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Support for this research was generously provided by the Omidyar Network’s Property Rights Research Consortium (PRRC). Brookings India recognises that the value it provides is in its absolute commitment to quality, independence, and impact. Activities supported by its donors reflect this commitment and the analysis and recommendations found in this report are solely determined by the scholar(s).
Around half of the Indian government’s economic assistance to neighbouring countries in South Asia goes to the infrastructure sector, including roads, railways, ports, and other projects. Between 2014-18, this total investment in cross-border connectivity amounted to around Rs10,000 crores (approximately US$ 1,461 million).  These development cooperation projects are a critical component for India to achieve one of its most important foreign policy objectives: to tie its domestic economy closer to neighbouring countries and accelerate regional integration.
Funded by the Ministry of External Affairs (MEA) and executed by Public Sector Enterprises (PSEs) or private contractors, most of the Indian infrastructure projects are situated in the neighbouring countries of Nepal, Bangladesh, Bhutan, and Myanmar. However, a vast majority of these investments have faced chronic delays, or even halted, due to a myriad of challenges. Access to unimpeded land in these neighbouring countries is among the most significant reasons why India’s infrastructure projects get bogged down. This is due to both the Indian and host governments’ lack of expert and technical capacity on land issues – including on managing records, property right frameworks, litigation and lack of enforcement, or deficiencies in surveying.
This paper examines these issues in the case of Nepal. Focused on in-depth case studies of two Indian-funded projects in Nepal – 1) The East-West Postal road (or Hulaki Rajmarg) project, and 2) The Jogbani-Biratnagar cross-border railway line – it surveys the institutional impediments and expertise deficiencies that led to years of delays in the process of land acquisition. Such issues led to protracted problems, on the ground between central, local, public, and private Nepali stakeholders, to occasional tensions in bilateral government relations, and most importantly, to significant escalation in costs to India’s public exchequer.
Additionally, the paper also contributes to the evolving policy and institutional debates on how the Indian government, and the MEA in particular, can enhance its expert and technical capacity to engage in future land acquisition processes abroad, especially in the case of Nepal and other neighbouring countries. It makes the case for the Indian government, via MEA, to:
- Encourage interactions between diplomatic generalists and various domestic Indian expert stakeholders involved in land governance and property rights at the central and state levels. This should help in the development of clear benchmarks for all land and property-rights related issues involving Indian infrastructure projects abroad.
- Deepen bilateral engagements between Indian officials and their counterparts in Nepal to exchange best practices on property rights and land acquisition governance, including, for example, digitisation of land records.
- Coordinate with other national and multilateral development cooperation agencies to exchange best practices and develop Indian guidelines and standards for land acquisition, resettlement, and rehabilitation processes abroad. This could, for example, include the Asian Development Bank and Asian Infrastructure Investment Bank or the Japan International Cooperation Agency (JICA), and the United States Agency for International Development (USAID).
 Throughout our paper, we use approximate USD/NPR/INR conversions based on average exchange rates for each specific year available on the websites of the United States’ Internal Revenue service (https://www.irs.gov) and the Nepal Rastra Bank (https://archive.nrb.org.np/). Press Trust of India, “India's aid to 6 neighbouring nations totaled over Rs 21,100 crore in 4 years,” The Economic Times, August 09, 2018, http://economictimes.indiatimes.com/articleshow/65341395.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
India historically has been skeptical of the U.S. as being unreliable, always attaching strings to relationships with partner countries, and then weaponizing their interdependence.
It's an open question how much this [arms purchases from U.S. rivals] will end up affecting partners like India, but also countries like Indonesia and Vietnam who have these legacy relationships with Russia and are not going to give them up any time soon. In fact, there's an argument to be made that for America's Indo-Pacific objectives, you actually want these countries to maintain and build up a certain amount of military capability, and in some cases the U.S. cannot offer that capability.
The U.S.-India relationship is largely in sync, but Russia remains one major area of difference.