Nepal is one of India’s largest and most prominent development partners
With the India-Nepal Development Partnership continuing to expand for over seven decades, the 10th India-Nepal Line of Credit (LOC) Review Meeting held in Kathmandu, Nepal last week provided a good opportunity for both sides to review the progress of ongoing projects which are at various stages of implementation.

“Both sides appreciated the strong cooperation in the India-Nepal Developmental Partnership, including through the LOCs (Lines of Credit) extended to Nepal,” the Indian Embassy in Nepal said after the meeting held on August 10, 2023. Site visits to ongoing road projects being built with Government of India’s LOCs were also carried out by the visiting Indian delegation on August 9 and 11, 2023.

Nepal is one of India’s largest and most prominent development partners. India-Nepal cooperation for developing modern infrastructure in Nepal began in 1951, with the construction of the Gauchar Airport in Kathmandu (the present-day Tribhuvan International Airport). The India-Nepal Development Partnership has continued and expanded for over seven decades. The projects under this Development Partnership have been diverse in size and sectors with a geographical spread throughout the Himalayan nation.

India's assistance to Nepal covers a wide range of sectors, including infrastructure, education, health, agriculture, and capacity building. This reflects the close relationship between the two countries, which is based on a shared cultural heritage and people-to-people ties.

According to information provided by the Indian Embassy, the Government of India’s LOC portfolio is more than USD 30 billion and is spread across more than 60 partner countries. In Nepal, it includes four LOCs - USD 100 million, USD 250 million, USD 550 million and USD 750 million - totalling USD 1.65 billion. These LOCs are dedicated towards infrastructure development as prioritized by the Government of Nepal. So far, these LOCs have financed more than 40 road projects (1105 km completed), 6 projects in hydropower and transmission lines, and several others in housing and reconstruction.


Power transmission infrastructure in Nepal has seen a major upgrade and augmentation with major projects under Indian LOCs. These projects include the Koshi Corridor (220 kV), Modi Lekhnath (132 kV), Solu Corridor (132 kV) and the Dhalkebar-Bhittamod (400 kV) projects. As of now, upto 452 MW of power export is being carried out through the Dhalkebar-Bhittamod 400 kV line.

Additionally, the Government of India has also agreed to fund the Bheri Corridor, Nijgadh-Inaruwa and Gandak Nepalgunj Transmission lines and associated substations under Indian LOC at an estimated cost of USD 679.8 million.

Incidentally, several agreements pertaining to Nepal’s power sector were signed between the two countries during Nepal Prime Minister Pushpa Kamal Dahal ‘Prachanda’s visit to India from May 31 to June 3, 2023. These included a Memorandum of Understanding (MoU) regarding the Fukot-Karnali 480 MW hydropower project development and the 669 MW Lower Arun Hydropower Development Project Agreement.

The ground-breaking ceremony for the Indian section of the Gorakhpur-Bhutwal Transmission Line also took place during the Nepal Prime Minister’s visit. This collaborative project will strengthen the power transmission network, boosting energy integration and efficient electricity distribution.

At the same time, India-Nepal collaboration in the energy sector was highlighted through the ground-breaking ceremony for the Motihari-Amlekhgunj Petroleum Pipeline's phase II facilities. This would strengthen the infrastructure for petroleum delivery, ensuring a constant flow of energy resources to fulfil both countries' rising demands.

In order to improve transportation connections between the two countries, the Kurtha-Bijalpura portion of the Jaynagar-Bijalpura-Bardibas cross-border rail line was officially handed over. Jaynagar is located in the Indian state of Bihar, about 4 km from the border with Nepal. Prime Minister Narendra Modi and Prime Minister Pushpa Kamal Dahal ‘Prachanda’ also witnessed the inaugural run of an Indian railway cargo train from Bathnaha (India) to Nepal Customs Yard.

Furthermore, the two Prime Ministers officially inaugurated the Inland Customs Points (ICPs) in Rupaidiha, India, and Nepalgunj, Nepal, strengthening the bilateral commerce ecosystem. These ICPs operate as key nodes for customs clearance, promoting effective trade procedures, and fostering economic growth.


High Impact Community Development Projects (HICDPs) are another important aspect of the India-Nepal development partnership. These are short-gestation projects with a maximum financial outlay of NPR.5.0 Cr (INR.3.0 Cr).

These grass root projects have been implemented in the priority sectors of Government of Nepal such as hospitals, schools, colleges, drinking water facilities, sanitation & drainage system, rural electrification & hydro power plant, embankment and river training works for creating adequate capacity building and construction of new infrastructure and enhancing the quality of life and all round development of people of Nepal.

According to information provided by the Indian Embassy in Nepal, since 2003, India has undertaken more than 535 High Impact Community Development Projects in Nepal, of which 478 have been completed.

Apart from taking up infrastructure development projects, India has also shared technical know-how with Nepal in various fields including education, health, archives, archaeology, irrigation, power, horticulture, development of industries, and trade promotion, contributing in its social-economic development.