KP Oli arrives in India: Nepal PM to meet Narendra Modi with trade deficit, connectivity likely to be on agenda

Pacts related to agriculture, research and development, education and training, exploring the possibility of inland water navigation upto Indian ports from Nepal, and expansion of Indian rail upto Kathmandu from the countries’ border have been agreed by the two sides,
Oli is likely to take up various issues including the early execution of India funded projects in Nepal, implementation of the Mahakali Treaty and construction of integrated checkposts.

Some other issues to be discussed with India include agricultural modernisation of Nepal, increasing production and trade, connectivity, implementation of the Pancheshwar Multipurpose Project and a postal highway among others, said Oli.

Oli’s visit to India assumes greater significance as its two neighbours – India and China – vie for more influence in the country. With Kathmandu officially associating with China’s ambitious One Belt One Road (OBOR) project, India’s concerns seems to have risen.

“India is keenly aware that China’s open chequebook policy has called into question its own tardy implementation of infrastructure projects.”

India is expected to send a strong message to Nepal about its growing proximity with China during Oli’s visit to India. “Modi’s tough message to Kathmandu will be couched in the niceties of diplomatic prose, but there will be no denying ‘India’s red lines’.”

One such point of contention between India and China is the Budhi Gandaki project.

Budhi Gandaki project

Nepal, in November 2017, cancelled the 1200 mega-watt Budhi Gandaki hydropower project with a Chinese firm citing irregularities and lack of transparency. It was awarded to a Chinese company by the then government, headed by former prime minister Pushpa Kamal Dahal.

However, Oli decided to revive the project and told This Week in Asia, “Political prejudice or pressure from rival companies may have been instrumental in the scrapping of the project. But for us, hydropower is the main focus and come what may, we will revive the Budhi Gandaki project.”

Sources quoted in this report said that India can buy back a large chunk of power but on the condition that Indian public sector or private companies be involved in building dams in Nepal.

“You cant expect India to buy power from a Chinese-built project. Let Nepal take Chinese assistance to build those dams and let China buy back the power produced from there,” the government official said.

Oli had previously said that he wants to deepen ties with China to get more leverage in his dealings with India “in keeping with the times”.

Inauguration of the integrated check posts

The inauguration of integrated check posts (ICPs) located on the India-Nepal border is likely to be brought up during the talks of the two leaders,

ICPs are sanitised zones with dedicated passenger and cargo terminals and space for regulatory agencies besides necessary modern facilities under one roof. The officials added that discussions on the check posts will be held considering the diplomatic success they can produce for India vis-a-vis its relationship with Nepal in the backdrop of an aggressive posturing by China, the report added.

In 2005, Nepal and India signed an accord to build a string of checkposts near the border at Biratnagar, Birgunj, Bhairawa and Nepalgunj. In the first phase, ICPs were to be built in Birgunj of Nepal and Raxaul of India, and Biratnagar of Nepal and Jogbani of India. The Indian side has already completed the ICPs in Raxaul and Jogbani and the ICP of Raxaul has already come into operation, while the one at Jogbani will be operational soon. Meanwhile, the Nepali side has urged the Indian side to operationalise ICPs at both sides of border Raxaul and Birgunj simultaneously.

Nepal’s trade deficit with India

In an interview with The Times of India, Oli said that Nepal’s trade deficit with India is growing at an alarming rate. “This is not sustainable. We need to take concrete measures to address this situation,” he added.

A review of the trade treaty might be one of the prominent issues that Oli discusses with his Indian counterpart. He had previously said that he will lay thrust on reducing the huge trade deficit with New Delhi.

“We need to work on both tariff and non-tariff measures and also on quarantine and testing related facilities for both agricultural and industrial products,” he had told The TImes of India.

Oli told South China Morning Post that he wants to “update” relations with India “in keeping with the times” and favours a review of all special provisions of India-Nepal relations, including the long-established practice of Nepalese soldiers serving India’s armed forces.

Nepal’s foreign minister was also quoted as saying by Kathmandu Post that time has come to change the discourse that Nepal is merely a recipient. We have enough bases for redefining and redesigning relations with India in the context of the two nations having strong leadership