<\/p>\n\n\n\n
Kathmandu- There is always intense reading in Kathmandu around a prime minister\u2019s first visit to India. It is never treated as routine diplomacy, it is interpreted as direction, intent and even hierarchy in foreign policy.<\/p>\n\n\n\n
In Kathmandu, it is seen as a signal of how the government wants to position itself with New Delhi and how much political space it believes it has at home. This time before any visit has even been formally announced, the conversation has already shifted in an unusual direction.<\/p>\n\n\n\n
Balendra Shah is not looking to walk into Delhi with another list of fresh announcements and photo-op agreements. Instead, the message coming from political and diplomatic circles around him is that Nepal first wants movement on issues that have remained stuck despite years of talks, promises and high-level meetings and issues that serve the country\u2019s interest. In effect, Shah is trying to turn implementation into the centre piece of the relationship before stepping into another ceremonial round of diplomacy.<\/p>\n\n\n\n
That in itself is significant<\/p>\n\n\n\n
Nepal has often complained that bilateral meetings with India produce headlines faster than results. It believes that agreements are signed, joint statements are issued and connectivity promises are repeated but progress on the ground moves slowly and sometimes disappears into bureaucracy on both sides. Shah\u2019s approach appears to be built around that frustration rather than announcing new frameworks, he wants to test whether the old ones can actually function.<\/p>\n\n\n\n
Three issues have emerged as central to that thinking. The first is Nepal\u2019s demand for a customs presence in Lipulekh. The second is Indian support in helping operationalise Bhairahawa and Pokhara international airports. The third is pushing forward the long pending Pancheshwor Hydropower Project, the fourth is the implementation of East-West railway and lastly, the renewal and review of the Nepal-India trade treaty which many in Kathmandu believe no longer serves Nepal\u2019s economic interests effectively. <\/p>\n\n\n\n
Each of these demands carries a different political weight and a different level of realism.<\/p>\n\n\n\n
Lipulekh is by far the most difficult. Nepal claims the territory under the Sugauli Treaty while India maintains effective control over the route, infrastructure and movement in the region. Kathmandu\u2019s argument is that if India and China can engage in trade and pilgrimage activity through the area, Nepal cannot simply be treated as absent from a territory it claims. So, the idea of a customs office has become politically important. Nepal sees it as a way of signalling presence and asserting that the dispute cannot be bypassed quietly through bilateral India-China arrangements.<\/p>\n\n\n\n
However, this is also where the demand collides with reality. India is highly unlikely to agree easily because a customs post is not just an administrative structure. It carries implications of recognition and authority on the ground. From New Delhi\u2019s perspective, allowing Nepal an official presence in Lipulekh would dilute India\u2019s own position in an area where it already exercises operational control. This makes it the least feasible of Shah\u2019s expectations and perhaps the most politically symbolic.<\/p>\n\n\n\n
The airport issue is more practical but equally revealing of Nepal\u2019s deeper economic anxieties. Bhairahawa and Pokhara airports were built with enormous expectations and enormous costs instead are into deep corruption cases. Bhairahawa airport was constructed at around Rs 30 billion while Pokhara airport cost roughly Rs 24.58 billion. These both projects were presented as symbols of a modernising Nepal that could reduce pressure on Kathmandu and become a regional aviation and tourism hub.<\/p>\n\n\n\n
Instead, both airports have struggled badly.<\/p>\n\n\n\n
Recent customs data for the first nine months of FY 2025\/26 paints a stark picture. Pokhara International Airport recorded zero foreign trade activity while Bhairahawa managed only limited imports and no exports. Despite billions in investment, both airports remain severely underutilised and continue to operate far below expectations.<\/p>\n\n\n\n
The problem is not only diplomatic support from India. It is commercial viability itself. Foreign airlines continue to prioritise Kathmandu because passenger demand remains concentrated there. Airlines have also cited high operating costs, limited traffic and fuel pricing concerns as reasons for staying away from Nepal\u2019s newer airports. Nepal Airlines operates only a limited number of international flights from Bhairahawa while Pokhara still lacks regular international carrier commitments.<\/p>\n\n\n\n
This is why the airport issue exposes an uncomfortable reality for Kathmandu. India may be able to facilitate connectivity and regional cooperation but it cannot create market demand where it does not yet exist. Nepal\u2019s airport problem is partly external but it is also deeply domestic.<\/p>\n\n\n\n
The trade treaty, however, is where Nepal has the strongest and most realistic negotiating ground. First signed in 1978, the Nepal-India trade treaty was automatically renewed in November 2023 without major revisions. Many trade experts in Nepal saw that as a lost opportunity because several longstanding concerns were left untouched despite Nepal\u2019s growing trade imbalance with India.<\/p>\n\n\n\n
India remains Nepal\u2019s largest trading partner and accounts for more than 60 percent of its total trade. That dependence makes the treaty politically sensitive and economically critical at the same time.<\/p>\n\n\n\n
