school building and other related infrastructure for the
Shree Janata Primary School, Belhi, Chapena (VDC), Saptari.
24. Construction of building of the Pashupati Shiksha Mandir, Ranitalaw,
25. Construction of building of Janakpur Nursing Campus, Janakpurdham.
26. Construction of school building development of play ground and lawn,
drainage system & provision of furniture for Shree Sankat Mochan Dev
Sharan Ramrati Secondary School, Janakpurdham, Dhanusha.
27. Construction of first floor of the building of Shree Mahendra Library,
28. Gifting of Buses to Schools/Colleges
Hydro Power & Rural Electrification Sector
1. Electrification of four VDCs in Sarlahi District from NEA grid.
Other Infrastructure Projects
1. Construction of a gravel road in (Gandhi Manmohan Marg) in Morang
2. Drinking Water Project in Triyuga Municipality of Udayapur District.
3. Rehabilitation of Kunauli-Fatehpur Road in Rajbiraj.
4. Lumbini Museum Project.
5. Museum, Library-cum-Documentation Centre at the Institute of Forestry
6. Project for improvement of Storm Water Drainage for Lazimpat-
Samakhushi-Ranibari areas of Kathmandu Metropolitan City.
7. Setting up of Digital Time Data Service (Teleclock Service) via telephone
network in Nepal.
1. Welfare Schemes for Ex-Servicemen
(a) Medicine Pack Schemes (MPS).
(b) Drinking Water Project (DWP)
2. Science and Technology related projects:
(a) Setting up of the INSAT Receiving Station at the Department of
Hydrology and Meteorology (DHM) in Kathmandu.
(b) Visit of experts to India to study technology transfer issues and rural
Commercial and Economic Relations:
India is Nepal’s largest trade partner and source of foreign investment. India is
also the major transit providing country for Nepal.
Trends in trade and investment:
Bilateral trade was US $ 1.33 billion in Nepalese fiscal year 2002-03 (fiscal year
begins on July 16). Nepal’s import from India amounted to US $ 971 million and
exports to India aggregated US $ 362 million. Nepal had a trade deficit of US $
609 million with India. In the Nepalese fiscal year 2003-04, Nepal’s total trade
with India was about US $ 1.52 billion Nepal’s exports to India were about US $
425 million and imports from India were about US $ 1.1 billion.
In fiscal 2003-04, Nepal’s exports to India increased by about 18% against a
decline of 8.6% in its exports to rest of the world; its imports from India grew at
15% against a slower growth of 7.6% from rest of the world. Nepal’s external
trade continues to be driven by growth in trade with India in fiscal 2004-05. In the
first six months of the current fiscal year (till 15 January 2005), year-on-year
growth in Nepal’s exports to India was 24% and 12.6% in imports from India. On
the other hand, there was a decline of 19% in exports to, and of 13% in imports
from, rest of the world.
There has been strong growth in bilateral trade since the revised Trade Treaty was
signed in 1996. Since the revision of India-Nepal trade treaty in 1996, Nepal’s
exports to India have grown over 5 times and total bilateral trade has grown over
3 times. Over 85% of increase in Nepal’s total exports worldwide, and about 90%
of total imports, since 1996 has been on account of India.
This period has also seen an increase in India’s share in Nepal’s foreign trade.
During the early 1970s, India absorbed almost all of Nepal’s exports and accounted
for nearly 90% of Nepal’s imports. However, India’s share in Nepal’s foreign trade
drop below 30% by mid-1990s. Since the 1996 Treaty, India’s share in Nepal’s
export has grown from 18.5% in 1995-96 to 65%% by January 2005. India’s
share in Nepal’s imports has also reached nearly 63% by January 2005, from 32.8
% in 1995-96. Today, India accounts for nearly two-third of Nepal’s foreign
Nepal’s main imports from India are petroleum products (26%), motor vehicles
and spare parts (7%), medicines (6%), cotton textiles (4.5%), machinery and
spares (4.5%), cement, and chemicals. Nepal’s export basket to India mainly
comprises vanaspati (14.1%), and range of other semi-processed and processed
food products. Other major exports include toiletries, twines, pulses, sacks,
polyester yarn, cardamoms, readymade garments, etc. Steel strips and sheets,
processed from raw material imported from India, are also emerging as major
exports from Nepal to India.
Indian firms are the biggest investors in Nepal, accounting for 35% of total
approved foreign direct investment of IR 14.5 billion (a little over US $ 300 million)
and also for 35% of 792 operating ventures with foreign investment. The United
States is the second largest investor with 17% share in cumulative investments
and China is third with 11% share.
