India-Nepal Relations - Open Border, Treaty of Peace, and Contemporary Challenges

India-Nepal Relations – Open Border, Treaty of Peace and Friendship (1950), and Contemporary Challenges

India and Nepal share one of South Asia's most unique neighbourhood relationships—deeply people-centric, economically interdependent, and strategically significant. Unlike most international borders, the India–Nepal boundary is traditionally "open", enabling extensive movement, livelihoods, and social ties across both sides. At the same time, the relationship is shaped by formal instruments like the Treaty of Peace and Friendship (1950), and by contemporary realities such as border disputes, security concerns, economic asymmetries, hydropower diplomacy, and growing geopolitical competition in the Himalayas.

1. Why Nepal Matters for India (Strategic and Developmental Context)

1.1 Strategic importance: the Himalayan frontier and regional stability

Nepal occupies a vital geopolitical space in the central Himalayas. For India, a stable and friendly Nepal supports security in the Indo-Gangetic plains and helps prevent strategic vulnerabilities in the Himalayan belt. Because Nepal is a priority partner under India's Neighbourhood First policy, regular high-level exchanges and institutional mechanisms aim to sustain stability, connectivity, and trust.

1.2 Economic interdependence: trade, transit, and livelihoods

Nepal is landlocked, making India its primary transit corridor for third-country trade and everyday goods. This creates a deep economic linkage, with India being Nepal's largest trade partner and investment source. At the same time, the Indian economy benefits from labour migration, services, and people-to-people business ties.

1.3 Water, rivers, and hydropower

Several major rivers flowing from Nepal into India are part of the larger Ganga basin system. This creates shared opportunities (hydropower, irrigation) and shared risks (floods, inundation, landslides), which require technical coordination and trust-based cooperation.

Prelims Angle

• Nepal is landlocked; transit through India is crucial for third-country trade.
• Key frameworks: 1950 Treaty; various mechanisms on trade, transit, border management, power, and water.

Mains Angle

• Explain India–Nepal ties as a people-centric neighbourhood partnership with both opportunities (connectivity, hydropower) and sensitivities (sovereignty, perceptions of interference, border disputes).

2. Treaty of Peace and Friendship (1950): Provisions, Significance, and Debate

2.1 Background and rationale

The Treaty of Peace and Friendship between India and Nepal was signed in Kathmandu on 31 July 1950. It sought to institutionalise an already close civilisational relationship and provide a framework for peace, cooperation, and special reciprocal privileges.

2.2 Key provisions (exam-focused)

For UPSC, the most frequently tested aspects are: sovereignty and mutual respect, consultation on serious external frictions, and reciprocal privileges/national treatment for citizens.

2.3 Why the Treaty is debated today

In Nepal's domestic discourse, the treaty is periodically criticised as being "outdated" or not fully reflecting contemporary equality and sovereignty sensitivities—especially regarding security-related expectations and the broader "special relationship" framework. For India, the treaty is often seen as enabling deep integration and stability. In exam answers, present this as a perception and trust issue rather than as a purely legal dispute.

Prelims Angle

• Year and place: 31 July 1950, Kathmandu.
• Most testable clauses: Article 6 (national treatment) and Article 7 (reciprocal privileges).

Mains Angle

• Discuss "treaty revision" as a political trust and reciprocity issue and link it to the need for updating institutions without weakening people-to-people ties.

3. The Open Border: Meaning, Benefits, Risks, and Governance

3.1 What does "open border" practically mean?

India and Nepal share a border that is commonly described as open, allowing extensive cross-border movement and social interaction. This is strongly connected to the broader special relationship and reciprocal privileges framework, and requires active coordination to keep movement smooth while managing security and crime risks.

3.2 Why the open border is a strategic asset

• People-to-people ties: family relations, festivals, pilgrimage routes, language and cultural continuity across the Terai belt.
• Economic lifeline: labour mobility, border markets, and service-sector linkages.
• Soft power: everyday social trust strengthens diplomatic space even during political ups-and-downs.

3.3 Risks and governance challenges

The open border can be exploited by criminal networks and smugglers, and it creates administrative challenges in policing, customs, and pandemic response. Key risks include:

3.4 Border management mechanisms (examples)

• JWG on Border Management and coordination between border forces to ensure smooth movement and tackle trans-boundary crime.
• Integrated Check Posts (ICPs) and connectivity upgrades for trade facilitation.

Prelims Angle

• Border length: ~1,751 km.
• Link open border with Treaty provisions: Article 7 (movement, residence, trade).

Mains Angle

• Write a balanced answer: open border is a civilisational advantage, but must be supported by modern governance, infrastructure, and coordinated policing.

4. Contemporary Pillars of Cooperation (What is Working Well)

4.1 Political and diplomatic engagement

India and Nepal maintain frequent high-level engagement and multiple institutional mechanisms to manage a broad agenda—from trade and transit to development cooperation, disaster management, and cultural ties.

