Discuss the potential role India can play in initiating a possible phase of trilateral economic engagement among India, China and Nepal.

India's Strategic Imperatives for Trilateral Engagement

India's approach to trilateral economic engagement with China and Nepal is driven by several strategic imperatives:

• Countering "Debt-Trap Diplomacy": India seeks to offer sustainable development alternatives to Nepal, especially in contrast to concerns about China's debt-based financing under initiatives like the Belt and Road Initiative (BRI). India has been providing grants and concessional credits to Nepal, unlike China's loan-based approach.
• Regional Stability and Connectivity: A stable and economically prosperous Nepal is crucial for India's border security and regional influence. Enhanced connectivity and economic integration can reduce vulnerabilities and promote shared prosperity.
• Leveraging Shared Resources: The vast hydropower potential of Nepal, along with its rich tourism resources, offers avenues for trilateral collaboration that can benefit all three nations, addressing energy needs and promoting sustainable development.
• Soft Power and Cultural Ties: India shares deep cultural, religious, and people-to-people ties with Nepal. Trilateral economic engagement can be strategically leveraged to reinforce these bonds, including through initiatives like the Ramayan Circuit for religious tourism.
• Addressing Trade Imbalances: While India is Nepal's largest trading partner, Nepal faces a significant trade deficit with both India and China. Trilateral cooperation could help diversify Nepal's economy and export base.

Potential Avenues for Trilateral Economic Engagement

India can play a pivotal role in initiating trilateral economic engagement across various sectors:

1. Connectivity and Infrastructure Development

• Trans-Himalayan Multi-Dimensional Connectivity Network (THMCN): While China has proposed a "China-Nepal-India Economic Corridor" under the BRI, India can advocate for and participate in connectivity projects that respect sovereignty and territorial integrity. This includes developing roads, railways, and air links that facilitate trade and tourism across the three nations.
• Cross-border Railways and Roads: India is already developing a railway line connecting Raxaul, India, with Kathmandu, Nepal. India can explore possibilities for coordinated development with China on similar infrastructure projects that enhance regional connectivity without compromising strategic interests.
• Integrated Check Posts (ICPs): India's assistance in developing ICPs at border points like Nepalgunj and Bhairahawa can be expanded, potentially involving trilateral discussions to streamline customs and logistics for goods moving between all three countries.

2. Energy Cooperation

• Hydropower Development: Nepal possesses immense hydropower potential. India has been actively involved in developing projects like the 900-MW Arun III and 679 MW Arun-4. A trilateral framework could facilitate joint investment from India and China in Nepal's hydropower sector, with power sharing mechanisms benefitting all.
• Power Trade: India has approved the export of power from Nepal. Exploring trilateral power transactions, potentially including Bangladesh, could create a regional energy grid, reducing reliance on fossil fuels and fostering energy security.

3. Trade and Investment

• Market Access and Supply Chains: India can work with China and Nepal to facilitate better market access for Nepali products in both Indian and Chinese markets. This could involve harmonizing trade standards and reducing non-tariff barriers.
• Industrial Clusters and Special Economic Zones (SEZs): Joint investment in industrial clusters along the Nepal-India border, and potentially with Chinese participation, could boost manufacturing, create employment, and diversify Nepal's export basket.
• Tourism Development: A "cultural corridor" focusing on shared Buddhist heritage can be developed, attracting tourists from all three countries and beyond. Joint tourism packages and infrastructure can enhance this sector.

4. Knowledge Sharing and Capacity Building

• Agricultural Collaboration: Sharing best practices in agriculture, climate-resilient farming, and food processing can benefit Nepal, a largely agrarian economy.
• Disaster Management: Given the Himalayan region's vulnerability to natural disasters, trilateral cooperation in disaster preparedness, early warning systems, and relief efforts is crucial.
• Environmental Protection: Joint initiatives for preserving the Himalayan ecosystem and addressing climate change impacts are vital for the sustainable development of the region.

Challenges to Trilateral Engagement

Despite the potential, several significant challenges hinder effective trilateral cooperation:

• India-China Geopolitical Rivalry: The underlying geopolitical competition and trust deficit between India and China, particularly concerning border disputes and China's strategic initiatives like the BRI, remain major obstacles. India views the BRI as infringing on its sovereignty, especially the China-Pakistan Economic Corridor (CPEC).
• Nepal's Balancing Act: Nepal seeks to maintain a non-aligned foreign policy, balancing its relations with both India and China to maximize its national interests. This often leads to cautious engagement with trilateral proposals.
• Sovereignty Concerns: India has expressed concerns regarding connectivity projects that do not respect sovereignty and territorial integrity, a clear reference to aspects of the BRI.
• Trade Imbalances: Nepal faces significant trade deficits with both India (NPR 144.67 billion in FY 2024-25) and China (NPR 51.80 billion in FY 2024-25), complicating economic integration efforts.
• Lack of Trust and Transparency: Building mutual trust and ensuring transparency in project implementation and financing models will be critical for any trilateral initiative to succeed.

Role of India in Initiating a New Phase

India can initiate a possible phase of trilateral economic engagement by:

• Adopting a "India-Nepal-China Plus" Model: India could propose a framework where bilateral cooperation with Nepal is supplemented by specific, mutually beneficial projects with China, rather than a broad, all-encompassing trilateral corridor that may raise sovereignty concerns. This "2+1" model has been discussed previously.
• Focusing on Non-Traditional Security Issues: Starting with cooperation on non-controversial areas like climate change, disaster management, and public health can build confidence and lay the groundwork for more complex economic collaborations.
• Championing Regional Connectivity: India can proactively propose and fund connectivity projects within Nepal that are transparent, sustainable, and cater to Nepal's developmental needs, thereby inviting China to participate under a clear set of rules and respecting Nepal's agency.
• Engaging in Multi-stakeholder Dialogues: Facilitating academic and policy dialogues among experts, businesses, and government officials from all three countries can help identify common interests and innovative solutions.
• Leveraging International Platforms: Utilizing platforms like BIMSTEC, SAARC (if revived), and other regional forums to discuss and build consensus on trilateral economic initiatives.