Indian ventures in Nepal are found in manufacturing, services (banking and
insurance) and tourism industries. Some large Indian investors include Dabur, ITC
(for cigarettes), Hindustan Lever, SBI, PNB, LIC, Oriental Insurance, Asian Paints,
Colgate-Palmolive, etc. In September 2003, a consortium of VSNL, TCIL and
MTNL, together with a Nepali partner, became the first private sector player in the
telecommunication sector in Nepal. The Indian partners have 80% share in the
venture and offer basic telephony service through WLL technology.
Indian joint ventures in Nepal have contributed significantly to increase in Nepal’s
exports to India. Dabur Nepal and Arti Strips, for example, each account for about
10% of Nepal’s exports to India, or about 6% each of Nepal’s global exports. Many
Indian joint ventures were established in Nepal principally to cater to the Indian
Nepal’s transit trade is routed through the port of Kolkatta/Haldia and fifteen
designated transit routes between Kolkatta and India-Nepal border. In addition,
Nepalese trade traffic to Bangladesh also transits through India.
The bilateral framework for trade and transit is provided by the India-Nepal
Treaties of Trade, of Transit, and Agreement for Co-operation to Control
Unauthorised Trade 1991. The Trade Treaty valid for five years was renewed
through an exchange of letters on December 3, 1996 and March 5, 2002. The
current arrangement is valid until March 2007. Under the Treaty of Trade, India
provides, on a non-reciprocal basis, duty free access, without quantitative
restrictions, to the Indian market for all Nepalese-manufactured articles barring a
short negative list (cigarettes, alcohol and cosmetics), subject to the conditions,
since March 2002, that the exports meet the domestic value addition requirement
of 30% and change in HS classification at the four-digit level in the course of
manufacture or processing in Nepal. After the March 2002 revision, annual quotas
have been prescribed for duty-free exports to India for four sensitive items –
vegetable fats (100,000 tonnes) acrylic yarn (10,000 tonnes), copper products
(10,000 tonnes) and zinc oxide (2,500 tonnes).
Bilateral trade takes place generally in Indian rupees, but Nepal’s central bank
maintains a list of items that can be imported from India in dollars. Currently,
there are 41 items on the list. Indian rupee is legal tender in Nepal and is freely
convertible. The exchange rate has been maintained at NRs. 1.6 per Indian rupee.
India and Nepal have also negotiated a bilateral cooperation agreement on
standards between Bureau of Indian Standards and Nepal Bureau of Standards
The India-Nepal Treaty of Transit, renewed every seven years, provides for port
facilities to Nepal at Kolkatta and specifies 15 transit routes between Kolkatta and
the India-Nepal border. As requested by the Nepalese side, a separate Customs
Cell at Haldia has become operational from 16 August 2004. For bilateral trade, 22
entry/exit points are provided along the Indo- Nepal border. The Transit Treaty
was renewed in January 1999. The renewed Treaty contains liberalised procedures
for the transit of Nepalese goods. The Agreement for Cooperation between
India and Nepal to Control Unauthorised Trade was renewed for five years
with effect from 6.3.2002.
The two governments are negotiating a Bilateral Investment Protection and
Promotion Agreement. The two countries already have a double taxation
avoidance agreement since 1987.
India and Nepal signed a Rail Services Agreement in May 2004, to extend cargo
train service to the Inland Container Depot (ICD) at Birgunj in Nepal. ICD has been
constructed with World Bank Assistance of US$ 17 million, while India has
constructed the rail tracks which link the ICD with the Raxaul railway station in
India. The ICD became operational on 16 July 2004. A Container Corporation of
India-led joint venture in Nepal has won the contract to operate the ICD.
A Motor Vehicles Agreement for passenger vehicles, initialled on 23 February
2004 awaits formal signature. The agreement envisages bus services between
India and Nepal on 14 routes through 5 border points on reciprocal basis. 53
buses will operate under this agreement everyday. Individuals travelling to either
country in their personal vehicles would also be able to cross over into the other
country without payment of any charge for the first five days.
In accordance with the provisions of the bilateral Air Services Agreement signed
in 1997, in addition to Indian Airlines and Royal Nepal Airlines, private airlines from
the two countries have recently been designated to provide air services between
the two countries. Jet Airways and Air Sahara from the Indian side and Cosmic Air
from the Nepalese side also operate air services between the two countries.
Government of India is committed to improving cross-border trade related
infrastructure. These include upgrading the four major custom checkpoints at
Birgunj-Raxaul, Biratnagar-Jogbani, Bhairahawa-Sunauli and Nepalgunj-Rupediya
to international standards; building an oil pipeline between Raxaul and
Amlekhgunj, through a joint venture between Indian Oil Corporation and Nepal Oil
Corporation; upgrading approach highways to the border on the Indian side;
upgrading and expanding a road network on the Nepalese side; and, broad gauging
and extending rail links to Nepal.
