Once firmly in New Delhi’s orbit, Nepal is now a three-way contestBrahma ChellaneyNikkei AsiaA highway in Kathmandu on March 20, 2024. © AP PhotoIndia has long viewed Nepal as lying firmly within its natural sphere of influence. The two countries are bound together by geography, culture, religion and an open border. Nepal’s economy remains deeply intertwined with India’s.Few international relationships anywhere in Asia combine such extensive people-to-people contact, cultural affinity and freedom of movement as that between India and Nepal.Today, however, Nepal is no longer defined solely by its ties to India. China has spent the past two decades steadily expanding its political and economic footprint there. Now the U.S. is emerging as a significant third player.The era when New Delhi could be regarded as Nepal’s indispensable external partner is quietly drawing to a close.Recent high-level visits by senior American and Chinese officials to Kathmandu underscore a broader reality: Nepal has become an arena of strategic competition among Asia’s two great powers and the world’s leading superpower. With the three competing for influence, investment and strategic access, Nepal has become one of the clearest examples of how India’s traditional dominance on the subcontinent is increasingly under serious challenge.The U.S. and India remain partners globally yet, as Nepal illustrates, Washington increasingly pursues policies that diverge from New Delhi’s interests on the subcontinent. Before visiting Nepal in April, U.S. Assistant Secretary of State for South and Central Asian Affairs S. Paul Kapur bluntly stated that a primary American regional objective is to “prevent the dominance of any single power in South Asia.”Nepal, wedged between India and Chinese-ruled Tibet, remains uniquely important to New Delhi, including for internal security, given the nearly 1,800-kilometer open border that allows Nepalis and Indians to move freely without passports. Millions of Nepalis live and work in India. Hindu and Buddhist traditions connect communities on both sides of the frontier. No other power enjoys such deep historical, cultural and societal ties.Yet such ties alone no longer guarantee political influence.China recognized this reality before most others. Through infrastructure investments, political engagement and sustained diplomatic outreach, Beijing gradually established itself as a major player in Nepal. It built close relations with Nepal’s two, long-dominant communist parties to help cultivate a friendly government there and expand its influence along India’s northern frontier.The communists’ crushing defeat in the March national elections has left Beijing’s preferred political channels in Nepal marginalized. Yet Chinese influence may not erode significantly as Nepal’s new Gen Z rulers realize the risks of relying too heavily on a single partner, India.For Beijing, Nepal’s significance extends beyond economics. The country sits astride China’s sensitive Tibetan frontier and occupies a strategic position between the world’s two most populous nations. Maintaining influence in Kathmandu has become an important element of China’s broader regional strategy.What is new is the growing American role. While both Washington and New Delhi seek to limit Chinese influence in Nepal, the U.S. is also helping create a regional environment in which India’s privileged position becomes less exclusive.The result is not outright rivalry between the U.S. and India. Rather, it is subtle differences in outlook and strategy that suggest Washington and New Delhi do not share identical interests in India’s immediate neighborhood, including Nepal.Washington increasingly treats Kathmandu as an independent strategic actor whose external relationships should not be constrained by any regional power. High-level American engagement with Nepal has become more frequent, while U.S.-backed development initiatives and investment programs have sharply raised Washington’s profile in Kathmandu.America’s growing strategic footprint, however, has alarmed Beijing, which opposes U.S. Millennium Challenge Corporation (MCC) projects, warning Kathmandu of potential “ramifications” and “outside interference,” especially if the five-year MCC grant program were extended beyond 2028. It has also cautioned Nepal against joining the U.S. State Partnership Program or allowing Elon Musk’s Starlink satellite network to operate in Nepal, viewing the former as implicit strategic alignment with Washington and the latter as a security risk.Yet focusing solely on the external powers misses the most important part of the story: Nepal itself.Kathmandu is not merely the object of great-power competition. Successive Nepali governments have become increasingly adept at leveraging rivalries among India, China and the U.S. to expand their diplomatic room for maneuver. Rather than choosing sides, Nepal seeks to maximize opportunities from all three relationships.This reflects a broader shift in the country’s foreign policy. Nepal’s leaders increasingly view India, China and the U.S. not as mutually exclusive partners but as complementary sources of investment, technology, development assistance and diplomatic support. What appears from New Delhi as a loss of influence often appears from Kathmandu as an expansion of strategic options.That dynamic is likely to endure. Nepal’s political class recognizes that competition among larger powers creates opportunities that did not exist when India exercised near-exclusive influence. By maintaining ties with all major players, Kathmandu can extract benefits from each while securing greater autonomy.For New Delhi, this changing landscape presents a challenge. India retains enormous advantages in Nepal that neither China nor the U.S. can replicate. But influence and exclusivity are not the same thing.China has already ended India’s near-monopoly on strategic influence in Nepal. The growing American presence is further diversifying Kathmandu’s external partnerships. Nepal is becoming a genuinely competitive geopolitical space.The real lesson is not that India is being displaced. It is that the age when New Delhi could assume primacy in its strategic backyard is fading. Across the subcontinent, influence increasingly must be earned through sustained engagement and competitive statecraft rather than inherited through geography and history.Few countries illustrate that transformation more clearly than Nepal.Brahma Chellaney, a professor of strategic studies at the independent New Delhi-based Centre for Policy Research and fellow at the Robert Bosch Academy in Berlin, is the author of nine books, including “Water: Asia’s New Battleground,” which won the Bernard Schwartz Book Award.