Features | Environment | South Asia

Nepal, India, and the Paradox of Hydro-hegemony

Nepal’s hydropower vision depends on India, both as a primary buyer and an exclusive transit route. That gives India immense power over Nepal’s ambitions.

The Pharping Power Plant, commissioned in 1911, was one of Asia’s earliest hydropower plants.

Nepal aspires to become the “hydropower battery of South Asia,” targeting an installed capacity of 28.5 gigawatts (GW) by 2035, with 13.5 GW planned for domestic use and 15 GW for export to India and Bangladesh. Besides the geo-hydrological obstacles and financial constraints, this vision must navigate a complex co-riparian hydro-political context with India. Nepal faces a vulnerability paradox stemming from the heavy dependency of its hydropower vision on India as both the primary buyer and the exclusive transit route for hydropower exports to Bangladesh, thereby subjecting it to India’s hydro-hegemonic maneuvers.

India’s hydro-politics, meanwhile, extends beyond merely hydropower purchases to satisfy the energy needs of its growing economy and population. It faces intricate water insecurities at multiple scales, including its domestic and inter-state water conflicts, the high dependency of the Ganga flow on Nepal’s rivers, and active water conflicts with other co-riparian countries, namely China, Pakistan, and Bangladesh. 

Such complex hydro-political dynamics foster a sense of apprehension toward Nepal’s upstream position, prompting hydro-hegemonic determinations through legalistic measures, exploiting Nepal’s structural economic dependencies, and restricting Nepal’s international hydro-relations. In co-riparian contexts, the outcomes of water resource interventions are shaped less by national economic objectives and more by the hydro-political interests of the dominant riparian state. Thus, Nepal’s reliance on India for its hydropower ambitions reinforces India’s hydro-hegemony and could lead to Nepal relinquishing significant control over its water resources.

Nepal’s Hydropower Vision

Nepal commissioned one of Asia’s earliest hydropower plants, the Pharping Power Plant, in 1911. Despite this early start, hydropower development progressed slowly throughout the 20th century. A significant shift occurred in the early 1960s when Nepal recognized its hydropower potential of 83 GW, elevating hydropower to a central issue in political and public discourse. Since then, hydropower has been integral to Nepal’s societal outlook, modernization visions, and developmental goals.

However, during the global modernization era in the latter half of the 20th century, hydropower development remained limited and reliant on state-led interventions funded by foreign aid from global and regional geopolitical actors, including the Soviet Union, China, the United States, and India. The adoption of neoliberal economic policies in the early 1990s, which promoted the commodification of nature and water, led Nepal to liberalize its economy and attract independent power producers (IPPs). This shift supported the national strategies to leverage hydropower for economic growth, including the 2001 export-oriented hydropower development model, which began to yield improvements in production by 2016. 

The recent ambition to transform Nepal into a global hub for data centers is driven by the perceived abundance of freshwater, a favorable climate, and significant hydropower potential. If fully realized, this potential could provide continuous electricity to data mining centers, with rivers serving as cooling sources for large-scale data processing.

Hydropower production in Nepal is now primarily organized under neoliberal economic principles of commodifying nature, with the private sector increasingly involved in the hydro-social domain by damming and diverting rivers, thereby transforming their surrounding socio-ecological spaces to commodify the flowing energy in rivers for making money. Although Nepal has generated a surplus of hydropower during the wet season since 2024, it remains distant from its 2035 target of 28,500 megawatts. 

Concerns persist in Kathmandu regarding India’s willingness to purchase surplus electricity or permit its transmission to Bangladesh. The hydropower relationship between Nepal and India underscores the complexities of India’s influence and strategic interests in both Nepal’s hydropower sector and its broader hydrological landscape.

Nepal’s Geo-hydrology and India’s Insecurity

While it may appear rational for India to prevent Nepal from developing water storage infrastructure to preserve Himalayan flows into the Gangetic basin, instead, India’s more effective strategy has been to establish legal control over Nepal’s water within Nepal. Since the 1950s, India has emulated British colonial practices by seeking and formalizing legal control over Nepal’s rivers through agreements such as the 1964 Amended Gandak Agreement, the 1966 Revised Kosi Agreement, and the 1996 Mahakali Treaty. These agreements legitimized and formalized India’s unilateral authority over the construction, maintenance, and operation of water infrastructure, including barrages. Although rooted in colonial-era strategies, notably the 1920 Sarada Agreement, the necessity for such measures is grounded in Nepal’s unique geo-hydrological characteristics.

Nepal is geo-strategically situated between India to the south and China to the north. Its diverse geological landscape features the towering Himalayas in the north and the fertile southern plains of Terai, making India the only direct co-riparian country. Thousands of rivers and rivulets originate from the high-altitude glaciers of the Himalayas and the Tibetan Plateau, traverse deep gorges, and flow southward through Nepal’s hilly terrain before entering India. These rivers, particularly in the Himalayan and hilly regions, have steep gradients and high velocities, making them ideal for hydropower generation. However, as the rivers reach the Terai plains, their potential for hydropower and storage diminishes due to reduced gradients, lower velocities, and wider channels. Additionally, heavy sediment loads from the upper regions are deposited in the lower plains of Nepal and India, reducing storage efficiency.

These geohydrological features make Nepal’s Terai and India’s northern Indo-Gangetic-Brahmaputra plains among the most challenging areas in the world for river control and damming. In addition, while the alluvium carried by Himalayan rivers enhances soil fertility in these plains, it also complicates control and storage of water, contributing to inter-state water conflicts, among other factors. 

India’s Imperatives for Establishing Hydro-Hegemony

These geo-hydrological dynamics shape India’s strategic interests and influence its hydro-hegemonic ambitions. India’s hydro-political strategy toward Nepal is multidimensional, incorporating water management, hydro-territorial interests, the externalization of economic and political costs, and broader regional strategic objectives. This strategy necessitates access to and control over water resources within Nepal before they reach the Indian plains, thereby effectively navigating the technical challenges of controlling water and shifting the human, material, economic, and political burdens of managing the Himalayan rivers onto Nepal. In the mid-20th century, India pursued these objectives through bilateral agreements during a period of state-led modernization. In the current neoliberal context dominated by market forces, this strategy can be realized through the involvement of private corporations in the commodification of Nepal’s hydro-social landscapes. Alongside the technical and geo-hydrological challenges previously mentioned, India’s pursuit of hydro-hegemony, whether through bilateral agreements or market-driven approaches, is driven by both domestic and regional strategic considerations.

Domestically, the Ganga River Basin spans 26 percent of India’s land area across 11 states and sustains nearly 600 million people, accounting for 43 percent of the country’s population. As one of the world’s most densely populated river basins, exponentially rising water demand places significant strain on available resources. While Nepal’s rivers........

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