The Republic of India and the Federal Democratic Republic of Nepal initiated their relationship with the 1950 Indo-Nepal Treaty of Peace and Friendship and accompanying secret letters that defined security relations between the two countries, and an agreement governing both bilateral trade and trade transiting Indian territory. The 1950 treaty and letters exchanged between the Indian government and Rana rulers of Nepal, stated that “neither government shall tolerate any threat to the security of the other by a foreign aggressor” and obligated both sides “to inform each other of any serious friction or misunderstanding with any neighboring state likely to cause any breach in the friendly relations subsisting between the two governments.”

These accords cemented a “special relationship” between India and Nepal. The treaty also granted Nepalese, the same economic and educational opportunities as Indian citizens in India, while accounting for preferential treatment to Indian citizens and businesses compared to other nationalities in Nepal. The Indo-Nepal border is open; Nepalese and Indian nationals may move freely across the border without passports or visas and may live and work in either country.

However, Indians aren’t allowed to own land-properties or work in government institutions in Nepal, while Nepalese nationals in India are allowed to work in Indian government institutions (except in some states and some civil services the IFS, IAS, and IPS). After years of dissatisfaction by the Nepalese government, India in 2014, agreed to revise and adjust the treaty to the reflect the current realities. However, the modality of adjustment hasn’t been made clear by either side.

Despite the close linguistic, marital, religious, and, cultural ties, at people to people level between Indians and Nepalese, since late 2015, political issues and border disputes have strained relations between the two countries with anti-Indian sentiment growing among the government and people of Nepal. Further because of border disputes between the two countries, a boundary agreement hasn’t yet been ratified by either government.