As India accelerates towards self-reliance, Nepal has a tremendous opportunity to integrate into its supply chains, providing raw materials, skilled labour and production support
The recent tariffs imposed by the United States on Indian imports have undoubtedly sparked concerns about economic disruptions. However, history has consistently shown us that challenges of this nature often act as catalysts for transformation. Rather than perceiving this as a setback, this might be an opportunity that allows India to reinforce its economic strength while simultaneously deepening strategic ties with Nepal, for whom India is their largest trading partner.
Trade tensions invariably lead to uncertainty but also compel nations to innovate, diversify and explore new opportunities. Recall the economic sanctions imposed on India following the Pokhran nuclear tests in 1998. At the time, many feared an economic downturn. Instead, India emerged stronger, transforming adversity into self-reliance and robust economic growth.
Diplomatic engagement with the US must be our urgent priority to mitigate these penalties. India must lessen the shock and guarantee that the April 2025 policies do not burden the Indian industry. However, self-reliance must be our long-term strategy to avoid future economic constraints. By minimising dependency on external markets and increasing indigenous skills, we may eventually reduce the risk of foreign manipulation or coercion into economic slavery.
These tariffs highlight the pressing need for India to expand and reinforce domestic manufacturing. Our Make in India and Viksit Bharat initiatives must be fast-tracked, establishing a robust industrial base that serves local demand and positions us as a key player in alternative global supply chains.
This is where Nepal can play an invaluable role. As India accelerates towards self-reliance, Nepal has a tremendous opportunity to integrate into our supply chains, providing raw materials, skilled labour and production support. Such an alignment would bolster Nepal's economic stability and growth while allowing India to offset trade imbalances resulting from shifting US policies.
Nepal and India share more than trade. We share profound cultural links, an open border and long-standing collaboration. Regional cooperation will be vital as India seeks ways to offset these levies. Nepal can improve infrastructure, cross-border trade, and energy, agriculture and tourism investment by aligning its policies with India's economic plans.
Energy is one of the most promising areas – already in focus – for Indo-Nepal collaboration. Nepal has abundant hydropower, whereas India craves clean, sustainable energy. Energy trading with India will boost Nepal's economy and provide a regular revenue source that is less affected by global market swings. Strengthened energy cooperation will draw foreign investment into Nepal's renewable energy industry, making it a key player in South Asia's sustainable power transition.
Tourism and cultural exchanges boost the economy. India sends millions of tourists abroad, and Nepal might become a prominent destination. Nepal appeals to Indian pilgrims due to our shared religious and cultural background. Pashupatinath Temple in Kathmandu, Muktinath in Mustang and Lumbini, Buddha's birthplace, have already drawn Indian visitors. Nepal may increase revenue and strengthen people-to-people ties by investing in world-class tourism infrastructure, enhancing transit and promoting its legacy in India. India benefits from regional stability and economic security from a strong Nepal.
Nepal's agriculture could boost economic integration. Nepal can become a significant supplier of organic vegetables, herbs and medicinal plants as India adopts organic farming. Strengthening our agricultural trade agreements would provide Nepalese farmers access to a much bigger consumer base and provide India with high-quality, natural food.
Infrastructure development between India and Nepal is underway, but we must accelerate cross-border rail networks, integrated checkpoints and digital trade facilitation. Nepal must participate in these endeavours and align its trade policy with India's vision of a self-sufficient and linked South Asia. This will provide Nepal access to broader markets and keep it vital to India's trading landscape. Improved road connectivity between rural Nepal and Indian markets will boost trade efficiency, getting Nepalese commodities to Indian consumers faster and cheaper.
Our countries' digital trade and financial integration will ease transactions and boost cross-border enterprise. With unified payment systems, digital banking and simplified customs, trade will be easy. Incorporating Indian fintech technologies into Nepalese start-ups and businesses will strengthen the digital economy and generate new revenue for India's technology sector.
For India, embracing Nepal as a key economic partner is not simply about strengthening a bilateral relationship but ensuring a resilient regional economy that can withstand global trade shifts. By deepening economic cooperation with Nepal, we can counteract the adverse effects of tariffs while fostering an environment where both nations can flourish. This partnership could serve as a model for India's engagement with neighbouring countries, demonstrating that regional collaboration is a powerful tool for overcoming global trade uncertainties.
This is a pivotal moment. India and Nepal can shape their economic futures without external economic influences. We can manage the changing global trade landscape and become stronger, more robust and more self-sufficient by focusing on bilateral trade, shared industrial efforts and regional economic partnerships.
India will face foreign trade challenges as it becomes a worldwide economic power. Increasing regional linkages helps reduce interruptions. India and Nepal can shield themselves from global economic swings and expand faster than ever by engaging proactively. This can also inspire other neighbours to follow the Indo-Nepal partnership model to reduce their vulnerability to major economies like the US and promote regional solidarity.
Bharti Sinha leads the Strategists' World practice in India.