4.2 Trade, transit, and economic frameworks

Multiple bilateral mechanisms including the Inter-Governmental Committee (IGC) on trade and transit regularly address market access, customs cooperation, and unauthorised trade.

• Trade scale (illustrative recent figures): India–Nepal merchandise trade has remained in the multi-billion USD range in recent financial years, with India as Nepal's largest trade partner.
• Transit: Nepal's third-country trade uses Indian ports and multimodal routes; updated transit arrangements and rail/road links reduce transaction costs.

4.3 Connectivity: rail, road, pipelines, and ICPs

Connectivity has expanded from traditional road links to cross-border railways, petroleum pipelines, and modern border infrastructure. India and Nepal reviewed ongoing cross-border railway projects (including Jaynagar–Bijalpura–Bardibas and Jogbani–Biratnagar) and also discussed SOPs for passenger services and the Raxaul–Kathmandu link, indicating a long-term connectivity vision.

• Petroleum pipeline diplomacy: The Motihari–Amlekhgunj cross-border pipeline (operational since 2019) and plans for extensions/new pipelines are examples of infrastructure-led trust building.
• Integrated Check Posts: Designed to reduce border friction in trade while strengthening enforcement capacity.

4.4 Energy and hydropower: from "potential" to "power diplomacy"

Energy cooperation has become a major win-win domain. A landmark development is the long-term plan to enable export of up to 10,000 MW of power from Nepal to India over the next decade. This strengthens Nepal's revenue potential and supports India's clean energy transition.

Another major step is Nepal exporting electricity to Bangladesh through India's grid (a milestone for regional power trade).

4.5 Digital and financial connectivity

India–Nepal cooperation is also moving into the digital payments space. Official briefings note that Nepal started accepting UPI payments since March 2024 through interoperability arrangements, reflecting deeper everyday economic integration.

4.6 Security and defence cooperation (unique features)

Defence ties include traditions such as honorary ranks for each other's Army Chiefs and regular joint exercises. Importantly, the Indian Army's Gorkha regiments include a large number of Nepali Gorkhas, reflecting an exceptional people-to-people security linkage.

Prelims Angle

• 10,000 MW long-term power trade plan; new 400 kV transmission corridors.
• Cross-border rail projects: Jaynagar–Bijalpura–Bardibas; Jogbani–Biratnagar; Raxaul–Kathmandu (survey/planning).

Mains Angle

• Frame "trade + transit + energy + digital" as a template of positive interdependence that can counter political mistrust.
• Show how hydropower can shift India–Nepal ties from "dependency" to "mutual benefit".

5. Contemporary Challenges: What Strains the Relationship?

5.1 Border disputes and cartographic assertions

Border-related disagreements—especially around areas such as Kalapani, Lipulekh, and Limpiyadhura—periodically create political friction and feed nationalist narratives. Such issues are sensitive because they combine historical claims, security geography, and domestic politics. Recent reporting also indicates continued controversy in public discourse around maps shown in official symbols/currency, showing that the issue remains politically alive.

UPSC note: In answers, avoid taking a polemical tone. Focus on (a) need for expert-level boundary mechanisms, (b) political restraint, and (c) keeping cooperation insulated from episodic controversies.

5.2 Open border governance: security and crime

While open borders are a civilisational advantage, they can also facilitate smuggling, unauthorised trade, narcotics movement, and trafficking if enforcement capacity and intelligence cooperation are weak. This is why institutional coordination between border forces and customs authorities is continuously emphasised in official mechanisms.

5.3 Treaty revision debate and sovereignty sensitivities

Nepal's periodic calls to "review" or "update" the 1950 treaty reflect a broader sovereignty sensitivity in domestic politics. India, meanwhile, values the treaty as a foundation for a stable and integrated relationship. The policy challenge is to modernise arrangements in a way that strengthens equality and transparency without undermining people-to-people advantages.

5.4 Economic asymmetry and perception of dependence

India's dominant economic presence can create perception challenges in Nepal, especially when combined with trade deficits, regulatory frictions, or supply disruptions. For India, the objective is to ensure that interdependence feels fair, predictable, and respectful—otherwise the relationship becomes vulnerable to politicisation.

5.5 2015 Constitution crisis and lingering perceptions

The events of 2015 (Nepal's new constitution, Madhesi concerns, and the perceived "blockade") created lasting trust issues in Nepal's public discourse. While diplomatic relations have moved forward, memory of perceived interference can be activated during political transitions.

5.6 The China factor and geopolitical competition

Nepal seeks diversified external partnerships, including with China, for infrastructure and economic options. For India, the focus is less about "blocking choices" and more about ensuring that Nepal's development and connectivity do not create security vulnerabilities, while offering credible and competitive cooperation.

5.7 Gurkha recruitment and the Agnipath-related friction

A contemporary sensitivity has emerged around recruitment of Nepali Gorkhas into the Indian Army under the Agnipath model, with reports indicating Nepal's concerns about short-term service and post-service security, contributing to a recruitment deadlock. This matters because it touches both livelihood expectations and a historic defence linkage, and it can spill into broader political sentiment if not managed through consultation.

