Indian PM visits Nepal as relations recover but China competition remains

Indian Prime Minister Narendra Modi arrives in Nepal today for talks with counterpart Sharma Oli. In a gesture of New Delhi’s desire to counter Chinese influence in its neighbour, Modi will inaugurate an Indian-financed hydropower project.

Indian-Nepalese relations hit a low point in 2016 when India was accused of political interference, opposing the new Nepalese constitution and its insufficient representation for minorities. Today both leaders are expected to reaffirm economic and political ties through negotiations on Indian-funded energy and transportation infrastructure and Indian support for amending Nepal’s constitution.

But the visit will likely be overshadowed by Kathmandu’s warmer relations with China, particularly as Chinese investors have doubled their Indian counterparts’ stake, contributing $79 million to the country this financial year. Energy-hungry, both China and India are looking to invest in Nepal’s hydropower-rich landscape as a means to secure stable electricity supplies. China hopes to use renewed energy investment to reduce Nepal’s dependence on India and facilitate discussions on using Nepal as an economic corridor for the three states.

Modi’s trip likely won’t curb growing Chinese influence. Despite its traditional ties with India, Nepal will cooperate with China and use Indian-Chinese competition to extract benefits from both its large neighbours.

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