6 min readSep 21, 2026 04:03 PM IST First published on: Sep 21, 2026 at 04:03 PM ISTFor decades, India’s diplomatic relationship with Nepal during natural calamities followed a well-known script. When cloudbursts, landslides, or flash floods devastated the Himalayan nation, New Delhi deployed National Disaster Response Force teams, airlifted emergency supplies, and offered generous reconstruction grants. India acted as a friendly “First Responder”.However, recent catastrophic flash floods across Nepal’s Bhotekoshi and Trishuli river basins—dubbed a “Himalayan Tsunami” after destroying settlements, highways, and hydropower infrastructure—have altered this paradigm. Moving away from a paradigm of charity and ad-hoc relief, Nepal’s leadership has explicitly pivoted to a framework of climate justice and financial liability. Kathmandu has formally appealed to the UN-backed Fund for Responding to Loss and Damage (FRLD) while calling on developed countries to deliver compensation and concessional climate finance, and pressing regional neighbours, including China and India, for cooperation on preparedness, data sharing and resilience. Kathmandu has clarified that it is not seeking damages from any single country, but the expectation placed on its neighbours is unmistakable. Prime Minister Balendra Shah will take this case to the UN General Assembly on September 24, where Nepal is hosting a side event on Himalayan climate risk, before the issue moves to COP31 in Antalya in November.AdvertisementThis shift presents India with a delicate strategic and geopolitical dilemma. As a leading voice of the Global South, India has historically argued that historical emitters in the Global North carry sole responsibility for funding climate Loss and Damage. Yet, as a rising regional power whose emissions footprint and infrastructure investments are intertwined with the fragile ecology of the Third Pole, India can no longer depend on global multilateral support alone. To maintain stability, influence, and security across its northern frontier, India must evolve from a benevolent donor of emergency aid into a structural co-underwriter of regional climate justice.Also Read | India will de-risk, not decouple, from US and ChinaKathmandu’s decision to name regional neighbours alongside traditional historical polluters stems from an agonising reality: Global climate finance mechanisms are fundamentally unsuited for fast-moving, compounding ecological disasters.Consider the UN Green Climate Fund’s (GCF) track record. A crucial $49.9 million project designed to protect vulnerable Nepalese communities from Glacial Lake Outburst Floods (GLOFs) sat in the GCF pipeline for over seven years. By the time bureaucratic approvals cleared, the waters had already broken. Similarly, while the UN Loss and Damage Fund was operationalised to address irreparable climate impacts, its capital reserves remain a drop in the ocean compared to real-world costs. Nepal faces a reconstruction bill that its official Rapid Damage and Needs Assessment puts at $4.78 billion from the latest disaster — nearly 10 per cent of its GDP. Relying on slow-moving international boards in Geneva or Bonn while mountain communities wash away is no longer viable for Kathmandu. Downstream and mountain nations are applying the Common But Differentiated Responsibilities (CBDR) principle locally, pointing out that adjacent, high-emitting economic engines share an immediate physical footprint in their backyard.AdvertisementFor New Delhi, Kathmandu’s call for climate compensation creates an uncomfortable precedent.On one hand, India’s official stance at COP summits remains anchored in climate equity: India’s per capita emissions remain low, its historical contributions to global warming are minimal compared to the West, and it is itself a severe victim of climate change. Accepting direct “liability” or paying explicit “climate damages” could open a Pandora’s box, exposing India to similar claims from other South Asian countries as well as from the Pacific Island countries, while weakening its leverage against the Global North.On the other hand, flatly rejecting Kathmandu’s appeals carries immense geopolitical risk. China, which shares the transboundary Tibetan plateau, is aggressively expanding its climate and ecological diplomacy across the Himalayas. An evasive stance risks alienating the Nepalese public, driving anti-India sentiment, and ceding strategic space to Beijing.India’s economic interests are directly tied to Nepal’s ecology. Indian public and private firms have invested billions in Nepal’s hydropower sector (such as the Arun III and Upper Karnali projects). When sudden GLOFs destroy these dams and cascade downstream into Bihar and Uttar Pradesh, the loss is mutual. India is not an outside observer; it is ecologically and economically co-dependent.To resolve this dilemma, India must transcend the false choice between total legal liability and passive humanitarian relief. As a dominant middle power, India can construct regional institutions that deliver the substance of Loss and Damage funding without getting bogged down in fault-based compensation terminology.Establish a Regional Himalayan Risk & Insurance Facility: Working through frameworks like the New Development Bank (NDB), Asian Infrastructure Investment Bank (AIIB), BIMSTEC, or a Third Pole Compact, India should champion a South Asian Resilience and Insurance Facility. Operating as a rapid-payout parametric insurance pool, it would release funds automatically upon satellite detection of threshold climate triggers, bypassing years of diplomatic wrangling. This ensures predictable financial flows for both Nepalese reconstruction and annual Indian disaster allocations.Re-engineer Transboundary Infrastructure Investment: Bilateral projects must evolve into resilience-first partnerships. India should route a dedicated percentage of joint infrastructure budgets into an Ecological Adaptation Fund to construct climate-resilient local infrastructure, stabilise upstream slopes, and safeguard mountain livelihoods.you may likeInstitutionalise Open-Access Transboundary Data: Early warning is the cheapest form of loss reduction. India’s advanced space capabilities (via ISRO) should be leveraged to create a real-time, open-access early warning system for the entire Himalayan belt. Co-owning GLOF monitoring data and lake volume tracking with Nepalese agencies transforms tactical intelligence into a shared regional security asset.In this new phase of climate geopolitics, countries like India and China stand at a pivotal crossroads. Just as they successfully cooperated to reshape global development finance through institutions like the New Development Bank, emerging powers now have the opportunity to innovate on climate cooperation—and indeed on disasters such as earthquakes—far beyond the rigid, slow-moving models developed by the West. By pioneering localised Loss and Damage mechanisms, co-underwriting regional resilience, and institutionalising transboundary safety, New Delhi can demonstrate a new paradigm of middle-power leadership—proving that its commitment to the Global South begins right at its own borders.The writer is Professor, School of Public Policy, IIT Delhi, former DG of ISA and Former Indian Climate Negotiator