Small States within strategic locations have become sites of great power rivalries. They play a significant role in international politics from geo-politics to geo-economic point of view. Earlier their behaviour was characterized by bandwagoning with the aggressor but now these states do not act as just buffer zones rather exhibit hedging with contending states. South Asia is one such region. The South Asian region is touted as the least integrated region in the world. India is the largest continental power in South Asia. India’s neighbours have signalled shifts in their foreign policy behaviour especially towards China in the recent past. This has generated both anxiety and debates inside Indian foreign policy circles to re-invigorate fresh policy towards Nepal and China.

Hyphenating India-Nepal Ties

Nepal established diplomatic relations with India and China in the 1950’s. While witnessing myriad upheavals in both the domestic and the international arena, Nepal, a landlocked state has more often than not tried to maintain harmonious relations with both New Delhi and Beijing. Nonetheless in the aftermath of its transformation from long-standing monarchy to a democracy, the country has now shifted its focus to diplomacy for economic benefits. The Nepali leadership has long resented the Indian influence and has sought to establish an independent foreign policy. Nepal has often played the China card in search for counterbalance for what it considers big-brotherism and undue pressure from India. Nepal’s stability is important for both India and China as it acts as a buffer between the two. In contravention to the line of thought that has been consistent over the years, N Sampang in the book Unique Asian Triangle: India, China, Nepal by Geeta Kochhar and Pramod Jaiswal (eds.) argues that with China making inroads into Nepal, the earlier ‘strategic buffer’ has been breached.

In 2015, Nepal witnessed the Madhesi crisis when the people from these communities set up blockades at important border crossings for trade with India, protesting for better representation in the Nepali constitution. This resulted in tensions between India and Nepal. The then Prime Minister KP Sharma Oli asked India to remove the official blockade. India denied any role in it, stating internal tensions as the cause for the blockade. To assuage burgeoning traction, the heads of both the states met, signed agreements aimed at improving infrastructure and providing aid for post-earthquake reconstruction activity. Such developments have irked China and forced it to be active in precluding India from achieving any strategic gain. Oli has publicly criticized New Delhi for interfering in Nepal’s internal matters. India, Nepal and China represent a Unique Triangle. This triangular relationship is crucial to understand the undercurrents and evolving dynamics of these three countries.

De-Hyphenating The Triangular Relationship

Nepal and India share unequal relations and these inequalities are clearly inbuilt into their respective geographical dimensions, demographic magnitudes, and economic resource bases. China’s policy towards Nepal has always been driven by the need to curb the clandestine activities of some 20,000 Tibetan refugees in Nepal. China’s South Asian policy has always been to marginalize India’s influence on Nepal. In furtherance of the above, Amish Mulmi in his book All Roads Lead North (2021) asserts that the strategic parleys between Beijing and Kathmandu must be viewed against the backdrop of India’s neighbourhood strategy. He cites the imposition of an unofficial blockade against Nepal by India in 2015 as the pretext for Nepal’s diplomatic shift towards the North. That India needs to eschew its skewed policy heavily focused on the security perspective is a glaring observation made by the author. Not only is it an observation but an eye-opener for the strategists calibrating half-baked strategies.

On 8 May, 2020 Indian Defence Minister Rajnath Singh virtually inaugurated 80 kilometers of new road in the Himalayas, strategically crucial link connecting to the border with China at the Lipulekh pass. This led to an immediate escalation of tension and objection by Kathmandu on the ground that it is a “unilateral act” on the part of New Delhi. Kathmandu contended that the road crosses their territory, accusing India of bringing a change in the status quo without holding any diplomatic consultations.

New Delhi plays an influential role in Kathmandu’s politics. Nepal’s major chunk of its foreign aid comes from India which it uses to manage its budget and other developmental tasks. India remains one of the largest foreign investors in Nepal, along with official development assistance and construction of hydel power projects. A new dawn, a new epoch in the relations was struck when India and Nepal inaugurated the Motihari-Amlekhgunj pipeline, the first of its kind in South Asia. In 2019-20, India provided 1,200 crore of Indian rupees to Nepal for its economic development under the “Aid to Nepal” budget. However, as Nepal turns to China to fulfil its political and economic aspirations by resorting to hedging policy, the resentment against India is rising. The triangular relationship between the three nations has undergone distinct changes, argues Geeta Kochhar.

