India, China and Nepal: An Emerging Trilateral Relation in the 21st Century

We have agreed to describe our relationship as a “Strategic and Cooperative Partnership for Peace and Prosperity”.<br>Jaideep Mazumdar

Oct. 19, 2012, 5:45 p.m. Published in Magazine Issue: Vol.: 06 No.-09 Oct. 19 -2012 (Kartik 03, 2069)<br>

On this 63rd anniversary of the founding of the Communist Party of Nepal, I was struck by the fact that The Communist Party of Nepal is older than the Republic of India and older than the People’s Republic of China. It is fitting therefore that on the 63rd anniversary of its founding, we are discussing “India, China and Nepal: An Emerging Trilateral Relation in the 21st century”.






In many ways, the last twenty years or so have seen India and China rediscovering each other. At the political level, there is unprecedented dialogue between the leaders of the two countries at the highest levels. Our leaders meet either bilaterally or on margins of international and regional summits at least two to three times a year. This has resulted in building trust and confidence between the two sides. Both India and China aver that there is enough space in the world for both countries to grow.  We have agreed to describe our relationship as a “Strategic and Cooperative Partnership for Peace and Prosperity”. Earlier this year, President Hu Jintao on a visit to India proposed five points on how to raise this strategic partnership to an even higher level. Prime Minister Dr. Manmohan Singh then described the relationship as “one of the most important bilateral relationships of the 21st Century”. 


The number of bilateral mechanisms we have instituted together are too numerous to mention. We have recently instituted a Strategic and Economic Dialogue, we have a defence dialogue, our armies carry out joint exercises and our navies are doing the same with close cooperation in anti-piracy in the Indian Ocean.



We have close coordination and cooperation on burning international issues such as on climate change, and in the G-20, we have cooperated well in giving developing nations more say in the global financial governance architecture.


Nor is this relationship limited to governments. In 2010, I had the privilege of helping to organize a Festival of India in China spread over eight months and covering the length and breadth of the country involving many dozens of performances and hundreds of artistes. A similar festival was organized by China in India. Visits of school children and youth are organized from both sides every year.  Indian television dramas are dubbed or subtitled in Chinese and have proven to be immensely popular. During my visits to provinces in China, many people have told me how popular and addictive they are. On the other hand, the Central Board of Secondary Education of India has only last month signed an agreement with the Confucius Institute Headquarters to introduce Chinese as a foreign language for middle school students in CBSE schools in India starting with 500 schools and gradually extending to all 11,500.



But in no other area is the growth of our relationship as spectacular as that in the field of economics. Nearly 20 years ago when I was a young First Secretary in Beijing, our bilateral trade was 438 million US dollars. By 2000 this had grown slightly to just about 3 billion US dollars. In a decade since then, this grown to 74 billion US dollars. To put this figure into perspective, the bilateral trade between India and China is four times Nepal’s entire GDP. And we are targeting bilateral trade of US$ 100 million by 2015.


Today, China is India’s largest trading partner in the world and India is China’s seventh largest export destination.


And nor is this relationship limited to only trade. There are presently 723 Indian projects in China with well known names like Infosys, TCS, APTECH, Wipro, Mahindra and Mahindra, Dr. Reddy’s, Suzlon Energy, Reliance Industries and many others all active in China. As many as 10 Indian banks have operations in China.


Similarly more than 100 Chinese companies have operations in India ranging from automobiles, energy, machinery, telecom to steel. A company like Huawei has located its international R&D center in Bangalore that employees over 2000 Indian IT professional.


Till December last year, the total contractual investment of projects being implemented by Chinese companies in India was US $ 55 billion covering such sectors as energy, aluminium and steel.


These economic relations have blossomed as they are backed by a host of bilateral agreements including BIPPA signed in 2006 and Double Taxation Avoidance Agreement signed in 1994.




Turning to India-Nepal relations, India is Nepal’s biggest trading partner and also the largest foreign investor. India is also home to an estimated 5-6 million people from Nepal who live and work in India. They can freely reside, purchase property and work not only in the private sector but in the Government of India and in State governments. There are Nepali citizens in the Indian army at every level - from generals, brigadiers and colonels to soldiers. It is the historical, cultural and civilizational affinity between the two countries and an open border that makes all this possible.


Economic development today is all about connectivity and energy. It is for this reason that India is building over 1400 kms of roads in Nepal and constructing five rail lines connecting Nepal with the Indian railway network for the rapid movement of goods and people.


Even in the area of hydropower India and Nepal are complementary. India presents a vast ready market for hydropower for Nepal. With only run-of-the-river projects, in the summer when there is peak demand in India, there would be surplus in Nepal to export and in winter when Nepal is unable to generate much electricity as water levels in rivers go down, she can use whatever is generated to meet domestic demand and import any shortfall. Already in India, power trading between regions is a thriving business. Even with only 4% of India’s electricity being traded, the turnover in power trading is Indian Rs 30,000 crores. Such power trading has the potential to make Nepal the richest country in South Asia.


Finally, for any country, peace, stability and prosperity of its neigbhours is of utmost concern. There is an old Chinese saying that it never rains on your neighbour without you getting your feet wet. India is committed to assist Nepal in any way it desires to build a peaceful, stable and prosperous Nepal.


For India, China and Nepal, Geography has made us neighbors. History has made us friends and Economics has made us partners. Those who are joined by geography, history, and economics cannot but work together for their common benefit.  


Mazumdar is Charge d’ Affaires a.i., Embassy of India. Excerpts of the paper presented by Mazumdar at the seminar on India, China and Nepal: An Emerging Trilateral Relation in the 21st Century.  

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