Nepal Between Two Giants: How the RSP Government Will Navigate India-China Relations

Nepal sits between the world's two most populous countries. Every government in Kathmandu must manage this geography — a constraint that has shaped Nepali foreign policy since the Treaty of Sugauli in 1816 defined Nepal's borders with British India.

The RSP government enters office with a different starting position than its predecessors. Where Maoist Centre maintained warm ties with Beijing and Nepali Congress tilted toward New Delhi, RSP has positioned itself as genuinely equidistant — a word easy to say but rarely practised in Nepali politics.

Three immediate tests will define the RSP government's foreign policy credibility.

First: the Belt and Road Initiative review. Nepal signed the BRI framework agreement with China in 2017, but no project has been completed. The RSP government has committed to renegotiating terms to ensure projects are commercially viable rather than politically driven, and to publishing full contract terms publicly.

Second: the Indo-Nepal border disputes. There are approximately 50 land boundary disputes pending between Nepal and India, most originating from colonial-era Survey of India maps. The previous government did not resolve a single one during its tenure. RSP has promised to complete a boundary settlement on at least 20 disputes within the government's five-year term.

Third: remittances and labour diplomacy. Nepal receives remittances equal to approximately 25-26% of GDP — one of the highest ratios in the world. Over 2 million Nepali workers are in foreign employment, primarily in India, the Gulf, and Malaysia. The RSP government has announced a Labour Diplomacy initiative to improve worker protections and negotiate better bilateral labour agreements.

Nepal Next will track all three against public commitments and official government documents.