Nepalese Prime Minister Balendra Shah, 36, campaigning in February/Prayushk

By Sumit Sharma Sameer and Dr. Pankaj Adhikari

July 14, 2026

KATHMANDU, Nepal — When Nepal’s foreign minister, Shisir Khanal, visited New Delhi in early June and Beijing a week later, both capitals spoke the language of friendship.

India called for a new phase in a “very special relationship,” focused on trade, energy, connectivity, health and digital cooperation. China reaffirmed support for Nepal’s sovereignty and promised deeper engagement in infrastructure, technology and investment.

The contrast was striking. India emphasized familiarity, interdependence and practical cooperation. China offered more explicit political reassurance, while welcoming Nepal’s commitment to the “One China” principle.

Yet both encounters skirted the issue that most directly implicates Nepal’s sovereignty: the protracted disagreement over the territory of Kalapani, Limpiyadhura and Lipulekh, otherwise known as the Lipulekh Pass dispute, which has resurfaced as a flashpoint over the bilateral decision by India and China to re-open the pass.

The pass was closed in 2020 amid COVID border restrictions. In August 2025, Beijing and Delhi agreed to reopen trade through the Himalayan passage — situated at 17, 400 feet on the border between Uttarakhand, India, and the Tibet region of China, near the trijunction with Nepal — along with two other routes.

On June 26th, the pass re-opened for cross-border trade and the Kailash Mansarovar Yatra, a sacred pilgrimage to Mount Kailash and Lake Mansarovar in Tibet revered by Hindus, Buddhists, and Jains.

Nepal claims Lipulekh as part of its territory and protested that the decision had been taken without its consent. China’s public support for Nepal’s territorial integrity did not prevent Beijing from treating the pass as a strictly bilateral matter with India.

The omission of Nepal from these decisions reveals the central paradox of Nepal’s foreign policy. Kathmandu has long treated India-China rivalry as its principal strategic challenge. In reality, rivalry can create room for manoeuvre. Each power has an incentive to court Nepal, offer alternatives and avoid driving it too far into the other’s camp.

The more dangerous moment comes when India and China find common ground.

Prime Minister Balendra Shah — the former rapper and 2026 TIME 100 inductee elected in March who is, at 36, the world’s youngest head of state or government — made remarks in Parliament in June that added another layer of uncertainty to the file.

Shah said that Nepal and India had encroached on one another’s territory and called for the United Kingdom, whose colonial rule in India formed the historical background to the relevant 1816 Treaty of Sugauli, to mediate in the dispute. In the wake of the predictable controversy, his government stressed that Nepal preferred bilateral dialogue with India rather than third-party mediation.

The episode exposed a recurring weakness in Nepalese diplomacy. Border policy cannot depend on improvised statements, partisan nationalism or symbolic map-making. It requires consistent legal arguments, authoritative archives, credible cartography and sustained negotiation across changes of government.

The purpose of diversification should not be to manufacture artificial balance. It should be to reduce the cost of saying no.

For Nepal, this is more than a dispute over maps. If Lipulekh were not important for trade, security, and pilgrimage, it would not have been re-opened.

But the episode demonstrates that the sovereignty of a small state can be weakened not only by coercion, but also by exclusion. When larger neighbours coordinate, they can redefine the facts on the ground, establish new practices and, in this case, gradually narrow the diplomatic space available to Kathmandu on questions of national interest.

This is the structural weakness of Nepal’s position. Its geography gives it importance, but not automatic leverage. A buffer state can benefit from competition between stronger powers, but only if it has credible institutions, coherent policies and alternative partnerships.

Without those, it risks becoming strategically relevant but politically dispensable.

Nepal’s doctrine of nonalignment remains sensible, but it is often misunderstood. Nonalignment does not mean equidistance, and strategic autonomy is not achieved by accepting one power’s designs to offset another’s influence.

India is deeply embedded in Nepal’s economy through trade, transit, employment, culture and an open border. China offers infrastructure, investment, technology and an alternative route to the outside world. Other partners, including the United States, Japan, and the European Union, can widen Nepal’s options, but they cannot replace geography.

The purpose of diversification should not be to manufacture artificial balance. It should be to reduce the cost of saying no.

A state is sovereign only to the extent that it can reject unfavourable terms without risking economic paralysis. That requires stronger domestic institutions, more resilient trade routes, transparent rules for foreign-funded projects and a national consensus on territorial and security issues.

This matters beyond diplomatic symbolism. Decisions made in Delhi and Beijing affect the prices Nepalese households pay, the markets available to farmers and hydropower producers, the reliability of transport and digital infrastructure, and the livelihoods of communities along the border. Sovereignty is sustained not only by constitutional claims, but by economic capacity.

Nepal’s task is therefore not simply to balance India and China. It is to prevent bilateral dependence from becoming strategic helplessness because while rivalry between the giants can create opportunities for Nepal, their cooperation can erase them.

India and China will continue to compete across the Himalayas, but they will also cooperate when their interests converge. Nepal’s foreign policy will succeed only when it is strong enough to ensure that such convergence does not happen over its head.

When the giants agree, Nepal must already be in the room.

Sumit Sharma Sameer is an author as well as producer and host of the Nepal-based podcast, ‘Ink & Insights’. Dr Pankaj Adhikari is a political scientist and policy advisor based in Melbourne, Australia.