India-Nepal Row: Years Of Goodwill Unlikely to be Undone By China

People across the border say that while China’s influence in Nepal has grown, but India’s No 1position is intact.

5 min read

“There is a rumour that there is a short supply of essential medicines. People are advising us to get extra gas cylinders refilled. This on the top of the coronavirus-induced lockdown which has created its own sets of problems. How horrible things have become,” Prabha Devi (name changed) told me on the phone from Nepal’s industrial city of Biratnagar.

Prabha Devi, then a resident of Bihar’s Supaul district bordering Nepal, got married to a Nepali citizen in 1979. Such marital alliances are not uncommon in most of the districts along the India-Nepal border.

A few years after marriage, Prabha Devi acquired Nepali citizenship.

She says Nepal has witnessed several changes since her marriage – the collapse of the monarchy, the arrival of democracy, and the years of Maoist insurgency followed by a semblance of political stability now, to name just a few.

However, one constant factor amid all this has been the extremely cordial relations between the two neighbours. Shared socio-cultural values, marital alliances and flourishing, and at times unrestricted, cross-border trade, have further cemented the ties. Will the ongoing tension alter that?


Lockdown Revived Memories of 2015 Blockade

“For the first time, I have noticed a perceptible shift in attitude among the people of Nepal towards ‘big brother’ India. The coronavirus-induced lockdown and resultant chaos all around has revived the memories of the 2015 economic blockade. Nepal was already ravaged by the deadly earthquake and the blockade almost crippled its economy,” said Anjali (name changed), now a resident of Bihar. She spent twenty years in Kathmandu and was witness to the troubles people faced at the time of the long and frustrating blockade.

“Getting a gas cylinder refilled used to be a nightmare. There used to be endless queues at petrol pumps. There was shortage of essential items and people suffered a lot,” she adds. The 2015 blockade was enforced by an influential ethnic group of Madhesis who are considered as being close to India.

The people in Nepal believed that Madhesis had the tacit support of the Indian government. New Delhi always denied this allegation.

Many consider that incident to be a turning point in the relations between the two usually friendly neighbours. Scholars argue that not just big headlines, some small changes too, have impacted the sentiment of the people on both sides of the border.

Insistence on Aadhar has Impacted Financial Transactions in Border Areas

“LIC used to be the preferred choice for all those interested in getting life insurance in Nepal. Many people would deposit their hard-earned money in Indian banks, and access was never an issue. Nepali students used to prefer schools and colleges in India. With the insistence on Aadhaar for all financial transactions, people in Nepal seem to have lost the privileges they thought they would always have in India,” a well-known economist told me a while ago. He is based in Biratnagar, and is part of some of the Nepali government’s advisory bodies. He too has marital ties in India.

A leading LIC agent of Bihar’s Supaul district concurs with the economist’s views. He says he used to get a bulk of his business from Nepal. That has completely stopped now.

Even Nepal-based industrial units with businesses in India have suffered in recent years.

“We have been a leading exporter in Nepal. We used to export goods worth Rs 200 crore every year. We will be lucky if we manage a figure of Rs 10-15 crore this year. The slowdown has been underway for the past 2-3 years. I am not inclined to continue with the job as businesses have all dried up. There has been massive job losses in our unit,” the marketing head of a leading industrial unit of Nepal told me on the phone. He is based in Biratnagar but is an Indian national.


India Remains the Biggest Trading Partner, China is Still a Fringe Player in Nepal

Biratnagar has been an industrial hub of Nepal with close to 200 small, medium and large enterprises. The marketing head says that all the units having large businesses in India have suffered in recent years.

A research paper too highlights the stagnation in Nepal’s India bound trade. It says that “India has had a trade surplus with Nepal since 2002-03 which has been growing over the years. The average trade balance ratio increased from 40 percent in the period 2002-03 to 2009-10 to 75 percent in the period 2010-11 to 2017-18, reflecting India’s expanding trade surplus.”

According to the paper, India’s export to Nepal has jumped from USD 2.1 billion in 2010-11 to USD 5.5 billion in 2017-18.

The import from Nepal has been stagnating in the region of USD 500 million during this period.

The paper further says that: “there is a general perception that India faces a looming threat from the growing dominance of China in Nepal’s domestic markets. However, data shows that even though China’s share in Nepal’s imports increased from 11 percent in 2010 to 14 percent in 2016, India’s share also increased from 64 percent to 66 percent during the same period. Therefore, India continues to be the largest exporter of goods to Nepal.” If trade data is any indication, China is nothing more than a fringe player in Nepal’s overall scheme of things.


All Is Not Lost For India-Nepal

With such tweaks in neighbourly relations, the people living in the border areas are of the view that the old warmth is somewhat missing now. The ruling establishment of Nepal is perhaps reflecting the change. Hence, the demand to settle contentious border issues.

People across the border admit that China’s influence in Nepal has grown in recent years but India’s numero uno position on all issues concerning Nepal is very much intact.

People, therefore, are hopeful that all is not lost yet. “If leaders of both the countries start ignoring the media for a while and engage in honest dialogue with an open mind, there is no reason why we should not have as cordial relations as was the case earlier. No doubt, there has been some delay in taking initiative. But years of immense goodwill cannot vanish just yet,” Anjali said.

(Disclaimer: The author’s sister is married to a Nepali citizen. He wants the two countries to always maintain the kind of relations they have always shared.)

(Mayank Mishra is a senior journalist who writes on Indian economy and politics, and their intersection. He tweets at @Mayankprem. This is an opinion piece and the views expressed in this article are that of the writer’s own. The Quint neither endorses nor is responsible for the same.)

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