ABSTRACT
This chapter discusses India-Nepal South-South cooperation (SSC) in broadest sense, encompassing aid, trade, investments, and political and security ties. South Asia Association for Regional Cooperation (SAARC) member nations have promising average growth rates, such growth has failed to add value to their expanding economic cooperation. Bilateral relations between India and its neighbor's often have a political dimension, creating a trust deficit that extends to other aspects of bilateral and regional relations. In 1988, during Panchayat regime, Indo-Nepalese relations came under threat when Kathmandu signed a weapons-purchasing agreement with Beijing; this accord also gave China the contract to build the Western sector road linking China with Nepal. Nepal offered Indian investors a climate free from the complicated customs and tax law of the Indian government under British rule. India's Ministry of Micro, Small and Medium Enterprises (MMSME) has particular concerns about the impact on small and medium-sized industries of cheaper imports, especially those coming from China via Nepal and Myanmar borders.
