Balancing Act in the Himalayas: Nepal’s Foreign-Policy Hedging Between India, China, and the United States (2015–2026)

Abstract

The unique geographical location of Nepal between two giants of Asia; India and China; has always had an impact on shaping the foreign-policy making of the country. Kathmandu has been strengthening its external relations since the Constitution of 2015 and the unofficial blockade on the border since then, with a focus on diversifying links and maintaining strategic autonomy. The article analyzes foreign policy of Nepal between India, China, and the United States (U.S.) during 2015–2026. The study uses secondary sources such as official policy documents (Nepal Foreign Policy 2077), trade figures, project implementation records of the Belt and Road Initiative (BRI), and the Millennium Challenge Corporation (MCC) Compact, parliamentary statements, and recent scholarly analyses in order to employ the small-state theory and concept of strategic hedging. It claims that Nepal has adopted a calibrated approach to hedging between the three powers, has aligned itself with the countries on the infrastructure and energy fronts, and has not entered into exclusive security arrangements. This approach has been limited and facilitated by the turbulence in the domestic political landscape, such as the 2025 Gen-Z movement and the 2026 electoral realignment under Prime Minister Balendra Shah. The extension of policy space through hedging has enhanced policy room of Nepal, but the structural asymmetries in trade, transit and power have dampened the impact of hedging. The article suggests policy recommendations for strengthening institutional capacity, economic diplomacy, and multilateral engagement to sustain autonomy in an intensifying multipolar environment.