India, Nepal can decisively shift trajectory of bilateral ties to achieve full potential: Jaishankar

Nepal's Foreign Minister Shisir Khanal visited New Delhi from June 5–7, 2026 — the highest-level diplomatic engagement since Nepal's new government under Pri...

What Happened

Nepal's Foreign Minister Shisir Khanal visited New Delhi from June 5–7, 2026 — the highest-level diplomatic engagement since Nepal's new government under Prime Minister Balendra Shah assumed office in March 2026.
The External Affairs Minister described the bilateral relationship as "very special" and called for a "decisive shift" to achieve its full potential, with discussions covering development cooperation, connectivity, energy, hydropower, education, health, capacity building, digital technology, culture, and sports.
India and Nepal jointly launched the linkage between India's Unified Payments Interface (UPI) and Nepal's National Payments Interface (NPI) to facilitate cross-border personal remittances, marking a concrete digital cooperation milestone.
Nepal's Foreign Minister signalled a clean slate approach, stating the new government carries "no old baggage" and accords the "highest priority" to ties with India, describing India as Nepal's "most important partner."
Startups, artificial intelligence, information technology, and renewable energy were identified as priority sectors for future collaboration.

Static Topic Bridges

India-Nepal Treaty of Peace and Friendship, 1950

The Treaty of Peace and Friendship, signed on 31 July 1950, forms the bedrock of the India-Nepal relationship. It contains ten articles and established reciprocal rights for nationals of each country in the territory of the other.

Article 7 grants nationals of each country reciprocal rights of residence, ownership of property, participation in trade and commerce, and free movement — the constitutional basis of the open border.
The treaty enables visa-free and passport-free travel, allowing Nepalese citizens to live and work in India and vice versa.
The treaty has been criticised within Nepal as unequal; a joint Eminent Persons Group has periodically been constituted to review it but formal revision remains pending.
A companion Letter of Exchange in 1950 has been used to interpret the treaty's security provisions.

Connection to this news: The visit signalled renewed commitment to deepen the relationship established under the 1950 treaty framework, now expanding beyond its foundational open-border provisions into digital finance and clean energy.

India-Nepal Mahakali Treaty, 1996

The Mahakali Treaty, formally the Treaty Between the Government of Nepal and the Government of India Concerning the Integrated Development of the Mahakali River, was signed on 12 February 1996 and ratified by Nepal's Parliament in September 1996 with a two-thirds majority.

The treaty contains 12 articles and covers three water projects: the Sarada Barrage regime (from the 1920 Sarada Treaty), the Tanakpur Barrage MoU of 1991, and the planned Pancheshwar Multipurpose Project.
Nepal is entitled to 28.35 m³/s (1,000 cusecs) of water in the wet season and 4.25 m³/s (150 cusecs) in the dry season from the Sarada Barrage.
The total energy from Pancheshwar is to be shared equally between the two countries; Nepal may sell its share to India at a mutually agreed rate.
Implementation has remained incomplete — the Pancheshwar Dam has not yet been constructed, making hydropower one of the most contested and consequential pending agenda items.

Connection to this news: Hydropower and energy cooperation were explicitly discussed, and unlocking stalled projects like Pancheshwar is central to achieving the "full potential" referenced in bilateral talks.

UPI and India's Digital Public Infrastructure (DPI) Stack

India's Unified Payments Interface (UPI) is a real-time payment system developed by the National Payments Corporation of India (NPCI) and regulated under the Payment and Settlement Systems Act, 2007. It enables instant inter-bank transactions through mobile devices.

UPI is operated by NPCI; its international operations are handled by NPCI International Payments Limited (NIPL), a wholly-owned subsidiary.
India has signed MoUs to link UPI with payment systems in multiple countries including Singapore (PayNow), UAE, Bhutan, and now Nepal.
Nepal's National Payments Interface is operated by the Nepal Clearing House Limited (NCHL); the two organisations signed an MoU in June 2023 to enable cross-border digital payments and remittances.
A QR-code based cross-border payment system between India and Nepal was launched in March 2024; the June 2026 launch extends this to personal remittances via UPI-NPI linkage.
Remittances from India to Nepal are economically significant: Nepal's remittance inflows are among the highest as a share of GDP in the world.

Connection to this news: The UPI-NPI linkage launch was the most concrete deliverable of the June 2026 visit, illustrating how India's DPI stack is becoming a tool of regional diplomacy and economic integration.

Key Facts & Data

Nepal FM Shisir Khanal's visit dates: June 5–7, 2026 — first high-level diplomatic engagement of the new Nepal government (PM Balendra Shah, in office March 2026).
The Mahakali Treaty (1996) was signed by Nepalese PM Sher Bahadur Deuba and Indian PM P. V. Narasimha Rao.
UPI processes approximately 18+ billion transactions per month in India (as of 2025–26).
NPCI International has enabled UPI linkages with 7+ countries as part of India's DPI export diplomacy.
Nepal's remittance inflows constitute approximately 22–25% of its GDP, making the India–Nepal remittance corridor one of the most important in South Asia.
The Treaty of Peace and Friendship, 1950: 10 articles; open border; reciprocal national rights under Article 7.
Mahakali Treaty, 1996: 12 articles; equal sharing of Pancheshwar power output; not yet implemented.