Nepal's New PM Shah Sets Pragmatic Foreign Policy Tone After RSP Landslide

Nepal's new Prime Minister Balendra Shah, backed by a near-two-thirds Rastriya Swatantra Party majority, pledges a pragmatic foreign policy while border disputes with India linger. He aims to strengthen ties with neighbours and development partners amid stalled EPG talks and new disputed maps.

The Rastriya Swatantra Party's surge in the March 2026 election reshaped Nepal's political landscape, giving the party control of nearly two-thirds of parliament. This mandate follows Shah's high-profile tenure as mayor of Kathmandu, where he cultivated a reputation for technocratic governance and urban renewal. Analysts note that the electorate's shift reflects a desire for fresh approaches to longstanding economic and diplomatic challenges. The party's platform emphasized anti-corruption measures and youth empowerment, resonating with urban voters.

Prime Minister Shah announced a foreign policy that stresses balanced engagement with India, China, and traditional development partners. The policy prioritises economic diplomacy, connectivity projects, and renewed cooperation on trade and investment. Simultaneously, the stalled report of the Eminent Persons Group on Nepal-India border issues and the release of new maps that include disputed territories keep tensions alive along the southern frontier.

Shah's emphasis on pragmatism suggests his government will seek incremental gains rather than sweeping realignments, focusing on projects that deliver tangible benefits to border communities. Early signals include renewed dialogue on hydropower projects and joint customs upgrades at key border crossings. By avoiding overt alignment with any major power, Nepal aims to preserve its strategic autonomy while attracting financing for infrastructure and energy projects. Observers will watch whether the administration can translate its manifesto promises into concrete agreements, especially regarding the EPG framework and cross-border trade facilitation. The next test will be the upcoming bilateral summit with India, where progress on the EPG report and map disputes could signal the durability of Shah's balanced approach.