What’s behind Nepal’s pivot away from India?

Nepalese Prime Minister KP Sharma Oli’s upcoming visit to China signals a strategic shift in Nepal’s foreign policy: the Himalayan nation seems to be inching closer to Beijing as frustrations with New Delhi simmer.

While the visit (December 2-6) highlights Nepal’s growing engagement with China, it also reflects the complexities of balancing its traditional ties with India.

Oli’s decision to prioritise China over India for his inaugural visit marks a break from a long-standing tradition among Nepalese leaders. Traditionally, successive prime ministers have visited New Delhi first, underscoring Nepal’s cultural, economic and political ties with India.

However, after months of perceived snubs by the Indian leadership—including silence on Oli’s invitation to Indian Prime Minister Narendra Modi at the UN General Assembly—the pivot to China appears calculated.

The Nepalese leader enjoys a close relationship with Chinese President Xi Jinping. His tenure has seen significant strides in Nepal-China relations, from signing the historic Transit and Transportation Agreement in 2016 to hosting Xi for a state visit in 2019.

These moves reflect Oli’s broader strategy of reducing Nepal’s dependence on India, particularly after the 2015 blockade imposed by New Delhi that crippled Nepal’s economy.

China’s growing regional influence presents opportunities for Kathmandu, but the pivot comes with challenges. Experts caution that Nepal’s attempts to counterbalance India could alienate its southern neighbour, whose trade with Nepal stood at $8.4 billion in 2023 compared to China’s $1.2 billion.

Bishnu Rijal, a central committee member of Oli’s Communist Party of Nepal (Unified Marxist-Leninist), says Beijing is poised to exploit the growing rift between Kathmandu and New Delhi.

“China is eager to fill the vacuum in Indo-Nepal ties,” he said. “This strategic gap could be an opportunity for China, especially if criticisms of India intensify.”

Oli’s Beijing agenda is ambitious. It includes negotiating a waiver on the $216 million loan for the Chinese-built Pokhara International Airport and finalising stalled Belt and Road Initiative (BRI) projects.

But Nepal's counting on China for infrastructure development raises questions about debt sustainability. Concerns about the Chinese “debt trap” grow, with many citing Sri Lanka’s Hambantota Port as an example.

Chinese experts are sceptical about Nepal’s prospects of securing a loan waiver. Gao Liang, deputy director of the Nepal Study Centre at the Institute of South Asian Studies at Sichuan University, says: “Personally, I don't think that's very likely. Making such a request in itself would not be conducive to Nepal's image enhancement in the international investment market.”

Gao says granting a waiver to Nepal could set an unsustainable precedent. Instead, he suggests that Nepal explore more practical options, such as negotiating an extension of the repayment period (which begins in 2026) or proposing alternative repayment methods agreeable to both countries.

Despite growing Chinese investments, India remains deeply embedded in Nepal’s economic framework. From pipelines to transmission lines, India’s connectivity projects have accelerated, contrasting with the delays and complications in BRI projects.

India-China rapprochement

Oli’s visit coincides with a thaw in India-China border tensions, marked by recent agreements to cooperate on patrols. While this rapprochement could reduce Kathmandu’s leverage in playing one neighbour against the other, it also opens doors for trilateral cooperation in trade, energy and infrastructure.

Experts argue that a harmonious India-China relationship could ease regional tensions, benefiting smaller nations like Nepal. However, this balancing act is not always easy.

“Nepal must avoid positioning China as an alternative to India. Instead, we should aim for a balanced approach, maintaining strong ties with both nations,” says Rupak Sapkota, a foreign policy expert.

“Historically, Nepal has leaned towards China when its relations with India deteriorate, but this reactive strategy is no longer viable in today’s complex geopolitical landscape.”

Nepal’s growing engagement with China mirrors broader trends in South Asia, where Beijing’s infrastructure diplomacy is reshaping the region. This rivalry creates opportunities for Nepal but also risks, as the country seeks to balance its development ambitions with maintaining independence.

Sapkota, who served as a foreign policy adviser to Oli’s predecessor Pushpa Kamal Dahal, says Nepal had developed strategic autonomy by consistently declining to join the US-led Indo-Pacific Strategy or China’s Global Security Initiative.

Nepal also rejected India’s Agnipath scheme, a military recruitment programme.

However, this neutrality comes with costs. Major powers have scaled back aid, as much of it is tied to alliance memberships, slowing Nepal’s access to international economic cooperation. Reduced international aid and slowed access to economic cooperation have hampered development.

China’s strict COVID-19 policies had also strained ties, stalling key infrastructure projects and limiting tourism.

Meanwhile, India’s influence remains strong, rooted in shared cultural ties and economic interdependence.

As Oli courts Beijing, Nepal must carefully navigate its relationships with both neighbours. Leveraging China’s infrastructure diplomacy while maintaining ties with India requires nuanced strategy.

“While India may attempt to pressure Nepal to avoid tilting towards China, the depth of current China-Nepal relations makes such a shift unlikely. The partnership has advanced to a level where it cannot be easily undermined,” Sapkota says.