India – Nepal relations

• Rail Transportation between India & Nepal got a major boost today with coming into force of authorization to all cargo train operators to utilize the Indian railway network to carry all containers bound for Nepal whether bilateral freight between India and Nepal or third country freight from Indian ports to Nepal.
• This liberalization will allow market forces to come up in the rail freight segment in Nepal and is likely to increase efficiency and cost- competitiveness, eventually benefiting the Nepalese consumer.
• These cargo train Operators include public and private container trains Operators, automobile freight train operators, special freight train operators or any other operator authorized by Indian Railways.
• After this LoE, all kinds of cargoes in all categories of wagons that can carry freight on the Indian Railways network within India can also carry freight to and from Nepal.
• The move will reduce transportation costs for automobiles and certain other products whose carriage takes place in special wagons.
• The signing of this LoE marks another milestone in India’s efforts to enhance regional connectivity under the “Neighbourhood First” policy.

Background of Rail Services Agreement (RSA) – 2004 and LoE.

• The Rail Services Agreement was executed on 21.05.2004 between the Ministry of Railways, Government of India and the Ministry of Industry, Commerce & Supplies (now Ministry of Commerce), His Majesty’s Government of Nepal (now Govt. of Nepal) for the introduction of freight train services between these two countries to and from Birgunj (Nepal) via Raxaul (India).
• This is an agreement which guides movement between India and Nepal by rail. The rationale for this Agreement is that there was no rail movement prior to this between the two countries and hence a framework was required for operational and commercial aspects and procedures for customs clearances for rail-bound cargo.
• Since then large various developments have taken place which requires changes to the Rail Services Agreement.
• There is a provision in Article 1.4 of the RSA that “the Agreement shall be reviewed every five years and may be modified by the Contracting Parties by mutual consent.
• For effecting amendments in the relevant Articles to RSA, Letters of Exchange (LoE) are signed from both sides.
• In the past, there have been amendments to RSA through LoE on three occasions. The first such amendment to RSA-2004 was effected through a Letter of Exchange (LoE) signed on 21st May 2004.
• The second LoE was signed on 17th December 2008 at the time of the introduction of bilateral cargo between the two countries which required the introduction of new customs procedures and Third LoE was signed on 19/20.02.2016 enabling rail transit traffic to/from Vishakhapatnam Port in addition to the existing provision of rail transportation through Kolkata/Haldia Port.

What are the India – Nepal relations?

As close neighbours, India and Nepal share a unique relationship of friendship and cooperation characterized by open borders and deep-rooted people–to–people contacts of kinship and culture. It shares a border with 5 Indian States - Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand.

India – Nepal Trade relations

The previous trade treaty revised in 1996 can be considered a turning point in the trade relations between the two countries. Since 1996, Nepal’s exports to India have grown more than eleven times and bilateral trade more than seven times; the bilateral trade was 29.8% of total external trade of Nepal in years 1995-96 reached 66% in 2012-13.

Indian firms are the biggest investors in Nepal, accounting for about 40% of total approved foreign direct investments.

Cooperation in Water Resources and River Training are one of the most important areas of our bilateral relations and has immense potential. It is estimated that about 250 small and large rivers flow from Nepal to India and constitute an important part of the Ganges river basis. India and Nepal are cooperating in the Arun III Hydroelectric project.

Background

The India–Nepal Treaty of Peace and Friendship of 1950 forms the bedrock of the special relations that exist between India and Nepal. Under the provisions of this Treaty, the Nepalese citizens have enjoyed unparalleled advantages in India, availing facilities and opportunities at par with the Indian citizens. The Treaty has allowed Nepal to overcome the disadvantages of being a land–locked country.

Beginning with the 12–Point Understanding reached between the Seven Party Alliance (SPA) and the Maoists at Delhi in November 2005, the Government of India welcomed the roadmap laid down by the historic Comprehensive Peace Agreement of November 2006 towards political stabilization in Nepal through peaceful reconciliation and inclusive democratic processes.

