This article examines the evolving landscape of India–Nepal relations through the lens of smart power, a strategic blend of soft power persuasion and hard power capabilities. While the two countries share deep historical, cultural, and economic ties, their relationship has increasingly been shaped by changing regional dynamics, China’s growing presence, and shifting domestic politics in Nepal. The study analyzes how India has integrated development assistance, connectivity projects, cultural diplomacy, digital cooperation, and defence collaboration to strengthen its influence while addressing emerging geopolitical challenges. Recent initiatives such as cross-border electricity trade, railway expansion, petroleum pipelines, and digital payment linkages highlight India’s shift toward a more holistic and people-centric approach. Despite periodic tensions and border disputes, smart power offers a sustainable framework for building mutual trust, enhancing interdependence, and promoting regional stability. The article concludes that a cooperative smart-power strategy can significantly deepen India–Nepal partnership in the coming decade.