Prelims Angle

• Know key disputed names: Kalapani–Lipulekh–Limpiyadhura (and Susta is also discussed in many analyses).
• Understand why open border is both an asset and a vulnerability (smuggling/trafficking).

Mains Angle

• Frame challenges as: trust deficit + governance gap + geopolitical pressure.
• Use a balanced IR lens: "mutual respect for sovereignty" + "people-first cooperation" + "institutional dispute-resolution".

6. Way Forward: Building a "Modern Open Border" and a Balanced Partnership

6.1 Principles for a stable India–Nepal relationship

• Respect and sensitivity: Act consistently with sovereignty and non-interference principles (both perception and reality matter).
• Reciprocity and transparency: Ensure major agreements are communicated clearly and generate visible local benefits.
• People-first approach: Protect open-border livelihoods while strengthening governance.
• Insulate cooperation from politics: Keep development, disaster relief, and technical cooperation running even during political tensions.

6.2 Policy steps (exam-ready, actionable)

• Treaty modernisation through dialogue: Update implementation practices and reflect contemporary equality while retaining the core advantages of Article 6–7 style privileges.
• Border dispute resolution track: Strengthen expert-level boundary discussions, joint verification of historical records, and "no escalation" political commitments.
• Smart border management (without closing the border): Expand ICPs, improve joint patrolling coordination, share intelligence on trafficking/narcotics networks, and use technology for targeted risk screening.
• Accelerate connectivity with predictability: Time-bound completion of cross-border rail links and clear SOPs for passenger services can create visible goodwill.
• Make hydropower a flagship of mutual benefit: Fast-track transmission corridors and transparent power trade mechanisms so Nepal sees revenue gains and India sees clean energy supply.
• Deepen financial integration responsibly: Strengthen regulated cross-border finance and trade settlement options (including rupee-based mechanisms) to reduce transaction costs for legitimate trade.
• Address Gurkha recruitment concerns through consultation: Create clear bilateral communication on the Agnipath model, its implications, and welfare safeguards.

Conclusion for Way Forward

If the open border is governed smartly, the 1950 treaty framework is modernised through dialogue, and shared projects in energy, connectivity, water management, and digital payments produce visible gains for ordinary citizens on both sides.

7. UPSC Quick Revision: Ready Notes for Prelims and Mains

7.1 10 Prelims-ready facts

1. India–Nepal border: ~1,751 km.
2. India–Nepal Treaty of Peace and Friendship: 31 July 1950, Kathmandu.
3. Article 6: national treatment in economic/industrial development.
4. Article 7: reciprocal privileges in residence, property, trade, movement.
5. Long-term power trade plan: up to 10,000 MW over a decade.
6. Two new cross-border 400 kV transmission corridors: Inaruwa–New Purnea and Lamki/Dodhara–Bareilly.
7. Cross-border petroleum pipeline: Motihari–Amlekhgunj (operational since 2019).
8. Digital payments: Nepal accepting UPI (interoperability) since March 2024.
9. Defence linkage: large presence of Nepali Gorkhas in Indian Army's Gorkha regiments (unique people-to-people security tie).
10. Disputed areas: Kalapani, Lipulekh, Limpiyadhura.

7.2 Mains answer framework (15-marker)

7.3 MCQs for Prelims (with explanations)

1. With reference to the India–Nepal Treaty of Peace and Friendship (1950), consider the following statements:

   1. Article 7 grants reciprocal privileges to nationals of both countries in matters such as residence and movement.
   2. It provides national treatment to each other's nationals in participation in industrial and economic development.

   Which of the statements given above is/are correct?

   Answer: Both 1 and 2. Explanation: Article 7 covers reciprocal privileges; Article 6 covers national treatment in economic participation.

2. The most appropriate description of the "open border" between India and Nepal is:

   • A) A fully fenced border with electronic surveillance
   • B) A border that allows extensive movement and strong people-to-people ties, requiring coordinated governance to manage risks
   • C) A maritime boundary with free shipping rights
   • D) A border that is closed during all political transitions

   Answer: B. Explanation: It is widely described as open and people-centric, but requires coordination to handle cross-border crime and trade regulation.

3. India and Nepal signed agreements in October 2025 to develop new cross-border transmission infrastructure. Which of the following pairs is/are correctly matched?

   • 1) Inaruwa (Nepal) – New Purnea (India) : 400 kV
   • 2) Lamki/Dodhara (Nepal) – Bareilly (India) : 400 kV

   Answer: Both 1 and 2.

Conclusion

India–Nepal relations are best understood as a neighbourhood partnership built around citizens, not just governments. The open border and the 1950 treaty framework created an exceptional foundation, but contemporary challenges—from border disputes and crime risks to geopolitical competition and perception issues—require modern governance, sensitivity, and credible cooperation. For UPSC, the strongest answers are those that balance strategic realism with a people-first approach and propose practical pathways to preserve the advantages of openness while addressing legitimate security and sovereignty concerns.