The treaty allows free movement of people[3] and goods between the two nations and a close relationship and collaboration on matters of defence and foreign policy.

The treaty provides for everlasting peace and friendship between the two countries and the two governments agree mutually to acknowledge and respect the complete sovereignty, territorial integrity and independence of each other.

There are a large number of Indians living, owning property and working or doing business in Nepal as a beneficial aspect of the treaty for India.

The Government of India and the Government of Nepal, recognizing the ancient ties which have happily existed between the two countries; Desiring still further to strengthen and develop these ties and to perpetuate peace between the two countries; Have resolved therefore to enter into a Treaty of Peace and Friendship with each other, and have, for this purpose, appointed as their plenipotentiaries the following persons, namely, The Government of India: His Excellency Shri Chandreshwar Prasad Narain Singh, Ambassador of India in Nepal.

Consuls-General, Consuls, Vice-Consuls and consular agents shall be provided with exequaturs or other valid authorization of their appointment.

Article 6 Each Government undertakes, in token of the neighbourly friendship between India and Nepal, to give to the nationals of the other, in its territory, national treatment with regard to participation in industrial and economic development of such territory and to the grant of concessions and contracts, relating to such development.

Prepared by LPThe Himalayan Nation of Nepal borders northern India in the south, east and west.

The rise of Communist China in 1949 and the subsequent invasion of Tibet heightened security concerns in both India and Nepal.

[7] With heightening concerns over the security threat to India presented by Communist China, which was seen as seeking to project power and influence over Nepal, Sikkim and Bhutan and China's border disputes with India, the latter sought to strengthen its "Himalayan frontier" by forging an alliance on defence and foreign affairs with the Rana rulers of Nepal.

Also, agreements were manipulated in the favour of antidemocratic autocratic rule of Nepal, where the power of the people is fragmented.

Nepal forced the Indian military mission to leave, and both nations began ignoring the treaty provisions.

[9] Upon forming a coalition government after the 2008 Nepalese Constituent Assembly election, the leader of the Communist Party of Nepal (Maoist) Pushpa Kamal Dahal said on 24 April 2008 that the 1950 treaty would be scrapped and a new pact would be negotiated with India.