India and Its Neighbours I: Pakistan, Bangladesh and Nepal

These three relationships fail in three different ways: Pakistan because the dispute is about the states’ founding ideas, Bangladesh because domestic political alternation resets it, and Nepal because asymmetry is experienced as intrusion by a state that has never been colonised.

This is chapter 55 of the PSIR Optional Notes, from the part on South Asia and the World Order in the Paper II syllabus. The complete book is a free download.

Pakistan

The structure of the dispute

The Kashmir question is not a boundary dispute of the ordinary kind. For Pakistan, a Muslim-majority territory acceding to India challenges the premise on which Pakistan was founded; for India, a Muslim-majority state within a secular federation is the demonstration of its own premise. Because the dispute engages both states’ constitutive ideas, functional solutions, trade, water, transit, have not been able to carry it.

The sequence. Accession in October 1947 and the first war; the Karachi Agreement of 1949 establishing the ceasefire line; the 1965 war and the Tashkent Declaration; the 1971 war, Bangladesh’s independence, and the Simla Agreement of July 1972, which converted the ceasefire line into the Line of Control and committed both to settling differences bilaterally, which remains India’s basis for refusing third-party mediation; Siachen from 1984; Kargil in 1999; the Lahore Declaration of 1999 and the Agra summit of 2001; the composite dialogue and the back-channel of 2004–07; and the rupture after the Mumbai attacks of November 2008.

The current phase

The shift is from dialogue-plus-terrorism-management to cost imposition. 2016: the Uri attack and the cross-border operations described as surgical strikes; India’s boycott of the Islamabad SAARC summit. 2019: the Pulwama attack and the Balakot air strike, the first use of air power across the international boundary since 1971; and, in August, the constitutional changes in Jammu and Kashmir, after which Pakistan downgraded diplomatic relations and suspended trade. 2021: renewal of the ceasefire understanding on the Line of Control, which held better than expected. 2025: the Pahalgam attack in April, after which India announced that the Indus Waters Treaty would be held in abeyance, closed the Attari crossing, suspended visa services and downgraded diplomatic presence, followed by military exchanges and an understanding to cease firing.

The 2025 paper asked about India’s options in the aftermath of Pahalgam, and the honest answer sets out a spectrum rather than a preference: military response below the nuclear threshold, which carries escalation risk under the stability-instability paradox of Chapter 40; economic and water pressure, which is now being used; diplomatic isolation through FATF and terrorist designations, constrained by Chinese holds at the 1267 Committee; internal security consolidation; and the long-run option of raising the cost of the relationship until Pakistan’s own calculus changes, which is the declared approach and whose test is whether it deters.

The Indus Waters Treaty. Brokered by the World Bank in 1960, allocating the eastern rivers to India and the western rivers to Pakistan with limited Indian use rights, and surviving three wars. Its disputes over Kishanganga and Ratle have run through the Permanent Court of Arbitration and a neutral expert simultaneously, which India has objected to as parallel proceedings. India’s notices seeking modification, and the decision to hold the treaty in abeyance in 2025, mark the end of its insulation from the wider relationship. The analytical point: a treaty’s durability rested on being quarantined, and once quarantine ends the instrument becomes leverage rather than an agreement.

Bangladesh

The relationship’s substance

Bangladesh is India’s largest trading partner in the region and India’s most consequential neighbourhood relationship. Its achievements are real and specific.

• Land Boundary Agreement. Concluded in 1974 and ratified by India through the 100th Constitutional Amendment in 2015, exchanging 111 Indian enclaves for 51 Bangladeshi enclaves and resolving adverse possessions, with residents given a choice of citizenship. It is the only case in the region of a border dispute settled by agreement.
• Maritime boundary. Settled by arbitration in 2014 under UNCLOS, with India accepting an award that went substantially against it, which is the strongest available evidence against the charge that India rejects third-party settlement.
• Connectivity. Restored rail links, inland waterway transit, the Akhaura-Agartala link, and the use of Chattogram and Mongla ports for cargo to the North-East, which substantially shortens routes that otherwise run through the Siliguri corridor.
• Energy and lines of credit. Power transmission, the Maitree plant, pipeline supply, and successive credit lines making Bangladesh India’s largest development partner.
• Security. Cooperation against North-East insurgent groups sheltering across the border was the single most valuable Indian gain of the past two decades.

