Prachanda will head the new government in Nepal until 2025 as part of a deal reached with the CPN-UML

Prime Minister Narendra Modi has congratulated Pushpa Kamal Dahal alias ‘Prachanda’ on being elected as the new Prime Minister of Nepal, stating he looks forward to working with him to further strengthen the friendship between the two countries.

"Warmest congratulations Comrade Prachanda on being elected as the Prime Minister of Nepal. The unique relationship between India & Nepal is based on deep cultural connect & warm people-to-people ties. I look forward to working together with you to further strengthen this friendship,” Prime Minister said in his tweet on Sunday.

Prachanda, a CPN-Maoist Centre chairman, was appointed Nepal's new Prime Minister after the former guerrilla leader dramatically broke away from the five-party ruling alliance led by the Nepali Congress, ending the political uncertainty after last month's general elections failed to produce a clear winner.

Prachanda has support of 165 lawmakers in the 275-member House of Representatives which includes CPN-UML with 78, CPN-MC with 32, RSP with 20, RPP with 14, JSP with 12, Janamat with 6 and Nagarik Unmukti Party with 3.

Nepal is an important neighbour of India and holds a special significance in its foreign policy because of the geographic, historical, cultural and economic ties that span over centuries.

Besides sharing an open border and unhindered movement of people, Indo-Nepalese also have close bonds through marriages and familial ties, popularly known as “Roti-Beti ka Rishta.”

When it comes to trade and economy, India is Nepal’s largest trade partner and the largest source of foreign investments, besides providing transit for almost the entire third country trade of Nepal.

Total bilateral trade between the two countries in 2021-22 reached $11005.10 million. While India carried out $9634.06 million worth of exports in 2021-22, Nepal exported $1371.04 million worth of goods to India in the same period.

India is the largest source of investment into Nepal, accounting for more than 32% of the total FDI stock of Nepal, which is worth nearly $520 million, as per NRB (Nepal Rastra Bank) data until mid-2020.

There are about 150 Indian ventures operating in Nepal engaged in manufacturing, services (banking, insurance, dry port, education and telecom), power sector and tourism industries.

Indian companies and investments have played a key role in Nepal’s national economic journey by contributing to industrialization, employment generation, government revenue and export earnings.