Since the county became a federal republic in 2008, over a dozen governments have been changed.
The youthful Rastriya Swatantra Party (RSP), which has a two-thirds majority in Nepal’s Parliament (the lower house has 275 seats), was elected by Nepalese people who were fed up with political corruption and wealth inequality. Its Founder and Chairman, former TV personality Rabi Lamichhane, and the incoming Prime Minister of Nepal, former rapper Balendra Shah, are its two main leaders. In the past, the Maoists, a section of the Communist Party of Nepal, and the Nepalese Congress controlled national affairs.
Following Nepal’s general election last month, Mr. Nischal Nath Pandey, Director, Centre for South Asian Studies (CSAS), a think tank with headquarters in Kathmandu, stated that “people were so fed up that they voted for a hip-hop star.”
Resetting India’s relationship with Nepal was now possible. Experts predict that Shah’s government will prioritize economic issues above ideological ones, although “a political push” from both parties will be required.
In a March X post, Prime Minister Narendra Modi, who made his first official trip to Nepal in 2014, stated that India will work closely with the country’s new leadership.
Mr. Shah is viewed by many young Nepalese as someone who will demolish the old power ecosystems. Following the removal of 74-year-old Former Prime Minister K.P. Sharma Oli due to youth demonstrations last year, the March poll was the first general election. Oli was seen to be tilting toward China, which unnerved India. India-Nepal ties deteriorated during two of his administrations. India felt that a group residing near the border was not adequately represented in Nepal’s 2015 constitution. Then, living in landlocked Nepal became challenging due to an official embargo imposed by India for several months. The border between India and Nepal is 1,751 kilometres long. Nepal adopted a map in 2020 that included a contested area claimed by both nations.
According to Mr. Ranjit Rae, who served as India’s Ambassador to Nepal from 2013 to 2017, this is a favourable time for India to promote the growth of bilateral trade and connectivity.
Mr. Rae stated, “I think things will improve.” The vote represents a significant departure from conventional politics. The RSP leaders should receive a lot of assistance from India. However, the party must maintain its unity.
The RSP was established in 2022.
According to Mr. Rae, the new Nepalese administration would probably “move forward cautiously” on projects up to China’s Belt and Road Initiative in Nepal.
Research indicates that between 2000 and 2017, Chinese loans and investments, including pledges, to Nepal totalled $4.5 billion. The amount disbursed is unknown.
In the past, Chinese people wanted to unite the Communist Party and other leftist groups in Nepal for their own objectives. That is no longer the case, Mr. Rae stated.
He said that Oli’s political approach consisted of anti-Indian rhetoric and that the March election was intended to bring about change and provide younger, more educated, and technologically aware leaders with an opportunity to steer the nation toward prosperity. Nevertheless, the new administration will take care to maintain a stable relationship between Nepal and China.
It’s time for India to start talking about its future
According to a senior former Indian diplomat, it relies on the new Nepalese government’s approach. “They would be serious about the economy, based on early signals.”
Mutual interest exists in hydropower.
On November 15, 2024, Nepal exported 40 megawatts of hydroelectric power to Bangladesh via the Indian grid. It seems that the trilateral project has been dormant since then. Cost-benefit agreements, mostly between India and Nepal, are among the unresolved difficulties.
Additionally, as the violence in West Asia impacted fuel supply and energy planning, it was reported on March 23, 2026, that Nepal was aiming to significantly expand hydropower exports to India in order to assist meet increased electrical demand. According to Mr. Hitendra Dev Shakya, Managing Director of the state-run Nepal Electricity Authority (NEA), the Himalayan nation intended to almost double its contribution to India’s grid to roughly 1.1 gigawatts (GW) during the summer, when high temperatures are predicted to push power demand to record levels. As transmission infrastructure advances, exports might increase to around 2.5 gigawatts over the following two years.
Given that India is largely dependent on the Middle East for petroleum supply, the action was taken during a period when tensions in the area have impacted energy markets. The country’s energy security has been put to the test during the peak usage season due to attacks on installations and the closing of the Strait of Hormuz.
More than 330 million homes in India rely on liquefied petroleum gas, which has been impacted by supply interruptions. Natural gas shortages may also hinder the production of electricity, especially at night when solar output is lower.
