OPINION | India faces diplomatic test amid Nepal's political upheaval

Ties between India and Nepal have also been tested by situations perceived by one or the other side as political brinkmanship.

Images of black smoke billowing from a burning Nepalese Parliament building as Kathmandu was roiled by what has come to be known as the Gen Z protests will remain etched in the minds for a long time to come. A sense of order prevails now with an interim government headed by a former Chief Justice, who has the backing of the protestors, in place.

Seen from India’s perspective, the events of September 2025 have put New Delhi’s diplomacy to the test, yet again.

It’s been barely a year since Sheikh Hasina was ousted from power in Bangladesh after what was, at least in its initial phases, a student-led movement. The developments in Nepal bring renewed focus on India’s Neighbourhood First policy and the effectiveness thereof in an increasingly volatile neighbourhood.

Interim governments can be challenging to deal with - a case in point is New Delhi’s recent experience with Dhaka. Bangladesh continues to be led by an administration headed by Nobel Laureate Muhammad Yunus, who goes by the official designation of Chief Adviser. Ties between Bangladesh and India have been frosty due to a host of issues. These include instances of violence against, and persecution of, Hindus and other religious minority groups, a lingering anti-India sentiment among certain influential sections in Bangladesh, China’s expanding influence, and Pakistan’s attempts to re-insert itself as an important player in Dhaka’s scheme of things.

Elections in Bangladesh are expected to be held only in 2026; till then, New Delhi will have to persist with its wait-and-watch policy, continuing to engage patiently through the existing, laid-down mechanisms whenever required to keep the channels of communication open.

India's Diplomatic Challenges in a Volatile Neighbourhood

India had faced another serious challenge in the region after a new government headed by Mohamed Muizzu came to power in Maldives in November 2023, riding high on anti-India rhetoric. New Delhi was forced to use a blend of good old-fashioned diplomacy and take a series of carefully-calibrated steps to shore up the country’s fragile financial situation in an attempt to bring the relationship back on an even keel and prevent Maldives from drifting too close to China. Muizzu undertook a state visit to New Delhi in October 2024, almost a year after assuming office. That this came after he had already visited China and Turkey, thereby breaking from the tradition of Maldivian Presidents making India their first port of call, summed up the challenge that Indian diplomacy was confronted with.

Sri Lanka went through its own share of violent protests and upheaval in 2022, fuelled by an unprecedented economic crisis. President Gotabaya Rajapaksa had to leave the country as the Presidential residence was overrun by protestors. India had to step in with financial support and facilitate an IMF debt restructuring plan to stabilise the situation in the island nation.

Given its recent experiences with new dispensations in Maldives and Bangladesh, and the upheaval caused by the economic crisis in Sri Lanka, India will be hoping that things play out differently in Nepal, where former Chief Justice Sushila Karki has been sworn in as Prime Minister heading an interim cabinet after she received the support of the young protestors.

Bound by Geography and History

India and Nepal have traditionally enjoyed warm ties, in keeping with their geographical proximity as neighbours, shared history and culture, and economic linkages. The 1950 Treaty of Peace and Friendship and subsequent treaties and pacts on trade and transit provide an institutional framework to this relationship.

More recently, in 2015, India pledged USD 1 billion to assist Nepal with post-earthquake reconstruction. Of this, USD 250 million was in the form of grant assistance for the housing, health, education, and cultural heritage sectors while USD 750 million was earmarked for a concessional Line of Credit (LoC). A large number of projects have since been implemented, and several continue to be taken up, across the length and breadth of Nepal.

Over the years, however, New Delhi has had to manoeuvre through frequent changes in Nepal’s power structure as well as challenges from China as Beijing seeks to extend and consolidate its geostrategic influence in the region. Nepal’s participation in China’s Belt and Road Initiative (BRI) continues to be an irritant as far as its bilateral relationship with India is concerned.

Ties between India and Nepal have also been tested by situations perceived by one or the other side as political brinkmanship. A contentious issue was the Nepal government’s approval, a few years ago, of a new map showing Kalapani, Lipulekh, and Limpiyadhura as part of its territory. This led to friction, with New Delhi reiterating that Kalapani – located in the eastern corner of Uttarakhand’s Pithoragarh district – is Indian territory.

Additionally, India has had to grapple with periodic campaigns accusing it of interfering in Nepal’s internal matters, a charge New Delhi has consistently rejected.

Time for Diplomacy Reset?

Nepal’s Gen Z protests highlight a sharp erosion of trust in existing constitutional and political structures in the country amid allegations of corruption and nepotism against the country’s ruling elite. At the same time, Nepal’s youth may not have a sense of the shared history with India that earlier generations grew up with.

The situation presents New Delhi with both a challenge and an opportunity. The challenge, simply put, would be to navigate the next six months or so without letting any issue rock the boat when it comes to bilateral ties, till fresh elections are held early next year. The opportunity, on the other hand, would be to put aside matters that have been contentious in the past and build on the positives in the bilateral relationship while exploring new avenues of partnership and cooperation in the next decade or so.

The initial apprehension as the events unfolded in Nepal earlier this month appear to have given way to a sense of cautious optimism in New Delhi, with Indian Prime Minister Narendra Modi setting the tone for future engagement. "I extend my best wishes to Right Hon. Mrs. Sushila Karki on assuming office as the Prime Minister of the Interim Government of Nepal. India remains firmly committed to the peace, progress, and prosperity of the people of Nepal," he said in an online post on September 13, 2025. Later, speaking at a public meeting in Imphal (Manipur) he also praised Nepal’s youth.

Navigating Nepal's Political Transition

India’s nascent Nepal Policy saw a recalibration in 1951, when Nepal began taking the first steps towards becoming a parliamentary democracy. More resets followed, particularly when Nepal adopted a multi-party system under a constitutional monarchy in 1990 and when the monarchy itself was abolished after nearly a decade of Maoist insurgency in 2008.

This is not the first time that Nepal has faced political turmoil and uncertainty in recent years. The country has seen over a dozen Prime Ministers in the years since Nepal’s monarchy gave way to an elected democracy in 2008. Nearly each of these phases have been marked by ups and downs when it comes to Kathmandu’s ties with New Delhi. One has to wait and see what impact the latest developments in Nepal have on its relationship with India.

(Vinay Jha is a senior journalist.)

Views are personal, and do not represent the stand of this publication.