There is understandable concern in Nepal over the sharp decline in iron and steel exports to India. Nepal’s steel exports to India reportedly fell by 62.43 percent in the last fiscal year, reducing export earnings by more than NPR 10 billion. For Nepali manufacturers and workers, this is significant and deserves attention.
But thinking of this development as Indian economic “bullying” risks turning a trade and regulatory issue into a political narrative that does not reflect the broader reality of India-Nepal relations.
The restrictions affecting Nepali steel were not designed specifically to target Nepal. India introduced safeguard measures amid wider concerns over steel imports and pressure on its domestic industry. Similar measures affect international suppliers, while questions surrounding standards, certification and the origin of imported products are also part of India’s regulatory framework.
That distinction is important. A trade measure that has consequences for a neighbouring economy should not automatically be interpreted as an attempt to pressure that neighbour.
Unfortunately, social media often eliminates precisely this kind of context. A complicated regulatory decision can quickly be reduced to a provocative headline, an angry post or a claim that one country is deliberately targeting another. Algorithms tend to reward outrage rather than nuance, and legitimate economic concerns can rapidly acquire nationalist overtones.
This is particularly important in the case of India and Nepal. Perceived differences between the two countries can sometimes be amplified far beyond their actual significance. Third parties, too, can find opportunities in such narratives, exploiting supposed fissures between close neighbours to advance their own geopolitical interests. A commercial disagreement can thus be portrayed as a diplomatic confrontation even when the governments themselves are discussing the matter through established channels.
India and Nepal should be especially careful not to allow such manufactured perceptions to define their relationship.
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India remains Nepal’s largest trading partner and by far its most important export market. In FY2025-26, bilateral merchandise trade stood at approximately $9.38 billion. India accounted for more than 60 percent of Nepal’s external goods trade and received more than 80 percent of Nepal’s goods exports. India is also the largest source of foreign investment in Nepal.
These are hardly the characteristics of a relationship built around economic coercion. They demonstrate how deeply the two economies have become intertwined.
More importantly, India-Nepal relations cannot be understood through trade statistics alone.
Few countries share the civilisational intimacy that India and Nepal do. Their relationship predates modern borders and contemporary diplomacy by centuries. Hindu and Buddhist traditions flow across the frontier. Janakpur and Ayodhya, Lumbini and Bodh Gaya, Pashupatinath and Kashi form part of a shared cultural geography that cannot be neatly divided by customs posts.
The open border is perhaps the most visible expression of this relationship. Every day, Indians and Nepalis cross it for employment, education, trade, pilgrimage, family visits and marriage. Communities on either side share languages, traditions and family ties. The relationship is therefore not merely government-to-government. It is fundamentally people-to-people.
Economic integration has increasingly followed this historical closeness.
Roads, railways, integrated check posts, electricity transmission lines, petroleum pipelines and energy trade are steadily bringing the two economies closer. Nepal has also emerged as an important supplier of hydropower to India, transforming what was once largely a conventional trading relationship into a deeper partnership in regional energy security.
The bilateral trade framework itself recognises Nepal’s particular economic circumstances. The India-Nepal Treaty of Trade provides favourable treatment for Nepali industrial products and reflects India’s recognition that Nepal, as a smaller and landlocked economy, requires dependable access to the Indian market.
This wider context matters when discussing the steel issue.
No major trading relationship is free of disagreements. Even the closest economic partners regularly clash over tariffs, subsidies, agricultural standards and market access. A disagreement over one product category should not become evidence of deterioration in an entire bilateral relationship.
Nor should Nepal view India’s economic rise as something that comes at its expense.
The opposite is potentially true. Nepal sits alongside one of the world’s largest and fastest-growing major economies and enjoys geographical access to an enormous consumer market. As India’s infrastructure, manufacturing and energy requirements expand, opportunities for Nepali businesses can expand alongside them.
The current issue is already being discussed through bilateral and regulatory channels. Nepal has articulated its concerns, and the two sides possess established mechanisms through which such questions can be addressed. That is precisely how mature neighbours should handle commercial disagreements.
There is also a larger strategic reality.
India has no interest in an economically weak Nepal. A prosperous, confident and economically successful Nepal benefits India through greater trade, stronger connectivity, energy cooperation and stability across the Himalayan region. Equally, a growing India offers Nepal economic opportunities that few other markets can replicate because geography, connectivity and social familiarity dramatically lower barriers between the two economies.
There will inevitably be disagreements between Kathmandu and New Delhi. Geography guarantees constant interaction, and constant interaction occasionally produces friction. But it also makes cooperation infinitely more consequential than disagreement.
Both countries should also resist allowing social media narratives, political rhetoric or outside interests to transform manageable differences into imaginary strategic divides.
India and Nepal are not simply two countries that happen to share a border. They share history, faith, families, commerce, rivers, energy networks and an extraordinary degree of human interaction.
Trade issues will come and go. Social media storms will come and go even faster. The India-Nepal civilisational relationship is built to endure.
The author is the Editor of Daily Milap, India.
