News Excerpt
Nepal-China Transit protocol will come into effect from February 2020, this will end Nepal’s reliance on India for international trade. This is not a good sign for India as it means “closer” relationship between China and Nepal.

•    Earlier Nepal has transported goods to and fro via the Kolkata Port.
•    India and Nepal had signed transit treaty in 1978 which was renewed in 2013.
•    However, Nepal has accused India of imposing economic blockade twice:
o    In 1989, when Nepal was trying to buy anti-aircraft guns from China
o    In 2015, on the grounds of non-inclusion of the minority communities – Madhesi and Janjati – in the new constitution of Nepal.
•    For Nepal, its “India-Locked” status has given New Delhi leverage over Kathmandu, resulting in a search for an alternate solution via Chinese routes.

Challenges to New Routes
The Nepal China Transit Protocol may not be the wisest solution for Kathmandu to adopt. There are three major challenges that Nepal will face:
    Language Barrier: China has been trying to popularize Mandarin in Nepal, which is not liked by many in Nepal and will have a long-term implication for Nepal.  
    Long Distance: The protocol will cause a threefold increase in the trading distance from before. With China, it will be 3300 km while with India it is around 750 km only. This factor will discourage the traders for which logistics cost is bound to increase
    Geographical Barriers: Due to tough geographical features such as rugged terrain and numerous rivers, Nepal suffers from poor transportation and communication system. On the other hand, China has a very well-equipped transportation system with good roads. This is the reason behind the lacklustre performance of Chinese imports in Nepal.

India’s Options
    Improvise on the congestion and inefficiency in the Kolkata port and provide adequate facilities within that port.
    Remove unnecessary restrictions that are prevalent on road transits.
    Excessive inspections and documentation could rather act against India instead of aiding the entire process.
    Housing and handling facilities at the border need proper and adequate attention.
    There is a need to manage movement of trains, arrangement of locomotives and freight rate as well as schedule so that there is no congestion faced by freight trains.

This is a testing time period for India–Nepal relations as the bilateral relations between China and Nepal is entering a new phase. Belt and Road initiative has been an essential opportunity for China to take its relations with the South Asian nations to a distinct level. Thus, it becomes important for India to revive its civilizational relations and to prioritize the only genuine way ahead – ‘Neighbourhood First’.

Kalapani Conflict
    Kalapani is a 35 square kilometre area situated on the eastern bank of river Mahakali. It is claimed by both India (Pithoragarh district, Uttrakhand) and Nepal (Darchula district) as an integral part of their territories.
    Kalapani is also a tri-junction point, where the Indian, Nepalese and Tibetan (Chinese) borders meet. The region has been manned by the Indo-Tibetan Border Police since 1962.
    The source of river Mahakali is at the heart of the dispute between the countries.
    The 1816 Treaty of Sagauli, signed between British India and Nepal, defined river Mahakali as the western border of Nepal. River Mahakali has several tributaries, all of which merge at Kalapani.
    India claims that the river begins in Kalapani as this is where all its tributaries merge. But Nepal claims that it begins from LipuLekh Pass, the origin of most of its tributaries.
    India has used tax records and surveys for upper reaches of river Mahakali to support its claims while Nepal has presented similar maps from 1850 and 1856, showing that river Mahakali begins in Kalapani.
    The two countries had formed the Joint Technical Boundary Committee in 1981 to resolve the dispute. Though the committee managed to resolve a large part of the dispute, they failed to reach a final settlement.
    In 1996, India and Nepalsigned the Treaty of Mahakali in 1996.

China-Myanmar Pact
ª    Recently, Chinese President visited Myanmar where two countries signed important pact including the one on China-Myanmar Economic Corridor.
ª    This visit came in the backdrop of international isolation faced by Myanmar on the Rohingya Issue worldwide.  Such kind of situation is often used by Chinese to strengthen their interest in the Indian neighborhood.
ª    China perceives Myanmar as a potential gateway to the Indian Ocean. This is evident from the fact that it signed a concession agreement and shareholders’ agreement for the Kyaukpyu Special Economic Zone (SEZ) deep seaport project.
ª    This seaport project provides China with an alternative to Straits of Malacca, which is currently their lifeline for energy transportation as well as a trade corridor.
ª    This rings alarm bell in India, as one more neighbor gets hooked to Chinese Cheque book diplomacy and ultimately get caught into debt trap.
ª    This also calls for India to invest more in Myanmar and deals with it without seeing it from the Rohingya perspective.
ª    The positive aspect for India is that large swathe of Myanmar is skeptical about these projects which have no significant benefits for Myanmar.