In comparison to India’s anticipated peak demand of over 283 GW this summer, Nepal’s contribution would still be minimal, but more hydropower imports might help make up for any gaps. According to Mr. Shakya, Nepal is currently looking for clients to export about 500 MW of the 600 MW of 24-hour electricity that it delivered to India last year for six months until November.
So, the point is that: Will hydropower supplies to India increase significantly under Nepalese PM Balendra Shah?
This is of course what time will tell.
Mr. Sunil KC, President, Nepal-India Chamber of Commerce and Industry (NICCI), discussed the necessity of reviving the trilateral project initiative during an annual strategic affairs seminar in New Delhi in March. He said that since the 1950s, there has been little private sector investment from India in Nepal. He proposed avenues for bilateral collaboration, including technology, food security, infrastructure development, and strengthening skills.
However, the Indian Consulate General, Birgunj said on April 24, 2026, that India sees economic collaboration with Nepal as a long-term investment in regional peace, prosperity, and interpersonal relationships. There has been ongoing collaboration between the two nations, particularly in the fields of connectivity, infrastructure, energy, and trade.
Most of Nepal’s commerce with third countries passes via Indian ports and highways. India and Nepal have a bilateral Power Trade Agreement that permits power import and export. To facilitate border commerce, electronic Cargo Tracking Systems (eCTS) and digital Country of Origin Certificates (e-CoO) have recently been implemented. Nepal has seen investments from Indian businesses in banking, communications, manufacturing, and hydropower.
In recent years, India has launched a number of connectivity projects to improve Nepal’s access to trade routes and maritime transportation. These include Hulaki Road, the Integrated Check Post at Birgunj, the Jaynagar-Bijalpura Rail Link, the Raxaul-Birgunj ICD Rail Link, and others. A cross-border petroleum pipeline runs from Motihari, India, to Amlekhgunj, Nepal, ensuring a steady flow of petroleum products from India to Nepal. This pipeline is the first of its kind in South Asia. The Amlekhgunj pipeline is being expanded to Chitwan.
Through the implementation of the High Impact Community Development Project (HICDP) at the grassroots level, the government of India and Nepal are working together to build hospitals, schools, colleges, drinking water facilities, sanitation, drainage, rural electrification, hydropower, embankments, and river management projects in order to enhance the local population’s quality of life. In order to execute bigger developments, the HICDP project’s cost limit was raised to Rs. 20 crores in January 2024.
What actions has India taken to start a dialogue with Nepal following the election of former rapper Balendra Shah as Prime Minister?
Prime Minister Narendra Modi and Nepal’s recently sworn-in Prime Minister Balendra Balen Shah expressed their eagerness to collaborate closely in order to advance bilateral relations in an early message exchange. With family ties, a common culture, open borders, and intertwined politics, Delhi and Kathmandu are ready to start a new phase in their relationship. Nepal, a landlocked nation, has relied on commerce and transportation via India. A significant avenue for Nepal’s hydropower exports and earnings has been stimulated by India’s desire to build an electricity infrastructure in the area. Mr. Shah, like many other past Nepalese leaders, attended school in India. Apart from familiarity, it would be erroneous to suppose that his importance will set a desirable and predictable path between the two nations.He overthrows the Brahmin Chhetri Pahari elite’s long-standing supremacy as Nepal’s first Madheshi leader at the age of 35. The goals of the new Gen Z movement that overthrew the K.P. Sharma Oli administration in 2025 need to be better understood by New Delhi. The previous generations of leaders that emerged through the Panchayati movement, the Congress and Communist parties, or the Maoist movement that toppled the monarchy did not pass on their outdated foreign policy beliefs to this new leadership. In this regard, the foreign policy of the Shah administration, particularly its connections with China and the United States, as well as its general relationship with India, has not yet been developed.
India has given Nepal more development aid over the last ten years, but the long-standing embargo on border commerce and territory disputes has strained relations between the two countries. In his capacity as mayor of Kathmandu, Mr. Shah was well-known for his overt nationalism and rejection of India’s and other nations’ control. New Delhi was somewhat alarmed by his usage of a map depicting larger Nepal. While the Shah government completes its achievement, the Modi administration should treat it softly and favourably and extend India’s full help in addressing Nepal’s pressing issues. The effects of the conflict in West Asia, where Nepal will require assistance with fuel and fertilizer imports, are among them.
