The Himalayan state of Nepal could cast a shadow over the recent thaw in India-China relations, as it objects to the resumption of border trade through Lipulekh Pass in Uttarakhand. Yet, the strong resolve of New Delhi and Beijing to reopen established routes suggests that such objections may not derail their renewed engagement. The decision to restart border trade through Lipulekh, Shipki La in Himachal Pradesh, and Nathu La in Sikkim is being viewed by both governments as a critical step toward strengthening cooperation despite long-standing disputes.
Kathmandu, however, has raised a note of protest. Nepal’s Ministry of Foreign Affairs asserted that “Limpiyadhura, Lipulekh, and Kalapani east of the Mahakali River are integral parts of Nepal,” adding that its official map—endorsed by the country’s Constitution—includes these areas within Nepali territory.
What stands out in this round of exchanges is India’s reaction. In the past, New Delhi would often take time to weigh its words and issue carefully calibrated responses. This time, however, the Ministry of External Affairs wasted no time in rejecting Nepal’s claim. MEA spokesperson Randhir Jaiswal dismissed the assertions as “neither justified nor based on historical facts and evidence,” describing them as “unilateral, artificial enlargement of territorial claims” that are untenable.
Jaiswal also underscored India’s longstanding position: “Border trade between India and China through Lipulekh Pass commenced in 1954 and has been going on for decades.” What was disrupted in recent years, he clarified, was largely due to the Covid-19 pandemic and other external factors, and both countries have now agreed to resume it. The message was clear—this is an established practice, not a new concession, and New Delhi does not see grounds for Kathmandu’s protest.
Nepal’s political undercurrents
The debate over Lipulekh is not only a diplomatic flashpoint; it is also a politically charged issue within Nepal itself. For many Nepalis, questions of sovereignty and territory tap deep into national identity and pride. The controversy has the potential to spark fresh protests and social unrest, particularly in Kathmandu where anti-India sentiments have historically found traction.
Political analyst Professor Adwitya Thapa of North Bengal University notes that whether tensions spill over into the streets will depend largely on Nepal’s leadership and its ability to manage internal politics. But there are clear signs that domestic rivalries are fuelling the dispute. Prime Minister K. P. Sharma Oli, facing dissent within his ruling Communist Party of Nepal (Unified Marxist–Leninist) – UML party, is under pressure. Former president Bidya Devi Bhandari, a senior UML figure, has been steadily consolidating support and is seen as closer to Beijing. In contrast, Oli, once aligned with China, has fallen out of favour with the Chinese leadership.
This internal tug-of-war gives the Lipulekh issue a new edge. Oli knows that showing flexibility toward India could help him stabilise his leadership, but it would require softening his hardline position on the disputed areas. That is no small task for a leader who, during the Covid-19 crisis in 2020, pushed through a new map of Nepal that controversially included nearly 400 sq. km of Indian territory, enshrining it into the country’s constitution. That unilateral action, at the time when Indian troops were facing Chinese aggression in Ladakh, deeply angered New Delhi.
The larger picture: India-China relations
While Nepal grapples with its internal dynamics, the bigger story is how India and China view their renewed engagement. Relations between the two Asian giants nosedived after the violent Galwan Valley clash in June 2020, when troops from both sides fought with sticks and stones, leaving soldiers dead on both sides—the first such fatalities in decades. The underlying problem remains an ill-defined 3,440 km disputed frontier, where rivers, ridges, and glaciers make the border ambiguous and volatile.
Yet in recent months, signs of recalibration have emerged. Chinese Foreign Minister Wang Yi’s visit to New Delhi underscored a willingness to move past the acrimony. Meeting Prime Minister Narendra Modi, Wang conveyed that relations had gone through “ups and downs” but carried “lessons worth remembering.” For both capitals, the resumption of border trade is a pragmatic way to re-engage, while leaving larger disputes to the slow grind of negotiations.
Professor Thapa believes the thaw has become a top priority for both governments: “Each side will ensure that it does not get foiled or spoiled in any way.” Against this backdrop, Nepal’s protests over Lipulekh may not significantly alter India-China dynamics. “Don’t forget,” Thapa adds, “this trade is nothing new—it has been happening even before.”
Nepal’s dilemma
Still, Nepal’s ruling elite finds itself in a bind. On one hand, they cannot afford to be seen as compromising on national sovereignty, especially when territorial pride can mobilise public anger overnight. On the other hand, the reality is that both India and China are moving ahead with border trade, effectively treating Lipulekh as Indian territory. For Oli and his rivals, the optics are important, but the space for actual maneuvering is limited.
Professor Thapa points out another dimension: Nepal could have viewed the agreement more creatively, as an opportunity for trilateral cooperation, rather than a threat. “Nepal stands to gain through spin-offs. But instead of seeing it that way, it has become a nationally charged issue.” The observation speaks to Nepal’s political culture, where issues involving India are often used to score internal points, reinforcing the narrative that “India will always dominate us.”
India’s calculated moves
Meanwhile, New Delhi has been carefully engaging Kathmandu through diplomatic backchannels. Foreign Secretary Vikram Misri’s recent visit to Nepal was seen as part of a broader effort to nudge discussions toward dialogue rather than confrontation. With Prime Minister Oli scheduled to meet Narendra Modi in Bodh Gaya in the second week of September, observers believe India will press Oli to address boundary issues through talks—and crucially, not to obstruct the positive trajectory in India-China relations.
Alongside high-level visits, India has recalibrated its engagement with Nepal through development cooperation, cultural diplomacy, and people-to-people initiatives that highlight shared ties rather than contested borders. At the same time, New Delhi has made clear that reopening the Lipulekh route with China is a matter of bilateral continuity that cannot be held hostage to domestic shifts in Nepal. The balance is deliberate—soft power to reinforce goodwill, coupled with firmness on sovereignty and flexibility in dialogue—ensuring that Kathmandu’s protests remain a side note rather than the main story.
In this context, China’s tacit acceptance of Lipulekh as a trade route with India could even be read as a snub to Oli and a quiet nod to his rival, Bhandari. The subtle power plays between Beijing, New Delhi, and Kathmandu only deepen the intrigue.
Between pride and pragmatism
At its heart, the Lipulekh issue is about more than just a remote Himalayan pass. For India and China, it symbolises the possibility of pragmatic cooperation despite lingering border disputes. For Nepal, it encapsulates the perennial struggle between safeguarding sovereignty and navigating the pressures of two giant neighbours.
This tug-of-war between pride and pragmatism has long defined Kathmandu’s political discourse. On one side, national pride over territory is a powerful rallying cry that no leader can afford to dismiss. On the other, there is a pragmatic recognition that Nepal’s stability and prosperity depend on balanced ties with both India and China. This duality often produces a cycle of fiery rhetoric followed by quiet compromise. The Lipulekh controversy appears set to follow the same path: loud objections for domestic consumption, but eventual acquiescence under the weight of geopolitical realities.
For ordinary Nepalis, however, these recurring disputes often translate into little more than heightened emotions and passing protests, while the real challenges—economic vulnerability, job scarcity, and the need for cross-border trade—remain unaddressed. In this sense, the Lipulekh episode is not just a story of high politics but a reminder of how symbolic disputes can overshadow everyday concerns. The choice before Nepal’s leaders is whether to continue feeding nationalist pride or to embrace pragmatism in ways that tangibly improve the lives of their citizens.
