India and Nepal share deep civilisational ties, an open border, and shared cultural heritage, yet modern relations face persistent geopolitical and territorial friction. Nepal’s historical trajectory—from Shah monarchy to a fragile republic—has been defined by balancing Indian influence. Following chronic instability, Nepal’s historic March 2026 “Gen Z” election saw the Rashtriya Swatantra Party sweep to power, installing outsider Balen Shah as Prime Minister. Despite initial diplomatic tensions regarding border disputes and sovereignty, recent high-level ministerial visits to New Delhi signal a shift towards pragmatic, development-oriented diplomacy, bypassing historical political baggage.
India and Nepal are not merely neighbours by geography; they are bound by centuries of shared civilisation, intertwined cultures, and common spiritual heritage, even as the relationship carries the weight of its own contradictions and evolving complexities. The countries share a 1,751 km open border stretching across five Indian states : Sikkim (99 km), West Bengal (100 km), Bihar (729 km), Uttar Pradesh (560 km), and Uttarakhand (263 km); a boundary that is not merely a political line on a map, but a living testament to the deep human connections that have flowed freely across it for millennia, through trade, pilgrimage, marriage, and migration. The two nations share a civilisational continuum that predates the modern concept of statehood itself; one where the same rivers are sacred, the same epics are revered, and the same festivals illuminate the night sky on both sides of the border. Yet, for all its intimacy, this relationship has never been without friction.
Unlike the deep civilisational ties that predate the formation of modern states, the challenges and tensions that define the contemporary relationship are products of the modern political order; rooted in territorial disputes, shifting geopolitical alignments, and the domestic politics of both nations. These challenges are deeply interrelated and demand serious, sustained attention from the leadership on both sides.
Nepal’s brush with history
Evolution of Nepal, from an aggregate of fragmented hill principalities to a modern republic, is a narrative inextricably bound to its relationship with India. Navigating the shifting dynamics of British colonial ambitions and the subsequent foreign policy of an independent Indian state, Nepal’s history serves as a compelling study in regional diplomacy and balancing acts. This historical journey outlines how a nation always tried hard to maintain its core sovereignty while perpetually managing the influence of its giant southern neighbour.
Before the mid-18th century, the term “Nepal” referred almost exclusively to the Kathmandu Valley, which was surrounded by small Malla kingdoms alongside various independent hill principalities. This fragmented landscape was fundamentally transformed in 1768 when King Prithvi Narayan Shah of Gorkha conquered Kathmandu, establishing the unified Kingdom of Nepal under the Shah Dynasty. Highly suspicious of the British East India Company’s rapid expansion across India, the King famously characterised Nepal as a “yam between two boulders”—sandwiched uncomfortably between Qing China and British India. To protect his fragile new state from Western imperialism, he actively enforced a closed-border policy.
This isolationist stance inevitably lapsed as Nepalese Kings sought territorial expansion into the fertile Terai plains, which collided with British interests, triggering the Anglo-Nepalese War of 1814–1816. Despite stubborn resistance from the Gorkhali forces, superior British numbers and resources forced Nepal to bid for peace, resulting in the Sugauli Treaty of 1816 which permanently altered Nepal’s geography and its relationship with India. Nepal ceded one-third of its territory and was forced to accept a permanent British Resident in Kathmandu. The treaty also permitted the British to recruit Nepalese soldiers, marking the origin of the world-famous Gurkha regiments that served the British Crown in India and abroad.
Internal political dynamics shifted drastically in 1846 following the Kot Massacre, a palace bloodbath orchestrated by an ambitious military leader, Jung Bahadur Rana, who stripped the Shah monarchs of actual power, reducing them to figureheads, and established a hereditary system of Rana Prime Ministers. To secure their autocratic regime, the Ranas completely reversed Nepal’s previous anti-British stance, opting for absolute alignment with British India. Jung Bahadur Rana personally led troops into India to help suppress the Indian Rebellion of 1857. In return, Britain guaranteed Nepal’s internal sovereignty, restored some annexed lands, and formalised its independence via the 1923 Nepal-Britain Treaty. Throughout this era, the Ranas kept Nepal strictly isolated to prevent democratic ideals from the Indian independence movement from filtering across the border.
The departure of the British from India in 1947 compromised the Ranas’ primary geopolitical lifeline. Indian-backed Nepalese dissidents formed the Nepali Congress party, and with New Delhi’s diplomatic intervention, King Tribhuvan was restored to power in 1951, effectively ending Rana rule. On the eve of this revolution, the pivotal 1950 Indo-Nepal Treaty of Peace and Friendship was signed. This treaty established an open border, reciprocal civic privileges for citizens in both countries, and a mutual security understanding regarding arms purchases.
However, Nepal’s democratic experiment did not last long. In 1960, King Mahendra staged a royal coup, dismantling the democratic cabinet to introduce the autocratic, party-less Panchayat System. To counter India’s immense influence, Mahendra cultivated closer ties with China, notably constructing the Kathmandu-Kodari highway to link Nepal with Tibet. Such strategic pivoting led inevitably to recurrent friction with New Delhi, culminating in 1989 when India imposed a devastating 13-month economic blockade over trade disputes and Nepal’s acquisition of Chinese anti-aircraft weapons.
