India–Nepal Border Economies after Federalisation

Detailed chapter description

Chapter 131 examines the India–Nepal border economy after Nepal’s transition to federalism. The constitutional change of 2015 created a three-tier state—federal, provincial and local—and the first full cycle of provincial and local governments after the 2017 elections brought new institutions directly into the economic life of the Terai–Madhesh border. Yet federalisation did not create a new international border, nor did it transfer customs or international trade to Madhesh Province. Nepal’s Constitution keeps customs, international trade, international boundaries, major national transport and treaty-making within federal jurisdiction. Provincial and local governments nevertheless shape the economic experience of the border through roads, markets, agriculture, tourism, business administration, land-use decisions, municipal services and subnational finance. For Mithila, Vajji and Anga this distinction is essential. The border is simultaneously a customs boundary and a dense field of family, labour, pilgrimage, educational, health and market mobility. Formal trade is concentrated in large corridors such as Raxaul–Birgunj and Jogbani–Biratnagar, while Jayanagar–Janakpur and numerous road crossings support passenger movement and local commerce. Since 2015 the material infrastructure of this border has also changed: integrated check posts, passenger and freight rail, a transnational petroleum pipeline, electricity trade, revised transit rules and digital-payment links have converted parts of the border from a truck-and-cash frontier into a multimodal economic network. The historical question is therefore not whether federalism ‘opened’ or ‘closed’ the border, but how authority, infrastructure and economic opportunity have been redistributed across a border economy that remains deeply transnational.