New Delhi, April 16 (NationPress) As Nepal gears up to transition from its status as a least developed country (LDC) in November 2026, India’s involvement in Nepal's development is set to become even more vital, according to a recent report.

The completion of various connectivity initiatives and the full implementation of the Long Term Power Trade Agreement will aid in diminishing Nepal’s trade deficit with India, as highlighted by the East Asia Forum report.

With the goal of enhancing its manufacturing capabilities and increasing exports for a seamless exit from LDC status, Nepal recognizes that cooperation in energy and infrastructure with India is essential during this transition.

The report notes that the bilateral partnership has evolved from traditional infrastructure support to a modern ‘high-tech, high connectivity’ framework, emphasizing significant investments in digital integration and energy collaboration.

As part of the 25-year power trade agreement signed in January 2024, Nepal is set to export 10,000 megawatts to India over the next decade, with both nations working to upgrade low-capacity transmission systems from 132/33 kV to 400 kV to facilitate increased exports.

India is also playing a key role in enabling 40 megawatts of power transmission from Nepal to Bangladesh under a trilateral agreement initiated in October 2024, which expanded to 60 MW annually in late 2025.

The establishment of a dedicated high-capacity transmission line linking Nepal and Bangladesh through Indian territory is deemed essential to fulfilling Bangladesh’s rising energy requirements and realizing Nepal’s hydropower aspirations.

Moreover, collaboration with Japan and European countries can further bolster development investments in Nepal. A proactive, growth-centric development partnership is mutually beneficial for both nations, the report states.

However, the report raises concerns over regulatory delays, funding shortages, and implementation hurdles that are hindering progress.

For example, the proposed Anarmani–Siliguri cross-border transmission line relies on the timely completion of Nepal’s Hetauda–Inaruwa–Anarmani line, which is currently stalled due to Right of Way disputes, forest clearance issues, and procedural bottlenecks. This line is crucial for Nepal to sell power to Bangladesh via the Indian grid.

Indian companies currently possess ownership or survey licenses for approximately 5,000 megawatts of Nepali hydropower projects, although some are experiencing delays in finalizing agreements on detailed project reports.

Ongoing hydropower projects face several challenges, including high seismic risks, loss of forest corridors, cost overruns due to bureaucratic delays, and local community opposition regarding resettlement and compensation.