Nepal and India reached three agreements on Saturday during the official visit of Foreign Minister Shisir Khanal to India.

The deals followed delegation-level talks between Khanal and his Indian counterpart S Jaishankar in New Delhi. One of them is operationalisation of the peer-to-peer Cross Border Payment transactions under a deal between the NCHL and NPCI signed in June 2023.

In June 2023, the Nepal Clearing House Limited (NCHL) and the NPCI International Payments Limited (NIPL), the international arm of the National Payments Corporation of India (NPCI), signed an MoU in New Delhi to start cross-border digital payments and remittances between Nepal and India.

When India and Nepal launched a cross-border QR payment system in March 2024 under the 2023 agreement, it was celebrated as a milestone, a sign that the two neighbours were finally building seamless digital financial ties. Since then, Indian tourists, students, and patients travelling to Nepal have been able to pay using their phones.

Nepalis travelling to India are still waiting for the same courtesy. Saturday’s understanding will facilitate payments by Nepali citizens while in India.

More than two years since the system went live, and despite repeated assurances from Nepali banks, payment operators and the central bank that their side is technically ready, the reciprocal service has not been launched. Deadlines have come and gone. December 2024 was one such target. It passed without explanation.

A primary reason for the delay, according to the Nepali officials, was a desire for a high-level official announcement of the launch. Both countries, particularly India’s NPCI, preferred to launch this during a prime ministerial-level visit as a diplomatic gesture. The understanding has been materialised during the foreign minister’s visit.

At the heart of the delay was a fundamental structural difference between the two countries’ payment systems. In Nepal, when an Indian traveller pays via QR code, merchants are charged between 1.3 and 2 percent per transaction. In India, UPI transactions have been free for both users and merchants since January 2020.

When Nepalis pay in India, it was unclear who would bear the processing cost—the Nepali issuing bank, the Indian acquiring bank, or the merchant.

Saturday’s agreement has sorted out these technical issues. The linkage between India’s UPI and the National Payments Interface of Nepal will facilitate cross-border personal remittances, Jaishankar wrote on the social media platform X.

The second understanding concerns the handing over of 72 health sector and 12 cultural sector projects as part of the post-earthquake reconstruction projects in Nepal. India was the major donor for reconstruction in Nepal after the 2015 earthquake as it pledged $1 billion in grants and loans.

A Memorandum of Understanding was exchanged between the Kathmandu University School of Engineering’s Centre for Digital Public Infrastructure and the Artificial Intelligence and Digital India Bhashini Division for co-creating National Digital Infrastructure for “Voice First” Language Translation Platform.

During the meeting, the two ministers held wide-ranging and productive discussions on the full spectrum of Nepal–India bilateral relations, the Nepali Embassy in New Delhi stated. The discussions encompassed areas of trade and economic cooperation, cross-border connectivity, energy partnership, water resources management, and the promotion of people-to-people ties, including through sports.

Both sides reaffirmed their commitment to strengthening the enduring partnership between the two neighbouring countries, the embassy stated.

“The two ministers reviewed the progress made on various ongoing bilateral projects and cooperation initiatives, and exchanged views on ways to accelerate their implementation,” the statement read. “They also discussed regional and international issues of mutual concern, including cooperation within multilateral forums.”

Both sides agreed to further deepen and broaden the bilateral relationship through development partnerships, enhanced connectivity and strong partnership on priority areas of mutual benefit, according to the statement.

After signing the MoU, Jaishankar said that they discussed “our unique partnership, including on development cooperation, connectivity, energy, especially hydropower development, education, health, capacity building, digital, culture and sports”.

He reiterated India’s commitment to work with Nepal for mutual progress, prosperity and the well-being of the countries’ peoples.

Both foreign ministers spoke about their priorities and features of the bilateral relations as soon as the meeting opened on Saturday evening.

India-Nepal relationship is “special”, based on a “strong foundation”, Jaishankar told Khanal. India also ensured the supply of fuel to Nepal amid the ongoing West Asia tension. Nepal is solely dependent on India for the supply of petroleum products.

In his opening remarks, Khanal said India is Nepal’s most important partner, adding that Nepal has placed highest priority on India and is ready to engage substantially.

Khanal further stated that ties with India are the most important in times of Nepal’s need and thanked India for fuel and fertilisers supply amid the conflict in West Asia.

“We carry no old baggage,” Khanal said, adding that Nepal has placed highest priority on its relationship with India. “Only a firm resolve to build a genuinely transformative relationship with our old neighbour and most important partner.”

The new government is ready to engage “substantively, purposefully” with Delhi, Khanal added.

In the opening remarks, Jaishankar said that India has ensured an uninterrupted fuel supply to Nepal, and has stood by its neighbour in times of need. India wants “collaboration, cooperation” with Nepal, said Jaishankar, in areas like artificial intelligence, start-ups, info-tech, and renewable energy.

Forthcoming high-level visits will mark the beginning of a new chapter in Nepal-India ties, Khanal said, without specifying.

He stressed that Nepal's new government carries a clear, decisive mandate for good governance and economic transformation.

“India and Nepal share a very special relationship, one which is built on a strong foundation of vibrant people-to-people ties, cross-border connection and shared cultural and religious traditions,” Jaishankar said. “It is anchored by shared trust, goodwill, and mutual benefit. Our bilateral ties have steadily developed in areas like trade, commerce, investments, energy, development cooperation, education, disaster response, and culture.”

But the countries have an opportunity to deepen cooperation in many other areas and in newer domains like startups, AI, information technology, and renewable energy, the Indian minister noted.

According to India’s Ministry of External Affairs, both ministers expressed satisfaction over the progress achieved in bilateral cooperation across diverse sectors and welcomed the recent initiatives to enhance co-operation in areas of innovation and startups; digital and financial technology; and training and capacity building. They agreed to intensify efforts towards further enhancing the multifaceted India-Nepal partnership, the MEA stated.

Both ministers welcomed the completion of internal processes for entry into force of the India-Nepal Mutual Legal Assistance Agreement in Criminal Matters (MLAA).

“This agreement will benefit the people of India and Nepal by providing an institutional legal framework to enhance the effectiveness of investigation, prosecution and judicial proceedings relating to cross-border crimes,” said the India statement.

This is the first visit at the level of foreign ministers of the two countries since a new government took charge in Nepal in March.

“Nepal is a priority partner of India under its Neighbourhood First policy and the visit reinforced the tradition of regular high-level exchanges between the two close and friendly neighbours,” said India’s foreign ministry.

“It provided an opportunity to exchange views on enhancing the bilateral partnership to fulfil the aspirations of peoples from both countries, and has imparted fresh vigour to our efforts towards this objective.”