Nepal’s Uneasy Position Amid India-China Trade Agreement on the Lipulekh Dispute

 

    The Lipulekh Pass, located at the tri-junction of India, China, and Nepal, has once again become the focal point of diplomacy and politics in the region. Recently, India and China jointly announced the resumption of trade through this route, which had been suspended for years due to the COVID-19 pandemic and border tensions. While this move is being interpreted as a positive development in India-China relations, it has placed Nepal in an awkward and uncomfortable position.

    Nepal promptly lodged a formal objection, asserting that Lipulekh, Kalapani, and Limpiyadhura are integral parts of its territory, and that no activity in these areas is acceptable without its consent. This reaction goes beyond a mere border dispute—it reflects how the shifting geopolitical dynamics of Asia are bringing the interests of smaller and larger nations into collision.

    Lipulekh holds significance not just for trade. It is a traditional route for the Kailash-Mansarovar pilgrimage and serves as a vital corridor for connectivity between India and Tibet. India claims the area as part of its Pithoragarh district in Uttarakhand, while Nepal contends that since the region lies on the eastern bank of the Mahakali River, it rightfully belongs to Nepal.

    At the root of the issue lies the 1816 Treaty of Sugauli, signed between British India and Nepal, which vaguely defined the boundary based on the origin of the Mahakali River. India maintains that the river originates from Lipu Gad, while Nepal insists that the true source is a stream flowing from Limpiyadhura. This differing interpretation has led to the long-standing territorial dispute over Kalapani, Lipulekh, and Limpiyadhura.

    Trade between India and China through the Lipulekh Pass has been ongoing since 1954, and the route is also key for pilgrims traveling to Kailash-Mansarovar. Nepal has consistently maintained that any activity in the area requires its approval, given its claim over the territory. India rejects Nepal’s claim, asserting that the pass lies within its sovereign territory.

    The dispute escalated further in 2019, following the reorganization of Jammu and Kashmir, when India released a new political map that included Kalapani and Lipulekh within its borders. Nepal saw this as a violation of its sovereignty and responded sharply. In 2020, India extended a road up to Lipulekh, which Nepal viewed as a direct challenge. Protests erupted across Nepal, and in response, the Nepalese Parliament passed a constitutional amendment to adopt a new political map that included Lipulekh, Kalapani, and Limpiyadhura as parts of Nepal. India dismissed this move as an artificial expansion and did not recognize the map. This episode significantly strained India-Nepal relations and fueled anti-India nationalism within Nepalese politics.

    Now, with India and China announcing the resumption of border trade through Lipulekh, Nepal has again responded strongly. The Ministry of Foreign Affairs in Kathmandu stated unequivocally that it had already informed China that the area belongs to Nepal. Nepal’s Parliament and major political parties also voiced unanimous opposition. For Nepal, this issue is not merely about territory—it is a matter of national identity and pride. Back in 2020, the political spectrum across Nepal had stood united in support of the new map. A rare moment of unity in Nepalese politics was achieved over the question of national sovereignty, and that sentiment remains strong even today.

    India, on the other hand, has reiterated that trade through Lipulekh with China has been ongoing since 1954, and the recent announcement does not mark a new development. The Indian Ministry of External Affairs maintains that the border dispute with Nepal can only be resolved through bilateral dialogue, and that the involvement of a third party is unacceptable. India's approach remains to continue talks with Nepal while securing its own strategic and economic interests with China.

    China's role in this matter is perhaps the most intriguing. Beijing merely stated that traditional trade routes—Lipulekh, Shipki La, and Nathu La—will be reopened. It has remained silent on Nepal’s objections. This silence is telling. China does not openly endorse Nepal's claims, likely because of its broader strategic and economic interests with India. Analysts believe China is treating this issue like a "silent card"—it knows Nepal seeks closer ties, but it does not wish to provoke India directly. Therefore, China neither supports Nepal's claim publicly nor opposes India’s position.

    Nepal’s unease stems not just from a geographical dispute, but also from its internal political vulnerabilities. Since 2020, anti-India nationalism has gained momentum in Nepalese politics. During this time, China extended economic and political support to Nepal, but Nepal also knows that its dependency on India is deep-rooted. With an open 1,850-kilometer-long border, shared cultural and familial ties, and dependence on India for education, employment, and healthcare, Nepal finds itself in a complex duality—desiring autonomy, yet deeply connected to India.

    For India, Lipulekh is not just a trade route—it is a strategically vital outpost along the China border. It is also the safest and most convenient route for the Kailash-Mansarovar pilgrimage. Hence, India views control over this area as essential for both security and religious reasons.

    Nepal, however, sees India and China cooperating over a region that it claims as its own, without any consultation or acknowledgment. It views this as an affront to its sovereignty. Hence, its protest is not just diplomatic but deeply emotional—tied to its national psyche. Political instability at home, frequent government changes, and the constant challenge of balancing relations with both India and China exacerbate Nepal’s discomfort.

    At the end of August, Nepal’s Prime Minister K.P. Sharma Oli is expected to visit India, with a potential visit to China also being discussed. The Lipulekh dispute is certain to dominate the agenda during both visits. Nepal will seek serious attention to its claims from both nations. India will aim to keep the issue within bilateral channels, while China will likely avoid any direct involvement.

    Three key takeaways emerge from this ongoing dispute:

1.   India and Nepal must resolve the border issue through peaceful dialogue. A sustainable solution must be based on facts and diplomacy, rather than emotional nationalism.

2.   China’s strategic silence speaks volumes—it does not wish to play an active role but still influences policies in both Nepal and India.

3.   Nepal’s internal political dynamics complicate the issue, as governments tend to frame it as a matter of national pride.

    Clearly, the Lipulekh dispute is not just a question of lines on a map. It is a blend of history, politics, diplomacy, and national identity. For Nepal, it is about asserting its identity; for India, it is about security and strategy; and for China, it is a silent card to be played when the time is right. The coming months will reveal how these three nations navigate this delicate geopolitical triangle while pursuing their own interests.