Nepal should enhance its interaction with Indian economy

The relations between Nepal and India, which saw the lowest ebb in 2015 border blockade, were taken to newer heights in the last couple of years. But another issue has emerged following a new map published by India that included Kalapani and Lipulek in Indian territory. Though many good projects such as Arun III, Integrated Check Posts, Postal Highway and cross-border railways are being developed with Indian support, the border issue has the chance of souring bilateral relations yet again. In this backdrop, Gopal Khanal, Jagadish Pokhrel and Modnath Dhakal of The Rising Nepal daily held a conversation with Indian Ambassador Manjeev Singh Puri weeks before his tenure in Kathmandu ends on 31 December. Excerpts:

For any Indian diplomat, it is said, taking charge in Nepal is very challenging. What is your experience? Whether Nepal was tough or easy, I don't know. But I knew that I was on a very important assignment. I was very proud and privileged that towards the end of my career, I got a chance to represent India in a country which I believe is our closest neighbour, relationship with which was fundamental to India's foreign policy.
I also understood that there were challenges. But I believe that challenges are inherent to any diplomatic assignment. I was very happy and honoured to be posted here.

There is some anti-Indian sentiment prevalent in Kathmandu. As an ambassador, after spending over two and a half years, did you feel this?
India and Nepal are two unique countries with people going across the border that is open. Everyone understands everything about the other person. In such circumstances, contestations are part of the game, and I don't believe this is something that should be taken as out of the ordinary. Our relationship lies at the level of the people. We are societies living together. There are degrees of contestations. Everybody wants to get the best for himself. My experience says that we have grown up in the Westphalian mode of nation state, which gives Nepal the feeling of a small state. But the world has evolved, and collaboration has come to the forefront. If there is a matter, we can find a way around it. If there is an issue, let’s find a solution.

In this context, India recently released a new map including Kalapani in its territory, which is contested by the government as well as people here. You also might have witnessed street-level protests as well. How can we solve the problem?It is difficult for me to say anything on the issue. The map is about the changes in the status of states in India, it has nothing to do with India's external boundaries, including those with Nepal. The exact same boundary has been there in all the maps before. I believe there can be all kinds of issues if you have 1800 kms of border - an open border which we have inherited. If we have some issues, we need to discuss them, and I am sure we have been discussing them. So, I must say, sitting in Nepal, I know where people are coming from, those who are saying this. I just want to leave one thought for everyone that we are such uniquely positioned countries and societies that if we have issues, we talk about them and find the solution. But we must be a little careful about one or two things that these sorts of things do not give any opportunity for anyone else. For me, it’s extremely important because we are bound together, we live together and we will live together, and we know what to do with each other. 

The government of Nepal is working to achieve the national aspiration of 'Prosperous Nepal, Happy Nepali'. No other country in the world has as much of a vested interest as we have in a prosperous Nepal. We are societies, economies and people linked with each other. If you make progress, we also will be benefitted. I am sure that the governments on both sides are mature enough to take things forward.

Do you have any prescription for a way forward to this impasse? If and where there are issues like this or any other, they should be discussed and resolved in a bilateral way. Let me give you an example, Nepal and India have an open border and people can freely move to either country, but in case of goods, only those specified in the bilateral Transit Treaty can move to Nepal from India or vice-versa. Over the years, there were so many sets of issues which were resolved. It is natural that some issues take time to get resolved. Border issues were also resolved. In the past, watershed principles and other geographical dividers were used to set the borderline but recently, recognising modern technology and shifting of riverine borders, we decided to move to fixed-point borders. When the governments of two countries can resolve this, they can address any other issue.

In fact, some Nepali authorities have also taken it as 98 per cent of the border problem solved, then why should we let the remaining 2 per cent, including Susta and Kalapani, trouble our deep, unique and exquisite bilateral relations?You are right. In my opinion, that 98 per cent should be worked on to be made 99 and 100. That’s my understanding but sometimes things need greater time and understanding. There are so many factors in our historical evolution, but people and government on both sides have always shown a will to sit down together, talk and find a solution. It takes a lot of determination on the part of the governments and people who matter to resolve this. We have demonstrated that we can find a solution.

Are there other issues, besides border, that are sticking points in bilateral relations? The usual and standard sticking points in bilateral relations are economic and trade issues. But we have long-term mechanisms that keep meeting year after year. They don't always create the Mt. Everest of progress but make incremental gains. We have a joint mechanism on trade and another on transit. For years, one of the sticking points was bulk cargo. There were two issues – what constitutes bulk cargo and what transit points should be used. The demand was to expand it, but we also have infrastructure and environmental issues. However, within a year or two, we have arranged the movement of bulk cargo through multiple transit points. In bilateral relations you make a demand, or I make a demand, the other side goes back and studies and tries to find out the solution within the favourable ecosystem. 

