Regardless, India must keep engaging Nepal
China's constant outreach to Nepal in the form of massive foreign direct investment (FDI) may have raised eyebrows in Delhi's political corridors. China is listed as the top foreign investor in the Himalayan nation, leaving India behind. Beijing's grand strategy to expand its wings across Africa, West Asia, latin America and particularly around the Indian sub-continent, is not a new phenomenon. But then, why does India need to be worried about China's engagement with NepalIJ It is not that New Delhi can prevent any nation from investing in its neighbourhood. Given the fact that today, the world is in the process of intensified globalisation, FDIs in any form can travel to any part of the world from any nation. From this globalist perspective, India should not at all be bothered about Beijing's financial overtures to Kathmandu. But from a strategic perspective, India has good reasons to be concerned about China's growing proximity to Nepal. India's relations with Nepal dates back to ages, and the country desires to maintain the status quo. But, the changing political dynamics in the region and specifically in Nepal, has at times dented the friendliness between the two neighbours. This was evident when the then Prime Minister of Nepal KP Sharma Oli had visited China last year and attended the latter's most prominent economic conference — Boao Forum for Asia. What caused tension in Delhi were the agreements signed during this visit. The Nepalese Government, in a way signalled the end of the country's sole dependence on India for utilising the transit right of a landlocked nation. Even during the historic protest movement launched by the Madhesis in 2015, the Oli Government accused India of orchestrating a purposeful blockade in the country, disturbing the supply of all essential goods and services. Then also, China appeared as an attractive trading partner to rescue Nepal from the crisis. However, the impetus for this sad saga of bilateral relations came from India's cold reception of and subsequent reaction to the promulgation of a new Constitution by the Oli Government in 2015, which did not fully factor the Madhesis grievances. With the coming of Pushpa Kamal Dahal ‘Prachanda’, India's relations have taken a positive turn.
There has indeed been a sharp rise in China's FDI in Nepal. It has grown exponentially, and China accounts for more than 68 per cent of all the FDIs pledged for Nepal in the first half of the present fiscal year. According to Nepalese Government sources, China's current share is viewed as a huge 40 per cent jump from its total FDI pledged for Nepal by many other nations in 2015-16. Also, the total FDI pledged into Nepal last year for the same period was just $51.93 million as compared to this fiscal's $76.39 million. By contrast, India stood at just $18 million in 2015-16. This year too, it’s far lower than what China has invested. New Delhi has a point when it says that India-Nepal relations are not just measured in terms of the amount of FDI pledged. It goes beyond, as India contributes more than $50-70 million each year as aid to Nepal. Therefore, India must remain focussed on a sustained relationship with Nepal, while also keeping a close eye on advancements from the Chinese side