Nepal-UK Relations

Bilateral Relations

Nepal established diplomatic relations with the United Kingdom in 1816.  Treaty of Friendship between Great Britain and Nepal was signed in 1923 which further formalised relations between the two countries. Ever since the establishment of their diplomatic relations, friendship, mutual understanding, cordiality, cooperation and respect for each other’s national interests and aspirations have characterized relationship between the two countries. The United Kingdom is also the first country in the world with which Nepal had established diplomatic relations. The United Kingdom is the first country in the world which established its Embassy in Kathmandu, the capital of Nepal. This is the country where Nepal had established its first diplomatic mission (Legation). Nepal had established its legation in London in 1934, which was the first Nepalese diplomatic mission established at the foreign country. It was elevated to the Ambassador level in 1947 A.D.

The UK remained one of the top development partners of Nepal with the annual British aid on an increasing trend. Tourism, trade, education, and the British Gurkha connection remained the key dimensions of the bilateral relations.

Since then, relations between the two countries have continued to grow, with a new Treaty of Perpetual Peace and Friendship signed in 1950 which expanded areas of cooperation and an exchange of State Visits. Amicable relations continue today; Nepal continues to be the source of recruitment of Gurkha soldiers into the British army – a tradition dating back to the nineteenth century but still an essential part of Britain’s modern army – and the United Kingdom remains one of the most significant providers of development assistance to Nepal.

As one of Great Britain’s allies during the two world wars, Nepalese soldiers in hundreds of thousands fought and sacrificed their lives in many battlefields of the world, thus leaving a heritage of deep and sincere friendship in the history of two countries. The Gurkha soldiers are the most visible bridge between Nepal and the United Kingdom. It is to state that the Gurkhas’ service in the British army started on April 24, 1815, which is continuing till the date spanning over more than two hundred years. The solid foundation of the relationship is built on the history of service, sacrifice and bravery of these Gurkha soldiers.

Nepal and the United Kingdom are celebrating the bicentenary of bilateral relations between the two countries .To mark the 200th year of the beginning of the official contacts between the two countries in 1816, a number of programs and events from both sides have been organized in 2016-2017.

Diplomatic Dealings/Exchange of visits

Exchange of visits at different levels and periodic consultations between the two sides have played a major role in further promoting the bilateral relations.

Visit to Nepal from UK Side

Visit to UK from Nepalese Side

Treaties/MoU/Agreements

Bilateral Consultation Mechanism

With a view to enhancing the friendly cooperation and further promoting the bilateral relations Nepal and the United Kingdom have signed a MOU on 7th January 2014. On behalf of Nepal and UK, Foreign secretary Mr. Arjun Bahadur Thapa and UK’s Permanent Under-Secretary Sir Simon Frazer signed the MOU for establishing the Consultation Mechanism at the Foreign and Commonwealth Office, London respectively. As per the MOU, both the parties will hold consultations at jointly decided intervals alternately in the capital of either country at an appropriate level as may be decided upon and hold discussion on all aspects of bilateral relations as well as on international or regional issues of mutual interest.

Finalized Agreements/MoU

• TIFA Agreement signed in 2011.
• An agreement on promotion and protection of investment between Nepal and UK signed on March 2, 1993
• Development Partnership Arrangement between Nepal and UK, signed on December 2013. It supersedes the Technical cooperation agreement desiring to strengthen the traditional cooperation and cordial relation between Nepal and the UK signed on 31 May 1994.
• Trade Agreement signed in 1965

Agreements/MoU in Progress

• Bilateral Agreement on Avoidance of Double Taxation.

Economic and Technical Cooperation (Development Cooperation)

Development cooperation partnership between Nepal and the United Kingdom is one of the important aspects of the traditionally friendly relations between two countries.

The UK aid to Nepal in various fields of activities started in 1961. The United Kingdom has been offering fellowships to the Government of Nepal since 1950s. British volunteers are engaged in Nepal since 1964. These programmes have contributed to Nepal’s need for specialised and trained manpower and also have developed important links between the people of the two countries. In order to better understand and address the issues of poverty in Nepal, in April 1999 DFID established an in-country office staffed by a multi-disciplinary team of both UK nationals and staff appointed in country. DFID presence in Nepal has greatly assisted in working with Government of Nepal in the development of understanding and establishment of networks that will promote opportunities for change.

