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India – Nepal bilateral relations

India – Nepal bilateral relations

Introduction

India–Nepal relations are the bilateral relations between India and Nepal. Both countries initiated their relationship with the 1950 Indo-Nepal Treaty of Peace and Friendship accompanied with secret letters that defined security relations between the two countries, and an agreement governing both bilateral trade and trade transiting Indian Territory. The 1950 treaty and letters exchanged between the then Indian government and Rana rulers of Nepal, stated that “neither government shall tolerate any threat to the security of the other by a foreign aggressor” and obligated both sides “to inform each other of any serious friction or misunderstanding with any neighboring state likely to cause any breach in the friendly relations subsisting between the two governments.” These accords cemented a “special relationship” between India and Nepal.

The treaty also granted Nepalese the same economic and educational opportunities as Indian citizens in India, while accounting for preferential treatment to Indian citizens and businesses compared to other nationalities in Nepal. The Indo-Nepal border is open; Nepalese and Indian nationals may move freely across the border without passports or visas and may live and work in either country. However, Indians are not allowed to own land-properties or work in government institutions in Nepal, while Nepalese nationals in India are allowed to work in some Indian government institutions (except in some states and some civil services (the IFS, IAS, and IPS)) notably the Indian military.

An estimated 32,000 Nepalese citizens are employed as active duty soldiers in the Indian army and further 1 million Nepali-migrant (720,892 in 2011) workers are believed to be spread throughout India while Indian embassy in Nepal has reported that 600,000 Indian citizens in Nepal have registered their paperwork with the Indian embassy in Kathmandu as of 2021. The number of Indian immigrants who haven’t registered their paperwork with the Indian embassy in Kathmandu isn’t known as of 2021, however, Government of Nepal has announced that all people living within the boundaries of Nepal will be counted in the upcoming census of 2021.

Trade

India is Nepal’s largest trade partner and the largest source of foreign investments, besides providing transit for almost entire third country trade of Nepal. India accounts for over two-thirds of Nepal’s merchandise trade, about one-third of trade in services, one-third of foreign direct investments, almost 100% of petroleum supplies, and a significant share of inward remittances on account of pensioners, professionals and workers working in India In the year 2017–2018, Nepal’s total trade with India was about US$8.2 billion; Nepal’s exports to India were about US$446.5 million; and imports from India were about US$7.7 billion.

Nepal’s main imports from India are petroleum products (28.6%), motor vehicles and spare parts (7.8%), M. S. billet (7%), medicines (3.7%), other machinery and spares (3.4%), coldrolled sheet in coil (3.1%), electrical equipment (2.7%), hotrolled sheet in coil (2%), M. S. wires, roads, coils and bars (1.9%), cement (1.5%), agriculture equipment and parts (1.2%), chemical fertilizer (1.1%), chemicals (1.1%) and thread (1%). Nepal’s export basket to India mainly comprises jute goods (9.2%), zinc sheet (8.9%), textiles (8.6%), threads (7.7%), polyester yarn (6%), juice (5.4%), catechue (4.4%), Cardamom (4.4%), wire (3.7%), tooth paste (2.2%) and M. S. Pipe (2.1%).

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