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This paper argues that the rise of India will have a positive effect on nearby Nepal, allowing Kathmandu to foster a more prosperous and democratic state. India, the second most populous country in the world, is rapidly advancing as a regional and international power. New Delhi's sustained growth, which has included almost a 9 percent increase in GDP over the past few years, and rising strategic influence, brings a new dimension to regional and global affairs. India's rise as a major power will create new political and economic life in South Asia and ultimately provide tremendous opportunities to region's domestic political and economic systems. Nepal, a small country located between India and China, will be significantly affected by India's future status as an economic and political power. India's willingness and capacity to assume a position of global leadership will facilitate to the development of Nepal's democratic institutes and political processes. New Delhi's economic progress will positively affect Nepal's own industries, such as the development of hydropower and tourism. Nepal's vast water resources provide enormous potential to produce hydroelectricity, which could foster a valuable commodity for export to India, and the increasing purchasing power of citizens of India would contribute to promote the Nepal's essential tourism trade. Finally, Nepal has the potential to become a transit point for goods between India and China to facilitate their growing trade and this opportunity could assist Kathmandu to become a part of the trade arrangements between two economies.