India has been in effective possession of territory being claimed by Nepal. Although Nepal refers to the 1815 Sugauli Treaty to legitimize its claims, India’s new road up to Lipulekh pass is not a change in the existing situation. India has earlier controlled this territory and even built infrastructural capabilities besides conducting its administration and deploying military forces up to the border pass with China. The region is of strategic importance as the new road now stands as one of the quickest links between Delhi and the Tibetan plateau. China had earlier in 2015, recognized India’s sovereignty by agreeing to trade through the Lipulekh Pass. Symbolic of cultural relevance, this is also an important route for people who trek across the border with China to visit Mount Kailash, every year. India’s decision could eventually have negative repercussions on the already taut India-Nepal relations. In line with democratization and competitive nationalism, Nepal’s foreign policies have become increasingly political and assertive. Clamour over Kalapani had come up in November last year after India announced its new political map post the abrogation of Article 370.

The Strategic Drift And China Card

The role of China is of great importance here. China’s growing political clout in Nepal ranges from being the largest foreign investor (US$ 81.89 million in 2019) to up-skilling Nepalese students in Mandarin and mediating and avoiding splits in the NCP. In order to seek cooperative alliances in the region and to expand its global hold, China utilized the One Belt One Road (OBOR) strategy. China has been building roads and railways at the Nepalese border to facilitate cross border trade, including plans to expand the Beijing-Lhasa railway line into the border of Nepal. This shall enhance the volume of Chinese trade and investment in Nepal, surpassing that of India. Moreover, Nepal’s perception of non-interference of China in its internal affairs has given China the edge over India that it always desired. Therefore; it would be amiss for India to desire Nepal not to forge friendly relations with China. India’s alleged interventionist approach would enhance the suspicion harboured by smaller south Asian neighbours and throw a double whammy in the form of marred prospects of deepening ties and countering China’s influence.

Balancing against China seems unlikely since its global outreach has penetrated the world market. China has already become a regional hegemon in Asian hemisphere. Therefore, bandwagoning with Beijing has a greater pay-off structure for Kathmandu. The rising presence of China across the Himalayas forced India to recalibrate its policies towards Nepal with a shifting focus from geostrategic denial towards greater economic delivery and subsequent connectivity. Nepal can no longer be the buffer state with limited sovereignty. Though its new policies seem to be gaining ground, yet in crises like the current one, India seems to prevail on more traditionalistic approaches focused on security, military, and other geostrategic factors. India needs to realize that the Nepalese politics matters and that it will have to continue to respect and employ benign political preferences in Nepal.

Nepal has been playing the ‘China Card’ for long now to call India to attention or extricate concessions. This strategic plan might have worked well in the past for Nepal, but the shrewdness might fail due to power shifts in Asia and the increased prospects of Sino-Indian conflict which has seen an escalation in recent times. The current border dispute reflects a slowly festering structural problem in the current India-Nepal relations.

Currently, the row seems to have reached an impasse. The dispute appears to have been complicated due to a hardening of stances on both sides. Nepal’s earlier demand of withdrawal of troops from Kalapani has now included the insistence of Limpiyadhura as its headwaters. While the withdrawal of troops seems unlikely given India’s bid, the situation acquires a further hurdle against the ongoing Indo-China border dispute. The de facto border-Line of Actual Control (LAC) remains un-demarcated. Furthermore, Nepal’s ruling Communist Party has reached out to China for investment and better connectivity, which is a setback for India. This dispute has now become a permanent issue and trying to defuse it through back channels might no more be a sustainable option for India. Both sides need to exercise political goodwill and statecraft to maintain smooth bilateral relations.

India’s strategy towards Kathmandu and Beijing has to be hyphenated and de-hyphenated simultaneously to understand which domestic and structural imperatives shape their foreign policy behaviour. Nepal’s domestic political compulsions affect India-Nepal relations significantly. Whereas India’s indifferent attitude has led to Anti-Indian sentiments in Nepalese Government. Landlocked between two major regional powers, Nepal’s ties with India and China shows that not being overly dependent on either India or China is a crucial aspect of Nepal’s foreign policy. Kathmandu is adopting hedging policy towards both New Delhi and Beijing.