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Promises and Perils of Nepal’s India Pivot

Kathmandu should avoid making sweeping claims that constraints in India-Nepal ties have disappeared or that the anti-India nationalism in Nepal has run its course.

Indian humanitarian aid being dispatched to Nepal following the flash floods in the Tibet-Nepal region on Aug. 26, 2026.

After months of keeping New Delhi at arm’s length, Nepal’s Balendra Shah government is discovering both the appeal and the political risks of drawing it closer.

Formed after the March 2026 elections, the Rastriya Swatantra Party (RSP) government did not start on the right foot with the southern neighbor. First, new Prime Minister Balendra Shah declined a one-on-one meeting with then-Indian Ambassador Naveen Shrivastava, in keeping with his policy of not meeting any foreign officials.

What rankled more with the Indians was his subsequent refusal to meet India’s Foreign Secretary Vikram Misri, who was coming to Kathmandu carrying Indian Prime Minister Narendra Modi’s formal invitation for Shah to visit India. Misri’s trip was called off. India — which continues to emphasize its “unique” relations with Nepal that are unlike its ties with any other country — saw this as a snub, and a breach of trust.  

Those were not the only irritants in bilateral ties. The new government in Kathmandu started taxing goods bought by Nepali nationals in Indian border towns, hampering the business of these hubs that rely on Nepali buyers. Entry of Indian vehicles into Nepal was also restricted.  

That was the state of affairs for the first five or six months of the Shah government.

But the tide seems to have turned and the government now appears keen to woo the Indians. At the forefront of this effort is Finance Minister Swarnim Wagle.

Even before the March elections, as a top RSP leader, Wagle had repeatedly visited New Delhi with a message that should his party come to power, it would go the extra mile to protect Indian interests.  

Of late, Wagle seems to have gotten the government’s green light to boldly assert that the era of “anti-India nationalism” in Nepal is over and his government is ready to turn over a new leaf with the southern neighbor.

Curiously, he and his government also sound accommodative of India’s self-declared red lines. In a recent interview with The Hindu, the Nepali minister said that Nepal now accepts that India’s refusal to buy hydropower from Nepali projects with Chinese investment is a “new geopolitical reality.”

Yet the finance minister is only laying the ground for Shah’s much-awaited India visit in the third week of November. Home Minister Sudan Gurung has also contributed to this effort, outlining potential areas of bilateral cooperation in a recent op-ed. Big deals are being planned during Shah’s visit.

But for any government in Kathmandu, close relations with India come with both costs and benefits. The........

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