Unlike Lipulekh, trade agreements are negotiable because both sides have economic incentives to keep them functioning. Nepal\u2019s frustration is less about tariffs and more about non-tariff barriers that often slow or block Nepali exports through customs delays, testing requirements and procedural complications. Kathmandu also wants better transit access, smoother logistics and more predictable electricity trade arrangements as Nepal\u2019s hydropower ambitions expand.<\/p>\n\n\n\n
Sources say, the provision requiring renewal every seven years itself needs reconsideration. For a landlocked country like Nepal, trade and transit rights should be permanent and guaranteed rather than dependent on periodic renewals. At present, Nepal\u2019s trade deficit with India has reached over 60 percent, raising questions about the balance and effectiveness of the treaty.<\/p>\n\n\n\n
In the 1990s (1991\/1996), Inder Kumar Gujral introduced the \u201cGujral Doctrine,\u201d which advocated extending concessions to neighbouring countries like Nepal even without strict reciprocity. The government officials argue that in that same spirit, unequal provisions within the treaty now need to be removed.<\/p>\n\n\n\n
Furthermore, India has yet to formally respond to the draft proposal sent following the commerce secretary-level meeting held in 2019. Advancing negotiations on the basis of that draft could still lead to a practical solution.<\/p>\n\n\n\n
But even here, Nepal faces a difficult truth that often gets lost in nationalist rhetoric. India is not the only reason Nepal struggles economically, its weak industrial output, inconsistent policy decisions, high production costs and poor export competitiveness remain Nepal\u2019s own structural problems. Even if India agreed to every major concession tomorrow, Nepal would still face the challenge of producing goods that can compete effectively in the Indian market.<\/p>\n\n\n\n
Nepal\u2019s push for the long-delayed Pancheshwar Multipurpose Project is rooted in both energy security and economics. Kathmandu sees the project as one of the few large-scale hydropower ventures that could significantly increase electricity production, strengthen irrigation capacity and deepen long-term energy trade with India. Nepal\u2019s argument is that nearly three decades after the Mahakali Treaty, repeated political commitments have produced little movement on the ground. For Kathmandu, pushing Pancheshwar now is also about testing whether Nepal-India cooperation can move beyond announcements into actual implementation.<\/p>\n\n\n\n
But the challenge is not only India\u2019s pace. The project has remained stuck due to disagreements over cost-sharing, water benefits, power pricing, environmental concerns and political inconsistency on both sides. Nepal also lacks a stable long-term execution framework which has repeatedly slowed negotiations.<\/p>\n\n\n\n
Similarly, Nepal\u2019s push for the East-West Railway is tied to a larger ambition of reducing dependence on road transport and improving internal connectivity and trade logistics. Kathmandu views the railway as critical infrastructure that could eventually connect industrial corridors, border trade points and major economic centres across the country. Nepal also sees railway integration with India as a way to improve cargo movement and reduce transportation costs.<\/p>\n\n\n\n
However, the railway project faces a basic economic question: whether Nepal currently has enough industrial output, freight demand and financial capacity to sustain such a large network. <\/p>\n\n\n\n
Without stronger industrial activity and cross-border trade integration, there is a risk that the railway becomes another expensive infrastructure project struggling with utilisation. That is why the success of the project will depend not just on Indian cooperation but on Nepal\u2019s ability to build the economic ecosystem around it.<\/p>\n\n\n\n
That is what makes Shah\u2019s approach politically interesting. It reflects a growing mood in Nepal that symbolism alone is no longer enough in relations with India and big announcements do not carry the same excitement when earlier promises remain unfinished. There is increasing pressure on governments to show outcomes rather than optics.<\/p>\n\n\n\n
At the same time, this approach also carries risks. Setting expectations too high before a visit can create political pressure at home if India does not respond the way Kathmandu hopes. Nationalist positioning may generate headlines inside Nepal but it does not automatically translate into negotiating leverage with India especially on issues tied to sovereignty and strategic control.<\/p>\n\n\n\n
The larger significance of this moment is not whether Shah eventually visits India or not. It is the shift in tone before the visit even happens. Nepal is no longer only asking for new agreements, it is asking whether the old ones were ever meant to truly move beyond paper.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu- There is always intense reading in Kathmandu around a prime minister\u2019s first visit to India. It is never treated as routine diplomacy, it is interpreted as direction, intent and even hierarchy in foreign policy. In Kathmandu, it is seen as a signal of how the government wants to position itself with New Delhi and […]<\/p>\n","protected":false},"author":2,"featured_media":28335,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7,8],"tags":[],"class_list":["post-28334","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics","category-special-report"],"acf":[],"yoast_head":"\n