Discuss the potential role India can play in initiating a possible phase of trilateral economic engagement among India, China and Nepal. (2025, 15 Marks)
Nepal has long cast itself as “a bridge, not a buffer” between its neighbours, and trilateral economic engagement is the policy form of that idea. Beijing floated a China–Nepal–India economic corridor in 2018; India has never rejected the idea, and never advanced it. Two things make the question live: Nepal’s political reset after the Gen Z uprising (September 2025), with Balendra Shah as Prime Minister from 27 March 2026, and the India–China thaw since 2025.
Why each party sees it differently
- Nepal gains transit options, investment and room to avoid choosing; its trade, transit and power markets still run overwhelmingly through India.
- China gains legitimacy for its presence on India’s Himalayan frontier at low cost.
- India hesitates: the boundary with China is unsettled, Himalayan infrastructure is dual-use, and trust has been thin since Galwan (2020). When India and China agreed in August 2025 to reopen border trade through Lipulekh, Nepal protested at once that the pass is its territory.
Shared foundations
Buddhist heritage, old trans-Himalayan trade routes, an open 1,751 km India–Nepal border and the Indian grid into which Nepal sells its power give India the strongest hand of the three.
The role India can play
- Enabler of energy trade: Nepal has sold power on Indian exchanges since 2021, and the first Nepal–India–Bangladesh trade (November 2024) carried 40 MW to Bangladesh across the Indian grid. The same model, under agreed rules, could carry hydropower built with mixed finance.
- Trade facilitation: customs harmonisation, digitised transit and integrated checkposts on existing routes yield gains without new corridors.
- Tourism circuits: linking Lumbini, Bodh Gaya and the Kailash Mansarovar route, reopened in 2025, costs almost nothing politically.
- Disaster and climate cooperation: after the Bhotekoshi flood of August 2026, triggered by an ice-rock avalanche near the Tibet border, Shah proposed at the UN General Assembly (24 September 2026) a Himalayan Climate Resilience Mechanism led by Nepal, India and China to share satellite data and early warnings. India can take this up first, as a low-risk entry point.
- Agenda-setter: by naming acceptable sectors itself, India removes the grievance that it blocks Nepal’s options, without granting China a corridor to the Gangetic plain.
Limits and safeguards
- Strategic transport such as the Kerung–Kathmandu railway, security matters and anything needing an agreed map should stay off the table.
- India’s rules barring imports of power from projects with Chinese equity would need a carve-out, or they would cap the energy track.
- Nepal’s own caution matters: no BRI project has been completed since it signed on in 2017.
- David Mitrany’s functionalism suggests technical cooperation builds trust; Ernst B. Haas’s hope of neofunctional spillover is weaker where sovereignty disputes persist.
Conclusion
India should lead with a selective trilateralism, open in named non-strategic sectors and closed in strategic ones. S. D. Muni’s call for a framework of Indian and Chinese “developmental coexistence” in Nepal turns Nepali hedging into a managed variable and tests whether the two Asian giants can cooperate at all; a climate mechanism is the obvious first step.