By Hemant Ojha and Krishna K. Shrestha
Australia’s relationship with Nepal has long rested on two recognised pillars: development cooperation and, more recently, trade and investment. Development ties date back decades, while a new economic track was formalised with the Australia–Nepal Trade and Investment Framework Arrangement signed on 9 February 2024. What this framing still misses, however, is the relationship’s most dynamic force: the Nepalese-Australian diaspora.
That omission now matters. The diaspora is no longer just a social bridge or a symbolic people-to-people link. It is already shaping how the two countries connect – through education, remittances, professional networks, business knowledge, and institutional trust. Ignoring it is no longer a minor oversight in policy design; it is a strategic blind spot.
Geopolitical advantage. Nepal’s location makes this argument more important, not less. Since joining China’s Belt and Road Initiative in 2017, Nepal has had to balance relations with both Beijing and New Delhi while preserving room for manoeuvre in its external partnerships. In that setting, Australia has an advantage: it is often seen in Nepal as a constructive partner without a hegemonic agenda. The question, then, is what social base can make that advantage more durable. The strongest candidate is the diaspora.
Why now? Because the conditions for a diaspora-centred approach are in place. Australia and Nepal have added a formal trade and investment framework to a relationship historically defined by aid. Australia’s official statements have pointed to flourishing people-to-people links as a foundation for deeper economic ties and noted that the Nepali diaspora numbers more than 200,000. More recently, Nepal’s political conditions have shifted: Prime Minister Balen Shah, elected in April 2026 with an outright parliamentary majority, has explicitly positioned the diaspora as a partner in national development – a signal that structured engagement would now find a receptive counterpart in Kathmandu. In other words, the community is already large enough and visible enough to be treated as a policy asset rather than a background feature of the bilateral relationship.
A well-integrated community in Australia. The scale and profile of the community strengthen that case. Nepalese-Australians are no longer simply a migrant population; they are increasingly embedded in universities, local institutions, small business networks, and professional life across Australia. That kind of integration gives the community unusual bridging power. It can translate norms, reduce mistrust, and turn policy ambition into practical cooperation in ways that conventional diplomacy often cannot.
Two-way economic value. The economic case follows directly from that social base. Australia remains an important destination for higher education and vocational training for Nepali students, while international student expenditure contributes AUD 2-3 billion annually. For Nepal, the economic significance of migration is even more pronounced: World Bank data show that personal remittances were equivalent to 26.2 per cent of GDP in 2024. As a higher-than-median-income community (with over A$77,000 per annum), the Nepalese diaspora is not peripheral to Nepal’s economy. It is one of its structural supports.
Social and institutional significance. Diaspora influence is not only economic. It also operates through everyday civic, family, and professional ties that connect the two countries in durable ways. That social embeddedness matters because it converts demographic presence into usable influence. Nepalese-Australians carry practical knowledge of Nepal’s regulatory environment, business climate, and political realities that formal diplomatic channels cannot easily replicate. This is not soft symbolism. It is market intelligence, institutional trust, and access grounded in lived experience.
Investment and development finance. The World Bank has repeatedly argued that Nepal’s long-term growth will depend on stronger domestic investment, job creation, and more effective mobilisation of capital for infrastructure and economic transformation. That is why recent efforts by the Nepal government to attract diaspora capital matter: from new pathways for Non-Resident Nepalis to participate in capital markets to wider policy discussions about diaspora-focused investment instruments and incentives. For Australia, this opens a wider field than a single sector. The diaspora can help connect capital, skills, and commercial trust across areas such as infrastructure, tourism, agribusiness, education, technology, and health – precisely where development needs and transnational capability increasingly overlap.
Australia already has a model – but Nepal may matter more. There is no need to invent it from scratch. Through the Maitri Grants program, administered by the Centre for Australia-India Relations, Australia already supports structured collaboration across business, research, culture, and diaspora engagement. But the strategic logic may be even stronger in Nepal than in larger partners such as India or Indonesia. Those countries command attention because of their scale, market size, and geopolitical weight. Nepal is different: its development needs and location make social trust, informal access, and credible intermediaries more valuable. In a geopolitically sensitive setting where state-to-state engagement is necessarily cautious and resources are limited, diaspora networks can play a disproportionately important role in connecting policy, capital, and institutions.
Resetting Canberra’s approach. Nepal is not a tier-one foreign policy priority for Australia. But that is exactly why a diaspora-centred approach makes sense. It would build on existing assets rather than require a major new bureaucracy or large new spending commitments. What is needed first is recognition: that Nepalese-Australians are not simply stakeholders to be consulted after policy is made, but contributors who can help shape the partnership itself.
From there, the practical steps are straightforward. Create formal space for diaspora representatives – professionals, business leaders, academics, and community figures – to inform Australia’s engagement with Nepal. Use existing aid and economic tools more strategically, alongside diaspora networks. Develop low-cost pathways for Nepalese-Australian professionals who want to contribute skills and knowledge in Nepal without incurring unnecessary career penalties in Australia. None of this requires grand strategy. It requires policy adaptation and catching up with social reality.
More than six decades after diplomatic relations were established, the Australia–Nepal relationship is no longer defined by aid alone, nor yet by trade alone. It is increasingly carried by people. Recognising the Nepalese-Australian diaspora as a third pillar of bilateral engagement is not rhetorical inflation. It is a clearer description of where the relationship already stands – and of how Australia can make it work harder.
Sources: ABS Census 2021, Country of Birth QuickStats (Nepal); World Bank Migration and Remittances data (Nepal); DFAT Nepal country brief; Australian Embassy in Nepal, press statement on TIFA signing, 9 February 2024.
Contributing Author(s): Hemant Ojha is Associate Professor at the Australian National University. Krishna K. Shrestha is Professor at the University of New South Wales.
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