When Rt. Hon’ble PM KP Sharma Oli visited India in 2018, he said that he had three dream projects in agriculture, inland waterways and railways. I felt so happy when he visited Uttarakhand in India and was honoured by a PhD by the Govinda Ballabh Pant University of Agriculture and Technology. He also expressed his wish to connect Nepal with the Indian inland waterways. And within two years, Nepal has joined the Indian National Inland Waterway and in the near future it will transport its goods via those channels. We are developing the Ganges as the major waterway in India which will help Nepal carry goods from Kolkata to very near its border at a minimal cost. It’s a good feeling. 

What are the other highlights in that connection?Raxaul-Kathmandu Railway is another dream project. It is difficult to create railways in the young-fold mountains, but the project will move ahead. Currently, feasibility studies are underway. Technical and financial capabilities of both the countries have gone up, so ways and means can be found. 

There are many other things that need mention, but I would like to say two things. First, we started the process to unleash Nepal's hydropower potential. When I was in school, there was a Canadian study about Nepal's hydropower potential but in so many years the potential hasn’t been harnessed. And there is good news that within a very short span of time after the launch of the 900 MW Arun III Hydroelectricity Project by Rt. Hon’ble PM Oli and Hon’ble PM Narendra Modi, the project has achieved almost 25 per cent progress. I think there was no project in Nepal that is being implemented on such a large scale with industrial engineering. 900 MW is almost equal to what Nepal is producing now. Can you imagine the changes it will bring to the economy and people? It will increase the power availability and money flow. God has given us resources and we should have the capacity to harness them. 

Second thing I would like to mention is the petroleum pipeline. We were talking about the project for quite a long time, but things were not happening. The project was inaugurated in April 2018 and diesel started flowing to Nepal in September 2019. Rt. Hon’ble PM Oli announced a Rs. 2 reduction per litre fuel during the joint remote inaugural of the project with Hon’ble PM Modi. I don't think that there can be any better example of direct benefit to individual citizens. The pipeline has also contributed to better environment along the road and quality supply. Integrated Check Posts (ICPs) are also another important project in the area of bilateral trade.

Building on this optimism, where do you see Nepal-India relations in the next five or 10 years?Nepal's preparation to graduate to a Middle Income Country is going well. You have done well and the world has recognised it. I know, nobody wants this kind of graduation because some positive discriminations go against you. But on the other hand, you will move ahead with greater pride. To realise the middle-income status by 2030 or earlier, Nepal should enhance its interaction with the Indian economy. Today we are a 2.5 trillion dollar economy and Hon’ble PM Modi has set a target to make it a 5 trillion dollar economy in the next five years. It gives you an immense opportunity as your business people, economists and government know us and there is an easy reach-out. 

At the same time, Nepali community is increasing in Bengaluru and Hyderabad where IT industry is booming, which is attracting the brightest minds. If we can smoothen and accelerate the processes, the relationship between the two economies will only go places. Similarly, there are companies in India that want to set up manufacturing plants in Nepal and they are not coming here just to get benefits from the arbitrage difference of duties in exports to India. They want to do global business from here. Animal vaccine manufacturing company can be a good example. Likewise, India can be a large source of tourists.

There is an issue with the report of Eminent Persons Group (EPG). The report had to be received by the prime ministers of both the countries, but India is reluctant to receive it. Would you like to comment on this?I am not in a position to comment on it. The Embassy of India was not part of the process. I am sure these things are being worked at by the concerned people.

We have been reading comments in Indian media that Nepal was moving closer to China with its support to China-proposed Belt and Road Initiative. What do you say about it?I don't want to comment on third country relations. You are a country that has age-old relations with both of its neighbours. It is your country's decision, I don't want to comment on it. At the same time, I would say that Nepal should be a little more cognisant of geography even though technology will allow us to overcome geography. But, as things currently stand, things are moving in one direction. The country with which Nepal's exports are increasing is India. Similarly, hydropower being generated in Nepal is also either destined for India or will be wheeled through it.

BRI and Indo-Pacific Strategy have been quite an issue. Nepal has been a partner of BRI and criticised in connection with the IPS. How is India assessing this?It's not for me to comment on Nepal's foreign policy vis-à-vis its relations with USA and China. But I want to tell you that India and Nepal share a unique relationship underpinned by nature, people, society and economy from times immemorial. Therefore, so far as we are concerned, we have remained engaged and we will remain engaged. Nepal is extremely important to us, and its prosperity is in our interest.

Going beyond bilateral engagement, what do you think of our engagement in regional forums such as SAARC or SCO?
You hosted the BIMSTEC summit here. We were very privileged our Prime Minister was here. We are a strong believer in regionalism. We are all working hard on BBIN (Bangladesh-Bhutan-India-Nepal) sub-regional network for vehicle connectivity. As far as SAARC is concerned, these institutional arrangements are predicated on one thing that countries work in such a manner that the institutional arrangements of other countries are not adversely affected. You cannot be, in any way, supporters of terrorism, fanning terrorism or nurturing it. One of the members of the SAARC needs to introspect and decide for itself how they will eradicate anything to do with terrorism. And that would be the way forward for this organisation. As far as all the rest of us are concerned in this part of Asia, if we work together to marry the interests of everybody, we should build better security and better life for our peoples. I see we are working in that direction.

Published in The Rising Nepal daily on 10 December 2019.