China’s expanding political and economic role in Nepal is challenging India’s traditional influence in Kathmandu.
The open India-Nepal border and Madhes politics make Nepal’s domestic developments a direct security concern for New Delhi.
Communist politics, royalist demands and the push for a Hindu state are reshaping Nepal’s political landscape.
For India, Nepal matters precisely because the relationship is so close. The two countries share an open border, deep economic and social ties and a long history of political engagement. But Nepal is also India's northern neighbour, bordering China’s Tibet Autonomous Region, and has seen growing Chinese political and economic engagement in recent years. For New Delhi, developments in Kathmandu can therefore have consequences far beyond Nepal’s domestic politics.
For New Delhi, the challenge is therefore not simply to counter China. India also has to manage the consequences of its own complicated history with Kathmandu, including disagreements over the 1950 Treaty of Peace and Friendship, territorial disputes and accusations of interference in Nepal's internal affairs. The 2015 Madhes crisis showed how quickly Nepal's domestic politics can spill into bilateral relations. India's interests in Nepal now depend on maintaining security and economic links without reinforcing perceptions that New Delhi expects political deference from Kathmandu.
An open border that shapes India’s security calculus
India and Nepal share a roughly 1,751-km open border. The open-border arrangement allows citizens of the two countries to travel across the frontier without visas. It has facilitated trade, employment and extensive social ties across the two countries.
It also creates security concerns. India's Ministry of Home Affairs has identified the open border as a security challenge, and the Sashastra Seema Bal (SSB) is deployed to guard India's side of the frontier.
The political sensitivity of the southern border was evident during Nepal's 2015 constitutional crisis. Madhesi parties and groups opposed aspects of the new Constitution, including provisions concerning political representation and the federal demarcation of provinces. Protests and a disruption of movement at key border points severely affected supplies entering Nepal. Kathmandu accused India of imposing a blockade, while New Delhi rejected the allegation and pointed to the unrest and security situation on the Nepali side.
The episode further strained Kathmandu-New Delhi ties and showed why the Madhes cannot be treated merely as a domestic Nepali issue. Its longstanding social, cultural and economic links with India's adjoining states mean developments in the Terai can quickly become a bilateral concern.
The 1950 treaty is another source of political friction. Nepal has repeatedly sought its revision, with critics arguing that it reflects an unequal relationship and does not reflect Nepal's present political and strategic circumstances. India has said it is open to reviewing the agreement.
China gives Kathmandu leverage — and India a problem
Nepal shares a Himalayan border with China, including the Tibet Autonomous Region, and Beijing has long been concerned with security along that border and with the question of Tibet. Its engagement with Kathmandu has nevertheless expanded into infrastructure, connectivity, trade and political relations.
Nepal signed a memorandum of understanding on cooperation under China's Belt and Road Initiative in 2017, followed by a BRI framework agreement in 2024. Beijing has also developed party-to-party links with Nepali political organisations. Carnegie Endowment research has documented its growing political engagement in Nepal since the country became a republic.
Closer ties with China give Nepal another source of investment and greater diplomatic room for manoeuvre. Kathmandu has repeatedly sought to balance its two large neighbours rather than permanently align itself with either.
India remains Nepal's largest trading partner and has extensive involvement in electricity, petroleum supplies, roads, rail links and other connectivity projects. That economic interdependence gives New Delhi substantial influence, but it does not guarantee political goodwill.
The strategic risk for India is therefore the cumulative expansion of Chinese influence at a time when trust between Kathmandu and New Delhi is uneven. The more Kathmandu can rely on Beijing when relations with India deteriorate, the less effective India's traditional leverage becomes.
Nepal’s communists balance ideology with nationalism
Communist politics has been central to Nepal's political transformation. The Maoist insurgency began in 1996 and ended with the 2006 peace agreement, after which the Maoists entered electoral politics. The monarchy was abolished in 2008, and Nepal's 2015 Constitution established a federal democratic republic.
The Communist Party of Nepal (Unified Marxist–Leninist), or CPN-UML, and the Maoist Centre have since remained major political forces. Their links with China have consequently been closely watched in New Delhi. The Chinese Communist Party has maintained party-to-party relations with Nepali communist organisations, while Chinese officials have engaged with senior leaders from across Nepal's political spectrum.
But Nepali communism cannot be reduced to Chinese influence. Carnegie research has highlighted the importance of domestic political calculations in shaping Nepal's relations with both India and China. Nepali communist leaders have at times cultivated Beijing while also engaging New Delhi, and criticism of India has also been shaped by Nepali nationalism and perceptions of Indian interference.
Equally, India's political relationships in Nepal cannot depend on one party or ideological camp. New Delhi's interests are better served by maintaining working relations across Nepal's political spectrum.
The Hindu-state push brings a new ideological fault line
Nepal's transition from a Hindu monarchy to a secular republic has also produced a political backlash. Royalist groups have demanded the restoration of the monarchy, while supporters of a Hindu state want Nepal to reverse its secular status.
Reuters reported in 2025 that thousands of royalist supporters rallied in Kathmandu demanding the restoration of the monarchy and Hindu-state status. The movement has remained part of Nepal's political debate, despite opposition from Nepal's mainstream republican parties.
Nepal's royalist and Hindu-state movements are domestic political forces and should not be described as RSS-led without evidence. But the ideological overlap is relevant to India. The RSS has long advocated the idea of a Hindu Rashtra, while Nepal's royalists and Hindu-state supporters have sought to restore the country's former Hindu-state status, which was replaced by secularism during the transition to a republic.
The overlap is therefore ideological and political, not evidence of a direct organisational relationship. It also adds another complication for New Delhi: developments in Nepal can resonate with India's own debates over religion and nationalism, while Kathmandu remains sensitive to any perception that Indian organisations or political actors are attempting to shape Nepal's internal politics.
India's historical advantage in Nepal has come from proximity, trade, energy links and people-to-people ties. But those advantages do not automatically translate into political influence.
New Delhi's task is therefore bigger than containing China. It has to protect its security and economic interests while giving Kathmandu space to pursue an independent foreign policy. India's ability to remain Nepal's leading strategic and economic partner will depend less on demanding loyalty from Kathmandu and more on making the relationship work on terms Nepal's political class and public can accept.
