The Prime Minister of Nepal, Sher Bahadur Deuba, has just completed a three-day visit to India in a bid to improve relations and deepen bilateral cooperation following a bitter border dispute over a Himalayan territory in 2020.
During his visit, Deuba held a meeting with his Indian counterpart Narendra Modi and took up the border issue.
The two sides also came up with a joint vision to generate hydro-electricity in Nepal as well as boost trade between the two countries, with the possibility of including Bangladesh at some stage.
India has also agreed to purchase Nepal's surplus electricity.
Deuba's visit marked the highest-level of diplomatic exchange between the two sides since the border row over the jurisdiction of the 335 square kilometers (291.34 square miles) up to the Kuthi Yankti river, including Kalapani, Lipulekh and Limpiyadhura — which lie northwest of Nepal near the Nepal-India-China tri-junction.
Deuba brought up the issue during his meeting with Modi and sought his help to activate an existing border mechanism to find a diplomatic solution.
"I have proposed to resolve the boundary disputes through a bilateral mechanism," Deuba said during a joint press briefing following the talks.
Modi, listening alongside Deuba, didn't comment on the matter during the news conference. Later, Indian Foreign Secretary Harsh Vardhan Shringla told reporters that the two leaders briefly discussed the topic.
"There was a general understanding that both sides needed to address this in a responsible manner through discussion and dialogue in the spirit of our close and friendly relations and that the politicization of such issues needs to be avoided," Shringla added.
Nepal, which was never under colonial rule, has long claimed the disputed territory in accordance with the 1816 Treaty of Sugauli with the British Raj following the Anglo-Nepalese (Gurkha) War. However, it's been under India's administrative control since the early 1960s.
Until 2014, Nepal and India had acknowledged the jurisdiction of the territory as an "outstanding issue" and set up a foreign secretary-level joint mechanism to find a diplomatic solution. Until now, however, it has not held a single meeting.
The dispute resurfaced after New Delhi issued a political map in November 2019 that placed the area within India's territory. Relations became more strained when India inaugurated an 80-kilometer-long roadway that passes through Lipu Lekh without the knowledge of Nepal. In response, Nepal issued a new map by amending its constitution that showed the disputed territory within its own borders.
"Earlier, India had denied the existence of the border problem. Now, it has accepted it and needs to resolve this through dialogue and discussion," Dinesh P. Bhattarai, a former foreign affairs adviser to Prime Minister Deuba, told DW. "I think this is a big step forward on the issue of border disputes."
The wording to avoid the "politicization" of the border issue could be referring to the context of forthcoming local elections in Nepal slated for May 31.
India is particularly concerned that the issue could be instrumentalized during the election campaigns, especially by Nepal's left-wing parties which share an ideological affinity with China.
Following last week's meeting, the two sides came out with a Joint Vision Statement (JVS) on power sector cooperation.
They agreed to jointly develop power generation projects in Nepal, establish cross-border transmission lines, and bi-directional power trade with appropriate access to electricity markets in both countries.
"We both agreed that we must take full advantage of opportunities for cooperation in the power sector," Modi said following his bilateral meeting with PM Deuba. "Our Joint Vision Statement on power corporation will prove to be a blueprint for future collaboration."
The two PMs agreed to finalize the detailed project report of the long due Pancheshwar hydropower project, which was inked during Deuba's official visit to India as prime minister back in 1996.
The multipurpose project involves the construction of two dams on the border river Mahakali, for irrigation, flood control and to generate 5,040 megawatts of power for the two countries.
Modi said the two leaders emphasized the importance of swift progress in dozens of joint-venture projects in Nepal, including the Pancheshwar hydropower project. "This project will prove to be a game changer for the development of the region," Modi said last week.
The two countries have also signed various agreements on Nepal's entry into the India-led International Solar Alliance; Indian technical assistance to Nepal's railway sector; and cooperation in the petroleum sectors.
The pair jointly inaugurated a 35-kilometer-long rail service connecting Kurtha of Nepal and Jayanagar to Bihar, India. It was part of a 68.7-kilometer Jaynagar-Bijalpura-Bardibas cross-border rail link built under India's line of credit. Likewise, they also jointly launched India's RuPay digital card for use in Nepal and inaugurated the Solu Corridor 132 KV Electricity Transmission Line and Substation in Nepal.
Nepal's Foreign Ministry spokeswoman Sewa Lamsal told DW that the visit was focused on economic cooperation. However, no progress was made on a substantive plan to reduce Nepal's widening trade deficit with India.
India is Nepal's largest trading partner, which accounted for 62% of the country's trade in the fiscal year 2019-20. During the first half of the current fiscal year, Nepal purchased $5.1 billion (€4.634 billion) worth of goods and services from India, while it managed to export only $810 million worth of products and services, according to data from Nepal's Department of Customs.
Nepal relies solely on India for its imports of petroleum products. Nepal also depends heavily on India for food, luxury items, medicines and machinery.
The two nations put aside some tricky political issues such as India's refusal to accept a joint report on regulating the border and New Delhi's reluctance to welcome Nepal's constitution.
The former was prepared by an expert panel — named the Eminent Persons Group — in 2018. Though full details are not available, the report suggests replacing the 1950 Treaty of Peace and Friendship. The new agreement would include regulating the Nepal-India border by making people produce identity cards, while crossing over to either side, and jointly tackling common challenges in areas such as combating terrorism, extremism and all kinds of trafficking, according to The Kathmandu Post.
When Nepal's Constituent Assembly had promulgated a new constitution in September 2015, New Delhi only "noted" it and subsequently imposed an unofficial border blockade against the landlocked country. The monthslong blockade created severe shortages of petroleum and other goods as well as life-saving medicines in Nepal.
India imposed the blockade after the Nepali leadership refused to heed its overt pressure to postpone the issuance of the charter and accomodate the demands raised by the Tarai-based political parties — which share language and ethnic ties with India.
Kosh Raj Koirala, a Kathmandu-based diplomatic journalist, told DW that although no substantive outcome came out on border and political issues last week, Deuba's visit had helped repair bilateral ties, paving the way for cooperation on multiple fronts, including the energy and connectivity sectors.