About 3.5 million people, or 14% of Nepal’s population, are employed overseas. Additionally, the nation depends on remittances and tourism-related income. Also, New Delhi could reevaluate requests made by past Nepali administrations to amend the bilateral friendship treaty, permit overflight for new airports in Nepal, and loosen limits on buying Nepali electricity supplied with help from foreign countries. After Mr. Oli was elected in 2024, disagreements prevented New Delhi from inviting him. In the end, he went first to Beijing. It’s time for Delhi and Kathmandu to move forward, prioritizing their neighbours in South Asia, and to extend an urgent invitation to Mr. Shah to visit Delhi as soon as possible.
Media sources state that Nepali Prime Minister Balendra Shah has received an invitation from Indian Prime Minister Narendra Modi. This visit coincides with a period of change, particularly following the “2025 Nepalese Gen-Z protests,” which led to the resignation of Former Prime Minister K.P. Sharma Oli. It is known that Prime Minister Balendra Shah has stated unequivocally that he does not want to travel to India as a formality. He hopes his visit will be both significant and productive. PM Balendra Shah’s visit to India is seen by many political analysts as potentially important for both countries. As soon as he was sworn in as Nepal’s 43rd Prime Minister, he began to change the nation.
He has clamped down on corruption, jailed dishonest officials, and imprisoned influential figures like Ramesh Lekhak, Former Minister of Home Affairs of Nepal and K.P. Sharma Oli. Many more dishonest politicians were arrested as part of the ongoing anti-corruption drive. Even his previous opponents have come to admire Balendra Shah for his unwavering opposition against corruption. Nepalis residing overseas have started to feel optimistic that things would eventually get better after he was elected Prime Minister. Many people in Nepal and India are hopeful that bilateral ties would improve in this situation.
Prime Minister Shah recently said, “I will not come to India just to get my photo taken.” Now, political experts are occupied with interpreting this statement’s significance.
What precisely does PM Shah want from India, then? What does India have to offer?
Every new Prime Minister of Nepal has historically been to India first. This is interpreted as a symbol of a new beginning in bilateral relations. Mr. Balendra Shah, however, views this custom as a strategic advantage for his nation rather than just a formality. He wants the visit to have concrete results that would help the Nepali people. And that’s when the true story starts.
Aviation is the largest problem. Nepal has been requesting a western aviation entrance point from India for a long time. Despite being prepared, the international airports in Bhairahawa and Pokhara are nevertheless underutilized due to a lack of suitable flight routes. PM Balendra Shah is demanding written guarantees, tangible advancements, and ground-level execution this time around. As part of Nepal’s growth, he wants the country to become more globally connected. This desire may prove to be India’s greatest challenge.
India, however, is taking action. Plans to fortify its infrastructure all the way to the border with Nepal have been expedited. The planned four-lane route from Bara Banki to Behrahi is more than simply a road; it is an initiative to strengthen ties between India and Nepal and ease trade with that country. Above all, the two nations will be far more connected than they were previously. As a result, although PM Shah sets his terms, India is also fortifying connections in its own manner, and Nepal stands to gain from these improved ties.
Up until recently, Nepal’s politics have tended to balance with China and occasionally lean towards India. However, Mr. Shah seems to be moving past this antiquated game. He has already held simultaneous meetings with ambassadors from seventeen nations, making it very evident that Nepal no longer desires to be confined to a camp at its own expense. He favours a neutral, balanced strategy that strengthens ties with friendly countries and neighbours.
Nepal’s foreign policy should not be restricted to only China and India, according to Prime Minister Balendra Shah. He already has plans to treat the United States, Japan, and the Gulf states equally. The explanation is obvious: a sizable number of Nepalis are employed in these countries, and their economic contributions support Nepal. As a result, Balendra’s priorities include economic development and diaspora relations in addition to diplomacy.
Now, the most important question is whether or not India would be his preferred stop. Or will he shift his focus to another country, making his priorities obvious? This choice will define Balendra Shah’s foreign policy and set the agenda for his new Nepal, making it more than merely a visit. India is keeping a careful eye on everything. PM Shah’s return with significant bilateral agreements would not only fortify but also revitalize relations between the two countries. Countries like China will not think twice about ending the chance if negotiations do not proceed as planned. This is where things become increasingly trickier. Because this is more than just a trip—it’s a worldwide strategic play that requires precise planning at every turn. Every choice will have an effect in the days ahead, and every comment has a deeper meaning.
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