Building Bridges: Analyzing PM Dahal’s Recent India Visit

Posted by : Sourav Dahal


Date : 2023-06-14

Building Bridges:

Analyzing PM Dahal’s Recent India Visit

Prime Minister Pushpa Kamal Dahal (Prachanda) concluded his four-day visit to New Delhi, India on June 3rd, 2023. This marked PM Dahal’s first foreign visit after nearly five months of assuming office in his third-time Premiership. During his first stint as the Prime Minister in 2008, PM Dahal had broken the century-long tradition of visiting India as the incumbent PM’s first foreign destination and had chosen to visit China instead, which reportedly had irked India. This time around, PM Dahal’s inaugural foreign visit brought home some major breakthroughs; specifically in energy trade, connectivity, infrastructure projects, cross-border digital connectivity, and border-disputes. Prime Minister Narendra Modi acknowledged pre-existing border disputes, and pledged to address the same – the acknowledgement is, in and of itself, remarkable. The parties in opposition however sought to downplay the success of the visit – some questioned the motive behind communist PM ’s temple visit in a saffron dress and rightly so, others raised questions regarding PM’s remark about swapping lands to settle border dispute and remarked that the visit brought many commitments but no concrete deals; while a few pointed that the much-touted aviation deal wasn’t materialized. The visit, perhaps had shortcomings - lack of bare minimum preparedness was glaringly visible – and in an ideal scenario, more could have been achieved. Despite this, when seen from the vantage point of consequential deals and commitments that are in Nepal’s long-term favor, PM Dahal’s India visit was largely successful.

Breakthrough in Energy Trade and Hydropower Projects

Of all, the visit has notable achievements in cross-border energy trade in which Nepal has secured access to Bangladesh via India. The agreement signifies an important milestone for Nepal as it marks the first-ever bilateral agreement with its neighboring country for the purpose of exporting electricity to a third nation. The deal would allow Nepal to export  40 to 50 MW of electricity, which is expected to commence shortly after the three parties reach an official agreement to the same effect. In addition to this, Prime Minister Narendra Modi made a commitment to purchase 1200 MW of electricity from Nepal. Currently, India imports 452 MW of power from Nepal, and this new commitment paves the way for Nepal to sell a staggering 10,000 MW of power to India over the next decade. Nepal now has surplus hydropower production in wet seasons, and PM Modi’s commitment would enable Nepal to capitalize on this and earn foreign revenue. These two agreements are in Nepal’s long-term interest as a path has been paved for Nepal to have access over a third-country energy market; and India could even allow access to other South Asian energy market in the future. Further, if Nepal’s hydropower export to India continues to grow, it could even provide Nepal with some strategic leverage in the long-run.

An agreement was signed for the construction of 480 MW Phukot-Karnali Hydroelectric Project between Nepal’s Vidhyut Utpadan Company and India’s National Hydroelectric Power Corporation - the project was earlier proposed to China to be constructed under the Belt and Road Initiative. Similarly, a project development agreement (PDA) was signed for the construction of the 669 MW Lower Arun Hydropower Project. India has introduced a policy which prohibits “trade with power plants that had ownership from any country that shares land border with India but doesn’t have a bilateral power treaty with India" – indicating China and Pakistan. India then refused to buy electricity from Nepal’s largest 456 MW Upper Tamakoshi Hydroelectricty Project (UTKHEP) which was constructed by a number of contractors including China’s Sinohydro. Nepal’s decision to collaborate with India for the construction of hydropower project which was earlier proposed to China could therefore be seen as an attempt to forge deeper energy ties with the southern neighbor which provides Nepal with a large and accessible energy market.

Important Agreements Pertaining Connectivity

Even in arenas of connectivity, the visit brought some major breakthroughs. The Nepal-India Transit Agreement which had expired in 2019 was revised which grants Nepal an access to India’s inland water routes for the transportation of cargo to seaports. And, an Integrated Check Post (ICP) was agreed to be established at Chandni Dodhara, and ICP in Nepalgunj-Rupaidiha was inaugurated. The foundation stone for the ICP to be built in Bhairahawa was laid, construction of the new Butwal-Gorakhpur transmission line was inaugurated and an agreement was reached for the construction of the Dodhara-Chandni dry port.

Equally important is the one on cross-border digital connectivity - an agreement to conduct financial transactions through QR codes. To date, while cross-border transactions for the acquisition of goods and services using cards have been possible, financial transactions through QR codes wasn't. Now, an accord has been achieved between the Nepal Clearing House and the National Payment Corporation of India, establishing a connection between the two entities responsible for operating the payment system in India.

An agreement was also reached between the two nations to build two petroleum pipeline projects. As per the agreement, a petroleum pipeline will be built from Siliguri in India to Charali in Jhapa, Nepal; and the existing pipeline from Amlekhgunj will be extended to Lothar in Chitwan. India is to provide around Nrs. 17 billion for these two pipeline projects.

Few Misses

While some negotiations, such as those regarding Nepal's aviation route via India, did not yield the desired results - as India only granted access to the Instrument Landing System (ILS) but is yet to grant a permit for an additional air entry point for the two newly-inaugurated international airports in Pokhara and Bhairawaha. Similarly, no substantive progress was made in regards to contentious border disputes between the two, and the opposition criticized PM for not even raising the issue about the final report of Eminent Persons Group (EPG). But an acknowledgment by PM Modi of the pre-existing border issues, and his commitment to make concerted efforts to address the same in the near future, in and of itself, is appreciable.


Despite carrying the burden of high expectations set by media hype and the opposition’s narrative, Prime Minister Dahal effectively navigated the diplomatic landscape, sealing substantial deals and managing to convince his counterpart to at least acknowledge upon certain contentious issues. This subtly emphasizes the diplomatic success of the visit. Although the opposition attempted to downplay the visit as ‘underwhelming,’ it is crucial to consider the limitations of a single visit, especially when led by the Prime Minister of the third-largest party heading a six-parties’ coalition government. It would be unfair to anticipate a radical breakthrough, in this visit, on longstanding contentious issues that have plagued Nepal-India relations for decades. This isn’t to claim that there was no room for further negotiations and deals but owing to the limitations, only so much could have been achieved. Perhaps, the long-term impact of the visit is contingent on India’s readiness to abide by its pledges but for now, the visit, in overall, is successful.