Foreign Policy Watch: India-Nepal

If China builds your dams, India won’t buy energy: PM Narendra Modi to tell KP Oli


Mains Paper 2: IR | Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: Budhi Gandaki project, Arun III project, etc.

Mains level: There is a (virtual)battle going on between India and China of securing greater influence in Nepal.


The battle for influence in the Nepal 

  1. The Indian PM is expected to tell Nepal counterpart that he can award as many dam projects as he likes to China, but India will not be able to buy the energy produced

The $2.5-billion Budhi Gandaki project

  1. The $2.5-billion Budhi Gandaki project, on a river by the same name in central-western Nepal, is increasingly becoming the centrepiece of this tug-of-war between India and China
  2. This is because the Budhi Gandaki was awarded year to China’s Gezhouba Group, weeks after former Nepal PM (Prachanda) decided to join China’s Belt and Road Initiative
  3. But within months, Nepali Congress had taken over the Prachanda’s government, and he had cancelled the dam project
  4. But last month, Oli told the South China Morning Post that he intends to revive the Budhi Gandaki, come what may

From the point of view of Nepal

  1. According to Oli, Nepal urgently needs to develop hydropower as an alternative to the highly expensive petroleum that it fully imports, most of it from India
  2. Nepal’s fuel import bill is said to have trebled in the last five years

The Arun III project

  1. India and Nepal are going to lay the foundation stone of the $1.5 billion, 900 MW Arun III hydro-electric project in the Sankhuwasabha district of eastern Nepal
  2. It is likely that India will buy a large chunk of the power that is produced by the Arun III project, being built by the Sutlej Jal Vidyut Nigam (SJVN)

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