Few believed the Nepalese Prime Minister Pushpa Kamal Dahal when he said in Kathmandu ahead of his departure for New Delhi for talks with his Indian counterpart, that he expected the visit to be a “historic” one.

Dahal told the Nepalese media: “I am confident that history will be created in my visit. I am setting out with this confidence. Our relationship with India is unique due to an open border; economic, political and social relations; and people-to-people contact. This kind of relationship cannot be found elsewhere.”

Nepal-Indian relations had been fraught for a number of years over old and new issues. While the Nepalese complained of Indian hegemony, the Indians complained about Nepal’s dalliance with China. The fact that Prime Minister Dahal was heading a Maoist party only made matters worse from the New Delhi angle.

However, it is now clear that, behind the scenes, Dahal and Narendra Modi had been moving towards a rapprochement. Dahal, head of a Maoist Communist party, had realised that India under Modi could not be wished away, especially because of the stature bestowed upon it by the United States and the West, its fearless advocacy of the interests of the Global South in international forums and its importance in the comity of nations as chair of the G20 and the Shanghai Cooperation Organization (SCO).

Nepal had no option but to fall in line with New Delhi’s thinking because its economic links with the rest of the world is solely through India. Nepal shares a border of over 1,850 km with five Indian States, namely, Sikkim, West Bengal, Bihar, Uttar Pradesh, and Uttarakhand. Land-locked Nepal relies heavily on India for the transportation of goods and services.

Nepal's access to the sea is also through India. Its imports are predominantly from India and through India. The economic and social links across the border are large, multifarious and irreplaceable.

The open border and the stark dependence on India for trade and employment had placed Nepal-India relations at a level no other bilateral relationship could match. And in contrast to a politically stable and strong India, Nepal is politically unstable, weak and lacking in direction.

Although in ideological conflict with India, Dahal saw the writing on the wall and thought it fit to mend fences with it to be able to stabilise his government and fulfil its pledges to the people.

India too sought to repair its fraught ties with Nepal both in furtherance of Modi’s “Neighborhood First” policy and to wean Nepal away from the charm of China’s “chequebook” diplomacy.

Nepal-India rapprochement was more than evident in the joint press conference held by Dahal and Modi after talks on June 1. Modi said that Dahal and he had agreed to take India-Nepal ties to “Himalayan heights” and added that “in this spirit, we will resolve all issues, be it boundary related or any other issue, and make the partnership between the two countries a super hit.”

Modi recalled that, nine years ago, in 2014, within three months of taking office, he had made his first visit to Nepal.

“At that time I had given a ‘hit’ formula for India-Nepal relations based on Highways, I-ways, and Trans-ways. I had said that we will establish such a relationship between India and Nepal that our borders do not become barriers between us,” he said.

The two sides also signed seven agreements to boost cooperation in a range of areas, including the extension of a cross-border petroleum pipeline, the development of integrated check posts, and boosting cooperation in hydroelectric power. A particularly noteworthy pact that was signed was the revised India-Nepal Treaty of Transit.

Significantly, the two leaders virtually inaugurated integrated check posts at Rupaidiha in India and Nepalgunj in Nepal. They also virtually flagged off a cargo train from Bathnaha in Bihar to the Nepal customs yard.

To further strengthen cultural and religious ties with Modi’s Hindu nationalist government, Dahal decided that projects related to the Ramayana circuit would be expedited. That this appealed to Modi was evident when it was Modi who referred to it at the press conference.

In his remarks, Dahal said that he appreciated Modi’s “Neighborhood First” policy and added, “The relations between Nepal and India are age-old and multi-faceted. This relationship stands on the solid foundation built on one hand by the rich tradition of civilisational, cultural, and socio-economic linkage and on the other by the firm commitment of the two countries to the time-tested principle of sovereign equality, mutual respect, understanding and cooperation.”

Dahal said that the two sides discussed ways to further strengthen cooperation in diverse areas including trade, transit, investment, hydro-power, power trade, irrigation, power transmission line, expansion of petroleum pipeline, construction of integrated check post and land and air connectivity.

Heaping praise on Modi, Dahal said, “We are happy to see the remarkable transformation of India’s economic and development landscape under the able leadership of PM Modi. I congratulate PM Modi on the completion this week of nine years in government with far-reaching achievement in many fronts.”

Would the trip satisfy the noisy opposition in Nepal? Dahal wanted his Delhi agenda to have all-party backing. Before leaving for Delhi, he consulted former prime ministers including Sher Bahadur Deuba, K. P. Oli, Jhala Nath Khanal and Baburam Bhattarai. Former foreign ministers and ambassadors to India were also included in the consultations.

However, the opposition, particularly, the Communist Party (Unified Marxist Leninist) led by K.P.Sharma Oli, is bound to raise unresolved issues. Oli had asked Dahal not to be “cowardly” in seeking India’s recognition of Kalapani, Lipulekh and Limpiyadhura as part of Nepal. Oli accused Dahal of not incorporating these places in the new map of Nepal.

Nepalese parties have been seeking the replacement of the 1950 peace and friendship treaty and also India’s views on the 2018 report of a joint Eminent Persons’ Group (EPG) on bilateral relations.

PM Modi has agreed to discuss the boundary issue, but he has not made any statement on the status of Kalapani Lipulekh and Limpiyadhura and other disputed areas, which are strategically critical for India.

Rivers like Mahakali, Karnali, Sapt Gandak and Sapt Kosi originate in the trans-Himalayan region, cross Nepal and flow southwards to join the Ganges in India. According to the ‘Indian Defense Review’, Nepal contributes 45% to the average annual flow to these rivers but occupies only 13% of the total drainage. Nepal wants this situation changed.

There is also a Nepalese demand for a revision of the 1950 India-Nepal treaty which gives India and Nepal special privileges in each other’s territory. Nepal has been feeling that the 1950 treaty is weighted in favour of India and needs to be renegotiated. But India is wary about changes, especially with the threat from China looming large on the horizon. Apparently, the revision of the 1950 treaty was not discussed.

New Delhi is also avoiding the report of the joint Eminent Persons Group (EPG) that was finalised in 2018. Nepal is reluctant to move on the report without first getting feedback from India. There is thus a stalemate.

Current indications are that New Delhi might not like to break the ice on the report before it is sure that it will not harm its core interests in strategic, security, economic and geopolitical terms. Apparently, the EPG report was skirted in the Delhi talks.

The “Agnipath” scheme for fresh Indian military recruits is as controversial in Nepal as it is in India. Nepal supplies Gurkhas to the Indian army in substantial numbers. Many Nepalese families depend on recruitment to the Indian army. But under the Agnipath scheme, 75% of the recruits (whether Indian or Nepalese) will be discharged at the end of four years, with a one-time payout but no pension. The prospect of unemployment after four years is daunting for rural youth in both countries.

Nepal is seeking an exemption for Nepalese Gurkhas from the scheme. But there is no word about this subject being discussed at the June 1 talks.