Nepal's Foreign Minister Shishir Khanal on 16 October 2026 outlined energy cooperation, trade facilitation, investment partnerships, digital transformation and tourism as the five core pillars of Nepal-India economic engagement, signalling Kathmandu's intent to deepen bilateral ties beyond traditional diplomatic channels.

Key Priorities Khanal Outlined

Addressing the 32nd annual general meeting of the Nepal-India Chamber of Commerce and Industry, Khanal said Nepal's considerable hydropower potential must be systematically linked to India's expanding energy market to drive further investment, strengthen transmission infrastructure and advance regional energy integration. He also called for expanded cooperation in digital payments, artificial intelligence and financial technology, arguing that such linkages would open the Indian market and its technological advances to Nepali youth and entrepreneurs.

'Diplomacy is no longer confined to the Ministry of Foreign Affairs, formal negotiations, and treaties and agreements. Industry, trade, energy and digital payment systems have also become important areas of economic diplomacy,' Khanal said.

Record Electricity Export Revenue for Nepal

The energy dimension of the bilateral relationship has gathered considerable momentum. According to cross-border electricity import and export data released by the Nepal Electricity Authority (NEA), Nepal earned NPR 29.32 billion from electricity exports to India and Bangladesh in fiscal year 2025-26 that ended in mid-July — a 67.96 per cent jump from the NPR 17.46 billion earned in fiscal year 2024-25. This marks the highest annual export revenue the NEA has ever recorded. Nepal routes some of its power to Bangladesh through India's transmission grid, underlining the regional dimension of the energy corridor.

Several high-capacity cross-border transmission line projects between the two countries have advanced, expanding the volume of electricity that can be traded in the future. India is simultaneously scaling up its direct investment in Nepal's hydropower sector, with multiple major projects backed by Indian capital currently under implementation.

Digital Payments Bridge: UPI Meets Nepal's NPI

On the digital front, Nepal and India officially launched a real-time, peer-to-peer cross-border remittance service in June 2026. The service connects India's Unified Payments Interface (UPI), managed by NPCI International Payments Limited (NIPL), with Nepal's National Payments Interface (NPI). Fund transfers are executed digitally in real time through mobile banking applications and digital wallets — a development that could significantly ease remittance flows between the two countries, given Nepal's large migrant workforce in India.

India Leads Nepal's FDI, But China Gains Ground

India remains the dominant source of foreign direct investment in Nepal. According to the report titled Foreign Direct Investment (FDI) in Nepal 2024/25 released by Nepal Rastra Bank (NRB), India accounted for 32.8 per cent of Nepal's total FDI stock as of mid-July 2025. China followed at 9.3 per cent, with Ireland at 7.3 per cent, Australia at 6.5 per cent and Singapore at 5.4 per cent. Notably, Chinese investment has been rising in recent years, adding a competitive dimension to India's economic footprint in its northern neighbour.

Khanal emphasised the need to translate the latent potential of bilateral relations into tangible economic outcomes, calling on Indian businesses to increase investment in Nepal to boost domestic production, enable technology and knowledge transfer, and integrate Nepali enterprises into regional value chains. How quickly those calls convert into capital commitments will determine the pace of the broader economic partnership.