India vs China, in Nepal

Read this article to get a glimpse of how a small and under-developed Nepal has become a battleground for its two large neighbours


  • Nepal cancelled the Budhi Gandaki hydropower project which had been contracted to a Chinese company. The timing is crucial as it happened a few days before the first round of elections to the provincial assemblies and federal parliament
  • China’s Gezhouba Water and Power Co Ltd had won the contract from the then Maoist-led government over a year ago. It was meant to be a water storage dam along the Budhi Gandaki river in the central and western regions of Nepal.
  • It is likely the Nepalese decision was influenced by India, which has pointed to Sri Lanka and the debt trap it finds itself in after the Hambantota port project. Unconfirmed reports said the project might go to India’s NHPC instead.


India vs China, venue- Nepal’s electoral field

  • Given that Nepal’s major electoral contestants bear pro-India and pro-China tags — the Nepali Congress of Prime Minister Sher Bahadur Deuba is perceived to be pro-India while the left alliance is seen as pro-China — the decisions on hydro projects have given credence to the alleged influence of external forces in decision-making in Kathmandu.
  • P. Oli, the prime ministerial candidate of the left alliance, which includes the Communist Party of Nepal-Unified Marxist Leninist and the CPN (Maoist Centre), said the decision on Gejuwa would be reversed if the alliance was elected to office.
  • Clearly, the competing interests of its giant neighbours will continue to cast their shadow over Nepal’s future politics and development.

Why did China enter Nepal’s infrastructure sector?

  • India’s past failures in completing hydropower projects on time has discredited its image as a reliable partner in Kathmandu.
  • China entered Nepal’s hydropower sector, challenging India’s monopoly, only about a decade ago.
  • This happened because political changes in Nepal became unmanageable and chaotic, and Beijing began to get suspicious about the role of New Delhi and western powers in the country’s internal politics.

The larger trend

  • While China has been an attractive alternative for Nepal after many years of squabbling with India, where hydro-projects have been a casualty, now Beijing has another player.
  • The US, working closely with India, has earmarked one of its generous grants to Nepal for regional connectivity as part of the larger Indo-Pacific outreach.
  • The larger trend here is a pushback to Beijing’s unilateral connectivity initiative, by India, the US and Japan to work out sustainable transparent alternatives to address local and regional infrastructure needs.

The way forward

  • In the current scenario of default, one country’s failure becomes a success for another while Nepal reels in the dark.
  • The delays in the execution of projects and the external interference on the country’s development agenda have infuriated a section of policy makers, including some politicians, who insist that the government must undertake some projects as a means to enhance national pride and implement them in a time-bound manner.
  • This vision has entered national planning and government policies. The impact is visible in the planning and building of highways, but it has not percolated to the hydropower sector.
  • As far as India is concerned, to build credibility and assure Nepal that it can bank upon it, it must meet the deadlines of the current projects and offer attractive terms for the new ones. It must focus on capacity building in Nepal. India must display it big heart, while not being a big brother.


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