Development Partnership Arrangement to provide a transparent and mutual accountability framework between Nepal and the United Kingdom on development assistance was signed on December 2013. This arrangement supersedes the technical cooperation agreement that was signed on 31st May 1994. The assistance of British Government generally comes through the Umbrella Agreement. The first such agreement of Pound Sterling 12 million was signed on 23 September 1979 for the implementation of various projects. On 14 November 1984, second agreement was signed. In December 1988, the amount was Pound Sterling 20 million. In September 1991, the UK Government agreed to increase the grant level of 1988 by Pound Sterling 5 million. The UK Government’s Department for International Development (DFID) prepared an Operational Plan for Nepal during 2011-2016. This plan commits up to £413 million of UK official development assistance during the period 2011-2016. The UK has assisted Nepal in the areas of livelihoods, e.g. agriculture, forestry, transport and communications, local development; basic services, e.g. education, health, water supply and sanitation; good governance, human rights and peace building efforts.

The British aid to Nepal is channelled through Department for International Development (DFID). All bilateral aid with Nepal is on a grant basis. The DFID Nepal’s operational Plan is divided into four main areas: governance and security, inclusive wealth creation, human development (basic services including education and health), and climate change/disaster management. The British Government has been extending its assistance particularly in different socio-economic fields.

British volunteers are engaged in Nepal since 1964 under the British volunteer programme. These programme have contributed to Nepal’s need for specialized and trained manpower and also have important link between the two countries.

As per Development Cooperation Report 2014-2015 by Ministry of Finance, UK remained the top ODA provider (based on disbursement) with a total assistance of US$ 168.07 million in the Fiscal Year 2014/2015. UK disbursed following amounts in different year.

On 16 April 2015, UK agreed to provide Financial and Technical assistance of Pound Sterling 35 million (approximately NRs. 5.21 billion) to the Government of Nepal for the implementation of Accelerating Investment and Infrastructure in Nepal Programme as per the MOU was signed between Ministry of Finance and DFID to this effect. The Programme has 3 major components namely – i) Public – Private Infrastructure Investment Promotion, ii) Economic Policy Development and Reform, and iii) Financial Sector Stability. DFID Technical Support has been instrumental in promoting foreign direct investment especially in large hydropower project through Investment Board Nepal for the last few years. This very programme has provisioned of supporting IBN to promote private investment in the country. Likewise there are provisions of continuing support to the second and third phases of Financial Sector Reform Programme of the Government initiated few years back. The program will last for six years from 2015 to 2020.

The British cooperation in the recent years has been focussed on community and rural support, planning and monitoring capacity building, financial and public management, good governance, elections and human rights, energy and climate change and peace building through the Nepal Peace Trust Fund.

Earthquake 2015

Nepal received generous support and assistance from the Government of the United Kingdom in the aftermath of the earthquake of 25 April 2015. It responded to the Nepal earthquakes immediately with the deployment of Eight Disaster Response Specialists under Rapid Response Facility and with the release of GBP5 million. The United Kingdom Government pledged USD110 million for the reconstruction and rebuilding of Nepal. Secretary of State for International Development, Rt. Hon’ble Justine Greening, MP and DFID’s Director General, Mr. Joy Hutcheon visited Nepal on 19 May 2015 to take the first-hand information on the damages caused by the earthquakes as well as to find out the effectiveness of the United Kingdom assistance to the earthquake victims. Similarly, Minister of State at the Department for International Development, Rt. Hon’ble Mr. Desmond Swayne TD MP, visited Nepal from 27-28 August 2015 for examining some of DFID’s work in the area of disaster preparedness, including the Humanitarian Goods depot at the airport and the site of emergency supplies.

Project-wise Commitment and Disbursement for Fiscal Year 2014-2015

Trade

Nepal and UK signed trade agreement in 1965. Despite our extensive engagements and linkages, both at the level of government and, people in the backdrop of our long-standing friendly and cooperative relations, trade and investment relations between the two countries have largely remained way below its actual potential.