An Inter-Governmental Committee on Trade, headed by Commerce Secretaries,
meets every year to consider policy, regulatory and infrastructure issues in India-
India – Nepal Co-operation in Water Resources:
Nepal’s rivers flow into India and constitute an important part of the Ganges River
System. They are a major source of irrigation in the Gangetic plains but also of
devastating floods in north Bihar and Uttar Pradesh. Nepal’s enormous hydropower
potential, estimated at 83,000 MW, of which 44,000 MW is considered economically
feasible, could meet India’s rising demand for power and, in the process, transform
Nepal’s economy. Nepal today has less than 600 MW of installed hydropower
Bilateral cooperation is aimed at deriving mutual benefits in the areas of irrigation,
flood control and power generation. However, after a promising start with the Kosi
and Gandak projects between independent India and Nepal, there has been little
progress in bilateral cooperation for harnessing the rivers for hydropower and
irrigation. Although Indian assistance helped create about 20% of Nepal’s irrigation
potential and over 10% of its installed hydropower capacity (through 3 small
projects, besides power from Kosi and Gandak), the transformational potential of
bilateral cooperation has remained unrealised.
Cooperation for flood control and management has also made modest progress. In
addition, the two governments engage on issues relating to cross-border
inundation problems that result from creation of local-level assets in border
regions, such as embankments, diversion schemes, etc.
Institutional structure for cooperation:
The two sides also have wide-ranging dialogue architecture for technical
discussions. The Joint Committee on Water Resources (JCWR), chaired by Water
Resources Secretaries on the two sides, is the apex body for discussing all issues
relating to cooperation in water resources. The two sides also have a Standing
Committee on Inundation Problem (SCIP), a short-term High Level Consultation
Committee (HLTC) for two specific inundation problems, a Standing Committee on
Embankment Construction (SCEC), Standing Committee on Flood Forecasting
(CFF), Committee on Flood Management and Control and a Joint Group of Experts
for Pancheshwar, a Joint Team of Experts on Sapta Kosi-Sun Kosi Project, a Power
Exchange Committee, and a Joint Committee on Kosi and Gandak Projects. The
JCWR, set up as prime ministerial initiative of the two countries in March 2000, had
its first meeting in October 2000 and the second one in October 2004. Other
forums have met at regular intervals.
Major Multipurpose Projects:
There are currently two major multipurpose projects (encompassing power,
irrigation and flood control) on the agenda of the two countries.
(i) Pancheshwar Multipurpose Project: The 1996 Mahakali Treaty between India
and Nepal provides for the implementation of the Pancheshwar Multipurpose
Project. The project, conceived as a peaking power project, will
have 5600 MW of installed capacity and create irrigation potential for
130,000 hectares in Nepal and 240,000 hectares in India. The Detailed
Project Report (DPR), to be prepared jointly by the two countries, has not
been finalised, since certain issues remain pending. The two countries are
pursuing their dialogue through the Joint Group of Experts on Pancheshwar.
(ii) Sapta Kosi-Sun Kosi Multipurpose Project: The project, located in Nepal,
involves a high storage dam on Kosi River; 3000 MW power plant; a
barrage downstream to feed irrigation canals in Nepal and India; a
diversion structure on Sun Kosi River to channelise water through a tunnel
into Kamala River; a small dam on Kamala River with a powerhouse of 50
MW and barrage downstream for irrigation purposes. The project is
designed to provide flood control, power, irrigation and navigational
benefits to both countries. India and Nepal opened the Joint Project Office
for Sapta Kosi-Sun Kosi Investigations in Biratnagar on 16 August
2004 to prepare the joint DPR for the project. Government of India is
providing Rs. 29 crores as grant for the work of the JPO. This project, if
implemented, will provide flood control benefit to India, create power
capacity of 3000 MW and irrigate 1.0 million hectares in India and 0.5
million hectares in Nepal.
Hydropower generation and trading:
There is considerable scope for mutually beneficial cooperation between India and
Nepal in developing small and medium sized hydropower projects in Nepal for
internal use in Nepal or exports to India. Nepal’s hydropower development policy
permits private and foreign investment in generation of hydropower, including for
exports. The Governments of India and Nepal have entered into discussion
regarding two medium sized projects in Nepal: Upper Karnali Hydel Project (300
MW), which is a run-of-the-river project; and Budhi Gandaki Project (600 MW)
which is a storage project.
In what constitutes a significant new development in our policy on bilateral
cooperation with Nepal on water resources, Power Trading Corporation has
signed a Power Purchase Agreement with an Australian company (Snowy
Mountain Engineering Corporation), which is developing a 750 MW West Seti
Hydro Power Project in Nepal. Nepal has several other small and medium sized
project proposals that can be developed by the private sector, including companies
in India. The PTC-SMEC agreement has kindled hope in Nepal of private sector-led
generation and transmission of power for the Indian market.