The severe economic hardship caused by the blockade ignited the 1990 Jana Andolan I (People’s Movement), forcing King Birendra to restore multiparty democracy under a constitutional monarchy. Yet, systemic corruption and slow development led to popular disillusionment, triggering a violent Maoist Insurgency in 1996, which lasted for a decade and resulted in over 17,000 casualties. The nation was further traumatised by the 2001 Royal Massacre, in which Crown Prince Dipendra killed King Birendra and his immediate family before taking his own life.
The political crisis peaked when the subsequent monarch, King Gyanendra, seized absolute power in 2005. This authoritarian shift alienated New Delhi, prompting India to quietly broker the historic 12-Point Agreement in New Delhi, which united mainstream political parties and the Maoist rebels against the monarchy. This alliance sparked the 2006 Jana Andolan II, forcing the King to yield power and leading to a Comprehensive Peace Accord. Finally, following elections in April 2008, the newly elected Constituent Assembly voted overwhelmingly to abolish the 240-year-old Shah monarchy, officially declaring Nepal a Federal Democratic Republic.
Nepal’s Political Trajectory since 2008: The Rise of Gen Z
In 2008, the abolition of Nepal’s monarchy— an institution that had endured for over 240 years— and the establishment of a federal democratic republic marked a watershed moment in the country’s history. This transformation was the culmination of decades of political agitation and an armed Maoist insurgency that put an end to the old order and ushered in a new era of parliamentary democracy. However, rather than delivering stability, this transition set in motion a relentless cycle of political uncertainty. Since becoming a federal democratic republic in 2008, Nepal has witnessed more than 14 different governments in just 16 years. There has been a revolving door of shifting alliances leading to fractured coalitions, and short-lived administrations, which have led to chronic issues of misgovernance breeding popular apathy and disillusionment.
This chronic political instability, compounded by widespread allegations of corruption, nepotism and maladministration, eventually reached a breaking point. In early September 2025, a powerful youth-led uprising; widely referred to as the “Gen-Z movement”, swept across the country, marking a decisive rupture in Nepal’s democratic trajectory. The movement culminated in the ousting of the coalition government of Nepali Congress and CPN (UML)-led by K.P. Sharma Oli, and subsequent appointment of Sushila Karki as interim Prime Minister. Under her stewardship, Nepal conducted what was widely regarded as a free and fair general election on 5 March 2026 (21 Falgun 2082 BS).
The results confounded political analysts and observers alike. The Rashtriya Swatantra Party (RSP), a relatively young party founded in 2022, led by Rabi Lamichhane and bolstered by the high-profile entry of Balendra “Balen” Shah, the former Mayor of Kathmandu, in December 2025, swept to a commanding victory, winning 182 out of 275 seats in the House of Representatives. Falling just two seats short of a two-thirds supermajority, the RSP’s landslide win and the subsequent election of the young Balen Shah as Prime Minister represented far more than an electoral outcome; it signalled a generational shift in Nepali politics and a profound public rejection of the old political establishment. However, framing it solely a generational shift would undermine the important driving factor which is accumulated frustration with the old political establishment. Whether the new leadership can convert that frustration into durable institutional reform remains to be seen.
Resetting of the India-Nepal Relations
The rise of Balen Shah to power has introduced a different dynamic to the bilateral relations between the two countries. As a political outsider, Balen is less embedded in the networks of Nepali political elites through which India-Nepal relations have historically been managed. This does not necessarily mean that relations will undergo a dramatic shift or reorientation. The structural geopolitical constraints and economic dependencies will not make this easy, and they will continue to act as a stabilising force between the two countries. However, his rise may produce a more independent diplomatic posture, as the new government seeks to demonstrate autonomy while managing relationships with neighbours whose interests do not always align.
That said, what it will certainly require is a resetting of the mechanisms through which old, pending issues are engaged and discussed. Previous governments in Kathmandu have consistently failed to address these issues with New Delhi seriously or with any genuine intention of resolving them, preferring instead to raise them periodically as political tools driven by domestic political necessities. Prime Minister Balen Shah will have to give priority to the contentious issues between the two countries without resorting to rhetorical contestation. He had also been part of such populist narratives earlier while serving as Mayor of Kathmandu, making statements about the idea of “Greater Nepal” and hanging a map in his office that included territories lying within India’s borders; gestures that were widely considered unnecessary provocations.
Acts such as these undoubtedly create a hostile environment that makes it difficult to reach any acceptable resolution to the territorial disputes, particularly concerning Limpiyadhura, Lipulekh, and Kalapani. However, Balen Shah has recently came out with a statement that suggests he is trying to moderate his position on the issue. It has raised a controversy; one that did not sit well with opposition parties in Nepal or with neighbouring India, when he claimed in parliament that, after assuming office, he had learned that Nepal, too, had “encroached” on Indian territories in several places. He further added that his government is seeking assistance from India, China, and England (the United Kingdom) to resolve the issue through land records and old maps. Shah stated, “Our view is that England (the UK) should also take an interest, as the issue dates back to the period when the British ruled India.” For opposition groups in Nepal, this represented a departure from Nepal’s longstanding position, which accuses India of occupying Nepali land and violating Nepal’s sovereignty.