Our statistics show the trade is in favour to UK. The following figures reflect Nepal’s exports to and imports from UK during the past years: (In NRS)

Nepal faces a trade deficit of 142,182,856 Rupees in the first eight month of 2016. The total export to UK stands at 1,256,018,669 Rupees while the total import stands at 1,398,201,525.  The major items of import from UK are: Motor car, vehicle, Parts of aero plane and helicopter, Whiskies, Malt not roasted, Sweets biscuits, Chocolate in blocks, slab or bar etc.

With high imbalance and elements of unpredictability, this is, of course, a typical feature of a trade relation between a developed and least developed country. It is for this reason that Nepal places high importance to directing foreign development cooperation in areas which help enhancing our productive capacity. Aid for trade is, therefore, another preferred area for us in our development cooperation.  Nepal welcomes aid for trade cooperation in its topmost priority area of infrastructure building in transportation and energy sector which has the potential of boosting the productive capacity of the country.

Major Nepalese exports to UK are Pashmina shawls, goatskin, leather goods, Nepalese paper and paper products, woollen carpets, handicrafts, ready-made garments, silverware and jewellery. Likewise, major imports from UK are copper scrap, hard drinks, cosmetics, medicine and medical equipment, textiles, copper wire rod, machinery and parts, aircraft and spare parts, scientific research equipment, office equipment and stationery.

While we continue building our trade capacity, Nepal and UK also need to encourage the businesses to benefit from the TIFA agreement which was signed in 2011. This framework encourages the businesses and investors for beneficial trade and investment in the highly potential areas of tourism, hydropower, agro-based products, herbal product, IT and technology transfer.  Nepal has also already shared with the UK side a draft text of a bilateral agreement on avoidance of double taxation in 2013.

Exchange of visits by trade delegations from Nepal and Britain has added a new dimension to the commercial relations between Nepal and Britain. Nepal-Britain Chamber of Commerce and Industry is active in promoting trade and investment between Nepal and UK.

Tourism

A sizeable number of British tourists come to Nepal every year for trekking and mountaineering and other leisurely activities. The following figures indicate the annual tourist arrival from UK to Nepal for the last few years:

UK is among the primary tourism generating market for Nepal. Given our historical linkages and increasing people-to-people contacts, the prospects for increasing the tourist arrival from UK in Nepal are quite promising. Keeping this fact in view, Nepal has been actively promoting Nepal as an attractive tourist destination for British public.

UK’s support and cooperation in line with our broader policy priorities will be much appreciated, especially in construction and upgradation of tourism infrastructure with focus on tourist safety. DIFID’s recent involvement and interest in tourist security, trekkers tracking, and maintenance of damaged trekking trails, including the Great Himalayan Trail, is most welcome. We encourage DIFID to increase their support in this area.

The unprecedented snow storm and avalanches triggered by cyclone Hudhud in October 2014 took lives of 43 people of various nationalities, including 21 trekkers in the popular Annapurna region. Given Nepal’s high vulnerabilities to the effects of climate change and its limited capacity in the areas of weather forecasting, it would be an appropriate area of cooperation between UK and Nepal in establishing a tourist information network integrated with tourism service providers, security agencies, emergency rescue and medical services with advanced real-time weather forecasting capabilities for the relevant government agencies.

Embassy of Nepal in London is planning to organize the many tourism promotional programme to increase the number of tourists from UK.

Consular Activities

During Fiscal Year 075/76, Embassy of Nepal in London generated £542048.72 (NRS
7,73,71,510.41) revenue.

Investment

Foreign investment commitment from UK stands at 1663 million rupees till 2013/14. The major investment is in the areas of banking, tourism, education, technology. An agreement for the promotion and protection of investment between Nepal and UK was signed on March 2, 1993.

Major investments from UK in Nepal are in the areas of banking, tourism, education, and technology. There are some British joint ventures in the areas of hotel, travel & trekking, tea production, education, garment, bio-technology and consultancy. These are significant figures, but do not reflect the true potential. We can attract much more investments from UK. For that we will continue to work with our renewed efforts towards trade diversification, taking lessons from the current unfortunate supply situation we are facing.

