Stocktaking of Nepal-India Ties

The last few weeks have been interesting for neighbours as close as India and Nepal. When the RSP government under Balendra Shah was sworn in late March 2026, there was an expectation that no baggage whatsoever from the last government would be carried forward, and that a new era would be ushered in, with ties between India and Nepal. The spirit of the same was highlighted in the Prime Minister of India's congratulatory call to Balen Shah and the tweet as well. Nevertheless, the legacy issues started developing as soon as the new government came to power, first as an order regimenting buying stuff from across the border in India. It was an old order, but it was reinforced strictly after Balen came to power. Then, as India and China agreed to start the pilgrimage through the Lipulekh Pass, Nepal objected and sent a diplomatic note. India's Foreign Secretary Vikram Misri was to arrive in Kathmandu to extend the invitation from PM Modi but the visit did not materialise as PM Shah has set up a protocol to not meet officials below the rank of minister, and his self-imposed ban was also taken with surprise in India. It must be noted that the Kalapani, Lipulekh, and Limpiyadhura are old disputes that surfaced after Mr Oli came to power in Kathmandu. Indian response has been so far calibrated and managed, and the Indian establishment understands that there can be populist rhetoric against it time and again, as the southern neighbours have been blamed for many issues in the past as well.

As the diplomatic deadlock was setting in, the arrival of RSP chief Rabi Lamichhane and the Foreign Minister Shishir Khanal in Delhi has changed the atmosphere and something positive can be expected in India-Nepal relations in the coming future. Delhi rolled out a red carpet that, both in its scale and arrangement, was the kind that is reserved for a visiting head of government and not for a party chief who had officially come in a personal capacity. Lamichhane sat with Prime Minister Modi for more than an hour, and went on to meet Jaishankar, the National Security Advisor Ajit Doval, Foreign Secretary Misri, Nitin Gadkari and the BJP president as well — a string of meetings that no RSP figure, and to be fair very few Nepali leaders, could have hoped to command so early in the life of a government. Khanal's leg, which was the formal government engagement, came within a few days and was built around the delegation-level talks with Jaishankar.

In terms of material capacity, however, both the visits delivered less than the warmth of the reception would suggest. Khanal's talks did produce an understanding to take forward the cross-border electronic payment arrangement between the two countries, along with the usual broad agenda of trade, connectivity, energy and people-to-people ties, but the heavier items — railway expansion, cooperation in education, transfer of technology — were spoken of in the language of agreements that are expected soon. The boundary question, it must be noted, was not formally taken up in Lamichhane's meetings at all, and when Khanal did touch upon it, he indicated that Nepal would look for a settlement through the existing bilateral mechanisms, which in effect was an acceptance of Delhi's old position of keeping any third party out of the matter. So the tangible balance sheet remained thin — one working deliverable, a basket of promises, and a standing invitation from Modi for PM Shah to visit India.

It is therefore in the area of optics that the two visits did their real work, and here the returns were quite considerable. Within a fortnight, a relationship that was being read as slowly drifting towards friction — built on the diplomatic note over Lipulekh and the reinforced order on cross-border purchases — was repackaged as a partnership of "development diplomacy". The reframing allowed Kathmandu to appear as the de-escalator rather than the agitator, and allowed Delhi to show that its Neighbourhood First policy could accommodate even a wholly new political force in Nepal. For the BJP, opening a party-to-party channel with the RSP — a party it had never before needed to court, having dealt for decades only with the Congress, the UML and the Maoists — was itself a hedge, an investment in whoever turns out to hold power in the next phase of Nepal's politics.

The more telling question is what Lamichhane's visit will produce within Nepal, and it would be a mistake to read his Delhi reception as an accidental overshadowing of the Prime Minister. Lamichhane heads the organisation, and a man in his position does not travel to Delhi without having worked out well in advance exactly what he wants the trip to say and to whom. The personal capacity label, the party-to-party invitation, the careful silence on Lipulekh, the language of development diplomacy — all of it was his calibration. He went as the chief of the party that holds the most powerful mandate in Nepal's recent history, and used that standing to open the channels that a government caught up in its early controversies could not open for itself. India, for its part, played the moment with sense and generosity, laying out avenues for both leaders rather than betting on one: the red carpet for Lamichhane and the formal table for Khanal were two ends of the same offer, a relationship rebuilt on what can be delivered — connectivity, energy, technology, payments — with the older quarrels over the boundary kept, for now, to the side.

The burden, therefore, now shifts squarely onto Balen Shah. Lamichhane has done the calibration and Delhi has cleared the ground; the call belongs to the Prime Minister, and it is here that the longer-term doubt sits. Shah's instinct, as the first weeks have shown — the reinforced order on cross-border purchases, the self-imposed protocol that derailed Misri's visit, the careless remark in Parliament conceding Nepal too had "encroached" on Indian land — runs towards the populist mandate. A mayor's style of governing by signal and instinct may serve the politics of the moment, but it does not always bode well for the patient, give-and-take work that a relationship with India demands over the long term. The party chief has played his hand about as well as it could be played, and India has kept its patience and opened the door; whether the window that 2026 has opened stays open will depend less on Delhi, and less on Rabi, than on whether Balen can govern the relationship with more discipline than he has so far shown the habit of.