Treaty of Sugauli

The Nepalese kingdom had stretched from the Sutlej river in the west to the Teesta river in the East. However, Nepal lost the Anglo-Nepalese War and the resulting Treaty of Sugauli, 1816 limited Nepal to its present territories.

The Sugauli Treaty stated that Nepal ceded to British the whole of the lowlands between the Rivers Kali and Rapti.

The Kali River is formed by the union of two headwaters : the Kalapani river that originates below the Lipulekh Pass and the Kuthi Yankit river that rises below the Limpiyadhura range. Both the streams have been termed ‘Kali River’ on different occasions.

The valley of Kalapani, with the Lipulekh Pass at the top, forms the Indian route to Kailash–Manasarovar. The Kali River serves as the boundary between Uttarakhand (Kumaon region) and Nepal from Limpiyadhura.

In addition to Mahakali/Sharda (West), Gandak/Narayani (South) and Mechi (East) are two other rivers which demarcate the border between India and Nepal. By 2007, the Nepal-India Technical Level Joint Boundary Working Group agreed on 182 strip maps covering almost 98% of the boundary, except the two disputed areas of Kalapani and Susta.

What is the issue about?

The dispute over the Kalapani area has spanned the last seven decades. Both Nepal and India have recognised it as an outstanding border issue requiring an optimal resolution.

The 1816 Sugauli Treaty between Nepal and British India placed all the territories east of the Kali (Mahakali) river, including Limpiyadhura, Kalapani and Lipu Lekh at the northwestern front of Nepal, on its side. The borders of Nepal, India and China intersect in this area.

Over the decades, these rivers have changed courses several times, giving rise to disputes, claims and counterclaims on land.

The Nepal government claims that by taking advantage of Nepal’s negligence in guarding its borders, India has encroached on its borderland.

The former director-general of the Department of Survey of Nepal, claims that maps from 1850 and 1856, prepared by the Survey of India with the participation of Nepali authorities, clearly state that the Mahakal River originates from Limpiyadhura, 16 km northwest of Kalapani, thereby proving that Kalapani belongs to Nepal.

However, India has consistently refused to accept those maps as proof.

Indian officials insist that a map drawn up by the British colonial government in 1875 should be considered instead.

The 1875 map allegedly shows the origin of the Mahakali River to the east of Kalapani. Unlike the maps from 1850 and 1856, the 1875 map does not have Nepal’s certification.

The Lipulekh pass, as well as the Limpayadhura pass (or Limpiya pass), are on Nepal border with Tibet. The Lipulekh Pass links Uttarakhand with China’s Tibetan Autonomous Region. The pass is near the tri-junction of India, Nepal and China. Nepal claims that the Indian army has encroached 372 km2 towards Limpiyadhura from Kalapani since the 1962 Indo-China war. At that time, Nepal, as a friendly neighbour, granted permission to the Indian army to set up a camp in the region. Subsequently, despite several firm requests by Nepal’s prime minister, Nepal has not been able to force India to withdraw its troops from the area.

What did India do? Current relations:

India signed an agreement with China in 2015 to use the Lipu Lekh Pass for trade; Kathmandu immediately protested to both New Delhi and Beijing.

India published a new map that showed Kalapani within its territory in 2019.

India’s defence minister inaugurated a road link to Lipu Lekh amid Covid-19 and an ongoing political crisis in Kathmandu.

Nepal also alleges India has routinely dismissed requests from the Nepal Ambassador for a meet with the Foreign Secretary.

Also, MEA said Kalapani talks could wait until both countries had dealt with the coronavirus pandemic first, which further enraged the Nepali government.

Meanwhile, Mr. Oli’s (Nepal PM) push towards the amendment at exactly the same time as the India-China border stand-off bolstered the belief that he is speaking with confidence borne from Beijing’s backing. The Oli government, which seeks to build its legacy by overturning what it calls “unequal” agreements made by the monarchy, could also cause a security nightmare for India

If Nepal opens up other parts of their long boundary, and reverses old commitments on open and unsecured border posts, the bilateral relationship will worsen benefitting China.

Nepal set to face fresh elections