India's Foreign Minister is in Nepal on a two-day mission to thrash out sensitive security and trade issues.
Foreign Minister Jaswant Singh has termed his visit to India's tiny Himalayan neighbor as a "goodwill mission" with no specific official agenda.
The visit provides an opportunity for a senior Indian cabinet member to meet Nepal's new leadership. Nepalese Prime Minister Sher Bahadur Deuba recently took charge of the government shaken by the recent massacre of most members of Nepal's royal family.
Brhama Chellaney is a foreign policy analyst at the independent Center for Policy Research. He says Mr. Singh and Nepalese leaders are expected to discuss a range of issues that have been troubling relations between the two countries. "Right now, the Nepalese monarchy and the Nepalese government are both seeking to strengthen their credibility and legitimacy," Mr. Chellaney says. "At this sensitive stage, I think India is very keen to ensure that any bilateral irritants are de-emphasized and that the emphasis is put on the positive elements."
On top of the list of mutual concerns is bilateral trade. Nepalese officials say they want to press India for the renewal of a trade treaty that allows the impoverished Himalayan kingdom unlimited duty-free access to the huge Indian market. The treaty was signed in 1996 to boost Nepalese exports.
But New Delhi wants to review the treaty when it comes up for extension in December. Indian officials say cheap Nepalese products have flooded the Indian market, hurting some of its industries. India also claims goods from third countries are being packaged in Nepal, and exported to India. The Indian market is crucial for Nepalese exporters, accounting for about 40 percent of Nepal's total trade.
Another contentious issues that will dominate the meeting is a controversial Indian dam project. There is anger in Nepal over a dam India began building four months ago close to their mutual border in Uttar Pradesh state.
Nepalese officials say the dam has led to the flooding of several low-lying villages in Nepal and could also threaten Lumbini, the holy site where Buddha was born more than 2000 years ago. Construction of the dam has been temporarily halted.
New Delhi is also expected to discuss its security concerns with Nepalese leaders. The Indian government complains Nepal is used as a base by anti-Indian militants who find it easy to infiltrate India from the Himalayan nation, and wants Nepal to crack down on such groups.