India/Nepal politics: Quick View - Nepal and India push for changes to friendship treaty

Content Type
Country Data and Maps
Institution
Economist Intelligence Unit
Abstract
No abstract is available.
Topic
International Relations, Politics, News Analysis, Forecast
Political Geography
India, Nepal

Event

On January 12th the sixth meeting of Eminent Persons Group (EPG) on Nepal-India relations reached an understanding to change the 1950 Indo-Nepal Treaty of Peace and Friendship.

Analysis

At a meeting held in India's capital city, New Delhi, the Nepalese side sought a review of the treaty, which, among other conditions, allows for free movement of people across the border. Although the EPG has not revealed the specifics that were agreed upon by both sides, Rajan Bhattarai, a Nepalese member of the group, informed local media that it had broadly agreed not to retain the treaty in its current form.

The EPG was formed after the then prime minister of Nepal, Khadga Prasad Oli, visited India in February 2016. The group has a two-year tenure and is tasked with reviewing bilateral agreements on trade, transit, investment, infrastructure, water resources, security, socio-cultural and economic issues that form the basis of Nepal-India relations.

The EPG will submit a joint draft report in July that will include a review of the relationship in the last six decades and provide recommended actions on potentially contentious issues. Nepal has been unhappy about what it calls "unequal" provisions in the treaty, especially over the sharing of water resources, transit of goods via India to other countries, and co-operation in security matters. Whereas India wants to ensure that stricter security measures are instituted along the border to reduce illicit trade and other crime. The next EPG meeting is scheduled for late February in Nepal's capital, Kathmandu.

The Economist Intelligence Unit believes that the 1950 treaty between the two countries will be only marginally amended following the EPG's July report. The free movement of goods and people across the border has largely been beneficial to both sides. This is especially true for Nepal, as its external sector is highly dependent on trade with India. Furthermore, streamlined transit regulations and improved cross-border transport infrastructure with India have also benefited Nepal's tourism industry. Indeed, Indian tourists comprise the largest share of visitors into the country.

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