A Power Trade Agreement was signed in the presence of the two Prime Ministers
in June 1997. This Agreement was to promote private sector participation in the
field of power infrastructure. In addition, power exchange takes place in areas
contiguous to the border between the two countries on the basis of decisions taken
by the Power Exchange Committee. Currently, 150 MW of power is exchanged
between the two countries, with Nepal being a net importer of power. Under the
Mahakali Treaty, India also supplies 70 million KW of power annually free of charge
Flood Forecasting and Control:
There are ongoing discussions between India and Nepal in respect of flood
forecasting and prevention. The two sides are cooperating since 1989 on flood
forecasting and warning through data collection and transmission from 42 sites
along rivers in Nepal. Government of India has provided equipment to Nepal to
collect hydrological and meteorological data from a number of sites in Nepal for the
purpose of flood forecasting. The bilateral Committee on Flood Forecasting, set
up during the October 2000 JCWR meeting, prepared a Comprehensive Flood
Forecasting Master Plan (CFFMP), which was adopted by the JCWR in October
2004. The Committee has now been entrusted with the task of implementing the
plan. Key features of the revised plan includes expansion of the number of stations
from 42 to 47, upgrading and modernisation of five key sites and real time data
transmission from key sites in Nepal.
In October 2004, the JCWR also established a Joint Committee to prepare a longterm
and comprehensive plan on flood management and control. Given the
severity of floods in Nepal and Bihar in recent years, the Joint Committee’s
immediate focus is to identify short-term measures for flood management and
To control floods in north Bihar and adjoining Nepalese territory from four rivers –
Lalbakeya, Bagmati, Kamala and Khando – Government of India has sponsored a
scheme of raising, strengthening and extending the embankments along these
rivers in Bihar and is also providing assistance for constructing embankments along
certain stretches of these rivers in Nepal. Pursued through the Sub Committee
on Embankment Construction (SCEC), the project has been completed on
Lalbakeya river (IRs 2.6 crores), is in progress on Bagmati River ( planned outlay
IRs. 14 crores) and is being planned for the Kamala and Khando rivers.
Cooperation in the Defence sector:
The Indian Army and the Royal Nepalese Army (RNA) share a close relationship.
The Chief of Army Staff of the Indian Army is given the honorary rank of a General
in the RNA and vice versa. Regular high-level exchanges take place between the
two Armies. India has been helping the RNA in its Modernisation Programme by
way of supply of equipment and training. The Gorkha regiment of the Indian Army
is raised partly from recruitments from Nepal. Pensions to over 115,000 Gorkha
soldiers who have retired after serving in the Indian Army are distributed in Nepal.
There are over a dozen District Soldier Boards in Nepal which arrange the
disbursement of pensions and also take up welfare programmes for retraining,
rehabilitating and assisting the ex-Gorkha soldiers and their families. Many Welfare
programmes are also undertaken for the retraining and rehabilitation of the retired
Gorkha soldiers and their families by the Indian Army.
Co-operation in Culture:
The India-Nepal B.P. Koirala Foundation was set up in 1991, with the specific
purpose of fostering educational, cultural, scientific and technical cooperation
between India and Nepal and to promote mutual understanding and cooperation
through a process of wide sharing of knowledge and professional talents in both
academic pursuits and technical specialisation. The Foundation has organised many
events since its formation, both in India and Nepal, in the cultural field.
An Agreement on Cooperation in the Fields of Culture and Sports was concluded
during the visit of PM Sher Bahadur Deuba in September 2004.
India-Nepal Co-operation in Human Resources Development:
India’s contribution to the development of human resources in Nepal has, over the
years, been one of the major facets of Indo-Nepal cooperation. Around 140
scholarships / seats are provided every year by Government of India through the
Embassy of India, Kathmandu to Nepalese nationals for undergoing various courses
at the Ph.D, Masters and Bachelors level in India. These scholarships / seats are
provided for a wide spectrum of studies ranging from engineering, medicine,
agriculture, pharmacology, veterinary sciences, computer application, business
administration, music and fine arts. In addition, with the aim of providing
comprehensive and integrated training to in-service candidates of HMGN / Public
Sector nominees of HMGN, 50 seats are allotted to Nepal under the Technical
Cooperation Scheme (TCS) of the Colombo Plan and 30 seats under the Indian
Technical and Economic Cooperation (ITEC).
Government of India has initiated a number of new scholarships in the last few
years. The Golden Jubilee Scholarship Scheme was implemented for the first time
in 2002-03 under which 50 scholarships are awarded to Nepalese students
undergoing MBBS / BDS, BE/B.Tech and other undergraduate courses in Nepal.
Under the Mahatma Gandhi Scholarship Scheme initiated in 2003-04, 500
scholarships are being provided every year to students of class XI and XII studying
in Nepal. The Dr. Homi J. Bhaba Scholarship Scheme launched in 2004-05,
provides five scholarships for post-graduate studies in Engineering.