Indian Politics & Policy Volume 1, Number 2, Fall 2018 | Page 80

Foreign Assistance in India’s Foreign Policy: Political and Economic Determinants
multi-party democracy that has been
wracked by a Maoist insurgency since
the mid-1990s. On February 1, 2005,
the government was dissolved as the
Maoist insurgency spread, triggering
talks of the Joint Working Group on
Border Management and the India–Nepal
Bilateral Consultative Group on Security
Issues. The Joint Committee on
Water Resources also met in 2004–05,
and an MOU was signed on an oil pipeline,
and rail service commenced in July
2004.
The SDP program is central to
India’s assistance to Nepal. It was introduced
in 2003, and by 2010–11, there
were 400 projects in all 75 districts of
Nepal. The aim is to spread the impact
of assistance and also local awareness
of it in the host country. In 2011–12,
an Indo-Nepal Bilateral Investment
Promotion and Protection Agreement
(BIPPA) and a Double Taxation Avoidance
Agreement were signed. More
recently, Indian Prime Minister Modi
announced a $1 bn credit line for hydropower,
irrigation, and infrastructure
in August 2014.
Over the entire period since the
Emergency of 2005, India helped to politically
stabilize Nepal, seen as vital for
Indian security, by encouraging peace
talks and the restoration of democracy
and building up of a constitutional development
process in Nepal at Nepal’s
invitation. Nepal agreed that it would
not allow anti-India insurgent activities.
Assistance to Nepal has to be placed in
this context along with the fact that India
now accounts for 60 percent of Nepal’s
foreign trade and 44 percent of its
inward FDI, and India is the largest assistance
provider and source of tourists.
However, India faces stiff competition
from China in economic assistance for
political influence and Nepal has been
adroitly playing the two off against each
other.
Bangladesh
India–Bangladesh relations after the
latter’s independence in 1972 were governed
by the 25-year India–Bangladesh
Friendship Treaty, which was allowed to
lapse in 1997 by the then Awami League
government of Sheikh Hasina Wazed
despite the signing of the watershed Indo-Bangladesh
Ganga Waters Treaty in
December 1996 which addressed Bangladesh’s
long-standing demands on
river water-sharing. 11 The 1972 Treaty
provided that neither country would
harm the security of the other. The lapsing
of this treaty removed this security
feature from the Indian point of view,
and in fact, since then India has suspected
Bangladesh, particularly during
the Bangladesh National Party government
of 2001–06, of conniving with terrorist
activities directed against India
by nonstate actors. Despite starting on a
promising note, relations have been bedeviled
by a number of issues including
an unresolved “ragged” boundary, illegal
immigration of Bangladeshis into
India, sharing of waters of 54 common
rivers, primarily the Ganges, the operation
of anti-Indian insurgent, and terrorist
groups from Bangladesh. Hence,
Bangladesh is a neighbor with whom
India’s relations are sensitive. Assistance
to Bangladesh has to be seen in
this context.
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