India has, however, rejected the possibility of any third-party involvement in boundary matters and reiterated that the established bilateral mechanism is fully capable of addressing boundary issues between the two countries. The Indian Ministry of External Affairs emphasised that close to 98 percent of the India-Nepal boundary has already been demarcated and that the remaining small area will also be resolved through bilateral engagement. This was the second instance of such friction since the new government took office in Kathmandu. Earlier, Nepal had protested at not being consulted by India and China over the decision to resume the pilgrimage to Mansarovar via Lipulekh, to which India responded by saying it was not a new development and that the Mansarovar Yatra had been continuing through this route since 1954.
Following the formation of the new government, there was considerable uncertainty about the future trajectory of India-Nepal relations and how the new administration would approach this historically significant bilateral relationship. Initial signals were mixed and confusing. The new government’s claim of a departure from previous governments’ policy of “surrender diplomacy” under which prime ministers received foreign ambassadors within hours of taking office, set a cautious tone. Nevertheless, Indian Prime Minister Modi personally reached out to the newly elected government in Kathmandu, congratulating both Balen Shah and RSP president Rabi Lamichhane on their decisive victory and reaffirming his commitment to working with the new leadership in good faith.
Lamichhane and Khanal Visit India : Diplomacy in Action
The recent five-day official visit of RSP chairman Rabi Lamichhane to India, at the invitation of the ruling Bharatiya Janata Party (BJP), marks a new beginning for the current government in Kathmandu in its effort to strengthen bilateral relations. During his meeting with Prime Minister Modi, Lamichhane said his party carries no political baggage from the past and seeks to develop relations with India in a new way, to which Prime Minister Modi responded that India, too, wants to chart a new political course with Nepal and be a partner in the country’s development journey. Lamichhane also wrote an article in the Indian English-language newspaper The Hindustan Times, in which he argued for a shift in Nepal-India relations from geopolitical friction to development diplomacy. Praising India’s economic achievements, he emphasised the need for his country to become part of India’s success story and called for investment and bilateral cooperation in the manufacturing and innovation sectors. He also stressed the importance of hosting India’s premier institutions, such as IIT and AIIMS, in Nepal to foster engagement with Nepali institutions.
In a similar spirit, Nepal’s Minister for Foreign Affairs, Shisir Khanal, made a three-day official visit to India beginning on 5 June 2026 and met his Indian counterpart, S. Jaishankar, in New Delhi. This visit came just days after RSP Chairman Rabi Lamichhane’s five-day trip to India and marked the first Foreign Minister-level meeting between the two countries since the new government assumed office in Nepal in March 2026. During his visit, FM Khanal reaffirmed that his government carries no “old baggage” and seeks to translate the civilisational bond between the two nations into a modern, development-oriented partnership. Articulating a spirit of rapprochement, he noted that “No problem is too large and no boundary too complex when we sit down with an open heart.”
The two sides formalised three agreements over the course of the visit. The most significant was the operationalisation of peer-to-peer (P2P) cross-border payment transactions under a deal between NCHL and NPCI, originally signed in June 2023. The remaining two included the handover of 72 health sector and 12 cultural sector projects under the post-earthquake reconstruction programme in Nepal, and the signing of a Memorandum of Understanding (MoU) between the Kathmandu University School of Engineering’s Centre for Digital Public Infrastructure and the Artificial Intelligence and Digital India Bhashini Division for the co-creation of a National Digital Infrastructure for a “Voice First” Language Translation Platform. The two leaders also held wide-ranging discussions on trade and economic cooperation, cross-border connectivity, energy partnerships, water resources management, and the promotion of people-to-people ties, including through sports. FM Khanal subsequently met with National Security Adviser Ajit Doval.
Assessments and Road Ahead
India-Nepal relations under Balen Shah are at a delicate juncture of history. The optimism that emerged in New Delhi following RSP’s landslide victory, and the prospect of a reformist government displacing the decade-old, deeply entrenched political ruling class; quickly gave way to disappointment, as diplomatic frictions surfaced in the new government’s first weeks in office. The rekindling of the territorial dispute and a deliberate distancing from New Delhi generated considerable anxiety about the future trajectory of bilateral relations. However, the recent visits of Rabi Lamichhane and Sishir Khanal have eased the nerves in New Delhi.
The coming months will be decisive. Whether both countries can successfully constitute joint expert teams on the border dispute, and whether Shah undertakes a state visit to New Delhi sooner than later, will determine if the relationship finds stable footing under the new dispensation or remains mired in confusion and ambiguity. It is hoped in India that Nepal’s structural geopolitical constraints and economic dependencies will inevitably push it toward sustained engagement with India; acting as a stabilising force in the bilateral relationship.
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