Nepal welcomes the BRI from China.

India has cause for extreme worry. In yet another indicator of China’s growing sway over Nepal, the two are moving forward to implement Beijing’s ambitious Belt and Road Initiative (BRI) in the Himalayan nation. India is not only opposed to this in principle on grounds of sovereignty but also fears it will enable China to increase its already considerable inroads into Nepal.

If 2017 marked Nepal’s initial step to coming on board the BRI with an MoU, the year 2024 marks a giant leap for the Himalayan nation in that direction. A framework agreement for cooperation on the BRI was signed during Nepalese PM K P Sharma Oli’s visit to China in early December, apart from nine other pacts. With the strategically located Himalayan nation having become a hub for Great Powers contestation, the US too would be uneasy with the latest Beijing-Kathmandu tango. While the US had managed to get Nepal on board its own Millennium Challenge Corporation (MCC) Compact to fund Kathmandu’s power and transport infrastructure, the BRI seems far broader. Kathmandu is trying to play down the framework as just a continuation of the 2017 MoU. The framework, however, underlines Kathmandu and Beijing’s renewed push for the BRI, an initiative on which New Delhi harbours deep suspicions for what it perceives as China’s hegemonic ambitions through debt-trap diplomacy. Sovereignty is another major concern, with the China-Pakistan Economic Corridor (CPEC), another project under BRI, passing through Pakistan-occupied Kashmir.

India is certainly worried about PM Oli-led Nepal once again moving into China’s sphere of influence. The CPN-UML leader is widely seen as being pro-China, and bilateral ties with India were prickly during his previous stints as the PM. India has yet to host Oli since he took charge as PM in July this year for the fourth time, with him first heading for Beijing, in a break from the tradition of visiting New Delhi.Also, showing scant regard for New Delhi’s sensitivities, the Oli government recently allowed 220 Buddhist monks from China to travel to Lumbini, the birthplace of Gautam Buddha even as the Nanhai Buddhism Shenzhen roundtable was being held in Kathmandu.

Oli delivered the inaugural address at this roundtable. There were also reports the China-appointed Panchen Lama would travel to Lumbini, though it did not eventually happen.

The Oli government’s encouragement of Beijing’s concerted moves to claim Buddhism as a shared heritage will not go down well with New Delhi, which has been making its efforts to build on its shared Buddhist heritage with Nepal.

Kathmandu’s thrust on greater economic cooperation with Beijing – the BRI is part of this endeavour – would also whittle down India’s influence over Nepal. The BRI framework agreement, incidentally, also envisages the opening of branches of Chinese banks and financial institutions in Nepal. India has traditionally had deep economic linkages with Nepal, nurtured in no small measure due to reasons of geography – the two neighbours share a long and porous 1,751-km-long border.

This, along with the landlocked nature of Nepal, has helped India become its largest trading partner. During the 2022-23 fiscal, bilateral trade was pegged at $8.85 billion. This included $8 billion of exports from India to Nepal, with $840 million of exports in the reverse direction. As per the Nepal Rastra Bank, India’s share in Nepal’s trade accounted for 64.1% in 2022-23.PM Oli sees cooperation on BRI as a means to forge closer economic ties with China, with the framework agreement resolving to deepen the economic partnership by “injecting new momentum to trade, infrastructure and connectivity cooperation”.

Not a single project under the BRI rubric has been executed in Nepal since the 2017 MoU. Nepal would be hoping that the 10 initial projects, including those meant to boost regional connectivity, will now see the light of day. India has its work cut out and should ensure it does not come across as overbearing. India’s approach in the Kalapani-Lipulekh-Limpiyadhura border dispute, where New Delhi ignored Kathmandu’s request for foreign secretary-level talks, is a case in point.

It led Oli, in his earlier stint as the PM, to cock a snook at New Delhi by changing his country’s map showing the disputed territories as part of Nepal.

Neither did New Delhi show respect due to a close neighbour when it decided to give a quiet burial to the joint 2018 Eminent Persons Group (EPG) report, which suggested that the 1950 Treaty of Peace And Friendship be replaced with a new one?

Nepal has also been unhappy with India’s refusal to give overflight rights for aircraft using the Chinese-built Gautam Buddha International Airport in Lumbini.

India would do well to remember that its domineering approach only serves to alienate a close neighbour further and push it into China’s ever-willing embrace. India should not lose sight of its strategic imperatives.