New Delhi: Nepal Prime Minister Baburam Bhattarai will be in India this week on a trip that, analysts say, provides New Delhi an opportunity to rescript its ties with the strategically located neighbour.

Bhattarai’s 20-23 October visit is his “first bilateral visit abroad" after taking charge as prime minister of Nepal, underscoring the special ties between the neighbours, said an Indian foreign ministry statement on Sunday.

Bilateral talks: Manmohan Singh (right) with Baburam Bhattarai on the sidelines of the United Nations general assembly in September.By PIB

Bhattarai met India’s Prime Minister Manmohan Singh on the margins of the United Nations General Assembly in New York last month, the foreign ministry statement said. During his four-day visit, Bhattarai will again hold talks with Singh, call on President Pratibha Patil, and meet representatives of Indian businesses, it said.

“Nepal is of immense importance to India, given its location between China and India. For a long time, it has been viewed as a buffer state between the two," said C.U. Bhaskar, former head of the National Maritime Foundation think-tank. “Nepal has had a special status vis-a-vis Indian security because a large number of Nepalese are part of the Indian army."

According to Bhaskar, Bhattarai’s visit will help cement stronger political ties, given that the neighbours have not been on the best of terms due to political turmoil in the Himalayan country that abolished its two-centuries-old monarchy and declared itself a republic in May 2008. New Delhi rolled out the red carpet for then Nepal Prime Minister and chairman of the Maoists, Pushpa Kamal Dahal, during a visit the same year, but ties did not become as warm as anticipated.

India’s security concerns include links between Nepalese Maoists and India’s Maoist guerrillas, who are active in a large swathe of territory. Another worry is that Nepal could become a conduit for anti-India activities fomented by Pakistan.

“There are also concerns vis-a-vis China and the tendency of bigger states to play one smaller state against another," Bhaskar said.

Former foreign secretary Lalit Mansingh said India should be ready to offer economic assistance to Nepal during Bhattarai’s visit. “Nepal is in a precarious state economically and financially, and it is likely that Bhattarai will ask for Indian assistance that India should give," he said. “Bhattarai is a pragmatic leader with strong links to India. So, India should be open to his success and make his visit successful."

This, Mansingh said, will illustrate that India does not have any animosity with the Maoists as a political party and will support any government that has the backing of the Nepalese people.

According to the Indian foreign ministry, India is Nepal’s largest trade partner and source of foreign investment and tourists. “Bilateral trade between India and Nepal has increased substantially since the signing of the trade treaty in 1996 and received further impetus after the signing of the revised trade treaty in 2009, which has provisions that allow Nepal greater access to the Indian market," it said on its website.

Provisional trade figures for 2010-11 show that Nepal’s bilateral trade with India stood at 16,129.7 crore, which accounted for 58.7% of Nepal’s total external trade, the ministry data said.

India also remains Nepal’s largest source of foreign investment, accounting for 44% of such investments. Indian investments in Nepal amount to 1,586 crore with 462 foreign direct investment projects.

Investing in Nepal’s vast potential in hydroelectric power, estimated to be around 43,000 megawatts, will be good for both countries, Mansingh said. “India should do these things keeping its long-term strategic interests in mind as well as for its own development needs that Nepal can help with."

Reuters contributed to this story.