There are multiple levels of relationship between India and Nepal. This article deals exclusively with their bilateral transit relations, focusing on their negotiations in the context of Nepal as a landlocked developing country (LLDC). While LLDCs consider their free access to the nearest seaport through a transit country as a natural right, the transit countries often bargain with them from a position of strength. The study reveals that while India used the transit issue as a political leverage, Nepal claimed it as its right to access the sea, undermining or without showing adequate sensitivity towards India’s security concerns. It is observed that Nepal did not benefit much from exporting to third countries due to both poor transit facilities in India and the absence of internationally acceptable bulk exported items.