An agreement on promotion and protection of investment between Nepal and UK signed on 02 March 1993provides a framework to further expand cooperation in this field. In this context, the proposal for signing another agreement on avoidance of double taxation will further help boost the flow of FDI between the two countries.

There are some British joint ventures in the areas of hotel, travel & trekking, tea production, garments, biotechnology and consultancy. There are many British and Non Resident Nepalese (NRN) entrepreneurs who are still making trade and investment successes in Nepal. Standard Chartered Bank and Unilever are two major British companies who have made a huge return from their investment in Nepal in the last 20 years.

Foreign Employment and British Gurkhas

Thousands of Nepalese are working at service sectors like hospitals, university, hotels and restaurants in UK. About 200 Nepalese are recruited as Maritime Security Guards in UK. About 150,000 Nepalese are living in UK. Many Nepalese belong to Ex-Gurkha Servicemen and their families.

The Gurkhas’ service in the British army officially started on April 24, 1815 after the Treaty of Sugauli between Nepal and the British India in 1814. Nepalese soldiers were taken into the British Indian Army in large numbers. Prior to the independence of India, the recruitment of Gurkha Army was organised by way of the Tripartite Agreement of 1947 among Nepal, India and the United Kingdom. This Agreement also paved way for the distribution between India and Britain of existing Gurkha Brigades serving in the British India. Thus the 2nd, 6th, 7th and 10th Gurkha Rifles became part of the British Army after India gained independence while the rest were retained by independent India.

British Gurkhas is a fully integrated part of the British Armed Forces. It constitutes an important element in Nepal-Britain relations.  Over 160,000 Gurkhas were enlisted in the Gurkha Brigade and other units of the Indian Army during the First and Second World Wars. The Brigade also suffered 43,000 casualties during the Wars.  In recognition of their distinguished service, the British Gorkhas servicemen from Nepal have won 13 Victoria Crosses (VC), the highest British gallantry honour. The Government of Nepal has been making representations to the British Government at various levels to make the benefits and pensions provided to the Gurkha soldiers equitable and just, in view of their outstanding contributions.

The gradual decline of the British Empire since the end of the Second World War and the emergence of a changing pattern of global power relations, particularly in the late eighties, led the downsizing of the British Army. Since the handover of Hong Kong to China in June 1997, the strength of the Gurkhas in the British Army has been reduced to 3,500. Currently about 250 people are recruited annually into the British Army. Nepalese are working in Gurkha Brigade of British Army. There are about 27,000 pension holders, 10,000 welfare recipients and 11,000 non-pension holders.

The British Government has been providing assistance for various Gurkha Welfare Schemes being implemented in different parts of Nepal. The total British expenses to the Gurkha soldiers, serving and retired, is reported to be around Sterling Pound 50 million a year. The British Government, through 24 Area Welfare Centres (AWCs) in Nepal, administers welfare activities benefiting the retired British Gurkhas and their dependents. However, the British side closed four AWCs.

In accordance with the Tripartite Understanding of 9 November 1947 and subsequent understandings between the British Government and the Government of Nepal, welfare service is provided to both serving and former members of the British Brigade of Gurkhas through the British Gurkha Welfare Scheme (BGWS). This is an official British organisation, operating wherever Gurkhas and their families are stationed including in Nepal. It commenced active operations in Nepal in 1970 as part of British Gurkhas Nepal.

BGWS aims at relieving the poverty and hardship of those ex-servicemen and their dependents and through them, assisting in improving the living conditions for their communities. It renders aid in the form of individual aid and community aid. Those programmes range from house building and education grants to the provision of financial help.

Cultural Cooperation

British Council in Nepal is working to extend cultural relations between UK and Nepal. Similarly, Nepalese diaspora and Gurkha soldiers are visible bond who have interlinked the Nepalese culture and traditions in UK.

