KATHMANDU • Indian Prime Minister Narendra Modi prayed at a renowned Hindu temple with his Nepalese counterpart K.P. Sharma Oli yesterday, as he started a visit aiming to reset strained relations between the neighbours.
"Nepal has welcomed me here as the Prime Minister of India, but this grand welcome is in honour of thousands of years of tradition between our two nations," Mr Modi said at the Janaki Temple in Janakpur, which is dedicated to the Hindu goddess Sita.
"This will act as a foundation for our economic development, cultural ties and a strong people-to-people contact between the two nations," he added.
Mr Modi has cast the visit as part of his "neighbourhood first" policy. It is the latest in a series of goodwill gestures by New Delhi, which has been alarmed by China's growing influence in Nepal.
Last year, Chinese firms pledged more than US$8.3 billion (S$11 billion) in investment, dwarfing Indian commitments of US$317 million. In May last year, Nepal signed up to Beijing's ambitious Belt and Road Initiative.
Mr Modi is due to fly to Kathmandu later where he will inaugurate construction of the India-backed US$1.4 billion Arun Three hydropower plant.
The plant is the first of five mega hydropower projects - two of which are backed by Chinese firms - to begin construction, which marks a diplomatic win for India.
"Historically, India-funded projects, while they seem generous, have struggled to show progress, while the Chinese do it quicker and gain on public opinion," said Kathmandu-based analyst George Varughese.
The five hydropower plants have been in the works for over a decade and could be a game changer for Nepal. The Himalayan nation has enough water to be a hydro powerhouse but it has so far harnessed less than 2 per cent of that potential, according to estimates.
Ties between the neighbours dived in 2015 when Nepal passed a controversial Constitution that sparked deadly protests, triggering a months-long border blockade.
Kathmandu blamed New Delhi for the blockade, which caused a crippling shortage of fuel and goods as the country struggled to recover from a devastating earthquake earlier that year.
Mr Oli, then serving his first term as prime minister, won huge public support as he stoked nationalist anti-India sentiment over the blockade. He used the platform again during his re-election campaign last year.
Many in Nepal remain suspicious of India's "big brother" attitude, and the hashtags #ModiNotWelcomeInNepal and #BlockadeWasACrimeMrModi trended on Twitter as the Indian leader touched down.
Mr Oli, who needs India - Nepal's largest trading partner - to realise his ambitious plans to kick-start economic growth, has opted for a more pragmatic approach to relations since he took office again in February.
In April, he travelled to New Delhi for his first foreign visit.
Mr Modi will visit a second Hindu pilgrimage site near Nepal's border with Tibet today. Analysts say the strong religious overtones are intended to send a message to his Hindu nationalist base at home where Mr Modi is fighting a key state election in Karnataka.