The unresolved and the fragile

Teesta. A water-sharing agreement was ready in 2011 and was not signed because West Bengal withheld consent, which is a federal constraint on foreign policy of the kind Chapter 46 describes. It remains the most visible Indian failure to deliver in the relationship.

Migration and citizenship. The NRC exercise in Assam and the Citizenship Amendment Act 2019 were domestic measures with an unavoidable bilateral effect, and Bangladesh has consistently rejected the premise that large numbers of its nationals are in India illegally.

Border killings. Deaths of Bangladeshi nationals in firing at the border remain a persistent public grievance despite repeated commitments to non-lethal measures.

The political fragility. The 2025 paper asked whether developments in Bangladesh have weakened India’s leverage in Dhaka, and the analysis should be structural rather than partisan. India’s relationship was built substantially with one political formation, which delivered on security and connectivity; the change of government in August 2024 and the subsequent political transition therefore exposed the relationship to a reset that a broader-based engagement would have absorbed. The evidence of weakened leverage: public sentiment shaped by the perception that India backed one side; the reopening of questions on transit and water; and space for other external partners, including China and Pakistan, to expand. The evidence against overstating it: the material interdependence is real, connectivity and energy links serve Bangladesh’s own interests, and no plausible government can dispense with the largest neighbour. The measured conclusion: leverage built on a party is weaker than leverage built on interests, and the correction required is engagement across the political spectrum, which is a lesson applicable well beyond Bangladesh.

Nepal

The relationship

Uniquely close and uniquely resented: an open border under the Treaty of Peace and Friendship of 1950, which permits movement, residence and property rights on a national-treatment basis; deep religious and kinship ties; the Gorkha recruitment tradition; and India as Nepal’s largest trading partner, source of investment and transit route to the sea.

The frictions

• The 1950 Treaty. Nepal regards it as unequal, concluded with the Rana regime, and has sought revision, particularly Articles 2, 5 and the accompanying letters concerning security consultation and arms purchases. An Eminent Persons Group reported in 2018 and its report has not been formally received.
• 2015. India’s response to Nepal’s new constitution, which Madhesi parties in the Terai regarded as under-representing them, and the subsequent obstruction of the border crossings during the post-earthquake period, was experienced in Nepal as a blockade. Whatever its cause, it is the single most damaging episode in the modern relationship and it accelerated Nepal’s turn to China.
• The boundary. Kalapani, Lipulekh and Limpiyadhura at the western trijunction, where the dispute concerns the source of the Kali river and therefore the boundary defined by the Treaty of Sugauli of 1816. Nepal issued a revised map and amended its constitution’s coat of arms in 2020; India has not accepted the claim. Susta on the southern border is a smaller dispute.
• Water. The Kosi (1954), Gandak (1959) and Mahakali (1996) treaties are all regarded in Nepal as unequal, and the Pancheshwar project under the Mahakali Treaty has not been implemented in nearly three decades.
• China. Nepal’s transit and transport agreement with China (2016), Belt and Road participation, and infrastructure engagement provide the hedging option that asymmetry invites.

What has worked

Petroleum pipelines, cross-border rail links, hydropower purchase agreements and India’s admission of Nepali power into its market, post-earthquake reconstruction assistance, and the resumption of high-level engagement. The 2025 paper’s question about trilateral economic engagement among India, China and Nepal points to Nepal’s own preferred framing of itself as a bridge rather than a buffer. The realistic assessment: trilateral connectivity is attractive to Nepal, unattractive to India while the boundary question with China is unsettled, and useful to China as a way of normalising its presence on India’s northern frontier. Its practical scope is limited to non-strategic areas, trade facilitation, tourism, disaster response, where the transaction costs of trilateralism are lower than its political costs.

Read the rest. This chapter is one of 58 in the complete PSIR Optional Notes, covering Paper I and Paper II in full — free to download.

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