Education Cooperation

UK is supporting US$ 260,012 for the education of marginalised girl in Kailali district of Nepal. DFID was the core education funding agency in Nepal, supporting the foundations of education values.  Active as a School Sector Reform Plan (SSRP) pooling Development Partner.  With Education for All overall goals, the SSRP objectives were to (i) ensure access and equity in primary education; (ii) improve the efficiency and institutional capacity of primary education; and (iii) enhance the quality and relevance of basic primary education for children and illiterate adults.  Under the SSRP, it handed the responsibility of the grant management and SSRP portfolio to the European Union, which oversees the implementation of the combined DFID/EU funding under the SSRP implementation. The total commitment of DFID under the SSRP was GBP 12.5 million.  This was however terminated in 2014.

With the cooperation of UK, following achievements have been made:

• Trained in the field 400 key state school teachers in basic teaching skills, who in turn will cascade down to some 8000 more.
• Launched 20 new links between Nepali and UK schools, and now having 310 active school links.
• Delivered English by radio and learn English Mobile programmes, reaching around 6000 teachers and learners of English.
• Delivered over 42,000 exams to 31,000 candidates, mostly in the English language, A levels and accountancy.
• Held Annual Education UK fair, in which 24 British universities took part. The fair had 3.600 visitors, many of them school and university graduates.
• Delivered global on-line English products to thousands of Nepali citizens. That is Learn English, Teach English and Schools on line.

In 2013, DFID committed around GBP 2million to establish 810 additional girls’ toilet and water supplies/WASH facilities across 18 districts selected based on low indicators in hygiene and sanitation with an implementation date which was extended to July 2015.

The British Government has been regularly providing scholarships in different areas for the development of human resource in Nepal since 1950s. Britain is offering Chevening Award to Nepalese from many years. A lot of Nepalese students are pursuing higher level studies in the UK. British Council in Nepal is supporting for exam reform in education sector.

Nepalese students in UK

Another important aspect of our relations in the area of education is the growing attraction of UK as a preferred choice of destination for Nepalese students aspiring for further education. The number of Nepalese students pursuing university and college degrees was increasing until lately when there were major changes in UK’s immigration policy and regulations relating student visas. A large number of Nepalese students were left stranded in UK as a couple of colleges in which they were enrolled went illegal. The students who had to take loans and sell their family property to pay for the admission and tuition fees to study in those colleges had to face financial losses in addition to the loss of their precious academic years.

Nepal appreciates the initiatives of UK government in further regulating the educational institution targeted for foreign students and relevant visa regimes. Since Nepalese, wherever they live in whatever capacity, are a peace-loving, friendly and hardworking people, it is our request to the British side to consider positively and sympathetically in relation to their legal, facial and economic policies affecting them. Especially, it would help the college students a lot if they are allowed to work for certain hours in a week as provided for the foreign students in universities in UK.

Security Cooperation

UK has provided support for upgrading of Nepal Army Birendra Peace Operations Training Centre (BPOTC) located at Panchkhal (45 km East of Kathmandu). It has also provided Explosive Ordinance Device (EOD) related Improvised Explosive Device Disposal (IEDD) related Special Training to Nepal Army. UK is continually providing the special training courses to Nepal Army officials.

High level visit from Nepal Army and British Army are regularly taking place in UK and Nepal respectively.

Consular Activities

Embassy of Nepal in London involves in various consular service ranging from passports, visas, Travel Document, NRN Card, Verification, Attestation and Power of Attorney.

Ever since the commencement of the issuance of Machine Readable Passports (MRPs) on 26 December 2010, a total of 35,032 MRPs have been issued from Embassy of Nepal in London as of 31 December 2016,. During Fiscal Year 2072/73, Embassy of Nepal in London generated £846,375(Rs13,28,80,875) revenue.

Embassy of Nepal in London has made numerous milestone starting from 01 January 2017 for the effective public service delivery.

• Same day service programme to issue visa and other consular works. Fees payments through banking system also.
• Online registration of Nepalese and Non-Resident Nepalese, Nepalese Diaspora Organisations living in UK, Ireland, Iceland and Malta.
• Time extension for passport, visa and consular services.
• Adopted people first approach and service with smile to handle grievances of the clients and maximize their satisfaction.
• Providing information through Facebook, Website, Twitter timely.
• Service on the holiday in case of emergency.

Country Profile – UK