Nepal has become the third country in India's immediate neighbourhood to see a violent uprising topple its government in recent years.
Prime Minister KP Sharma Oli resigned after more than 20 people died in clashes with police during anti-government demonstrations triggered by a social media ban.
A nationwide curfew is in place and the army is attempting to bring the situation under control after protesters stormed parliament and set fire to the homes of several politicians.
For many, the scenes in Kathmandu were reminiscent of the turmoil that gripped Bangladesh last year and Sri Lanka in 2022.
Though Bangladesh and Sri Lanka are also India's close neighbours in South Asia, Delhi's relationship with Kathmandu is special because of historic people-to-people, economic and strategic ties.
Nepal shares a largely open border of more than 1,750km (466 miles) with five Indian states; Uttarakhand, Uttar Pradesh, Sikkim, Bihar and West Bengal.
Delhi is keenly watching developments across the border, with Indian Prime Minister Narendra Modi swiftly reacting to the unfolding events.
The violence in Nepal is heart-rending. I am anguished that many young people have lost their lives, Modi wrote in a post on X on Tuesday.
Stressing that stability, peace and prosperity of Nepal are of utmost importance, he appealed to all my brothers and sisters in Nepal to support peace.
Modi also chaired an emergency security meeting with his cabinet colleagues on Tuesday to discuss the situation.
Much like it was caught off-guard by the uprising in Sri Lanka in 2022, analysts say India was taken by surprise by the developments in Nepal, with Oli resigning just a week ahead of a planned visit to Delhi.
Any instability in the country is a cause of concern for India because of Nepal's strategic location.
The Western Theatre Command of China sits right across Nepal. The route to the Indo-Gangetic plains comes straight through Nepal, said Maj Gen (Retd) Ashok Mehta, an expert on Nepal.
The unrest also has implications for the large Nepalese diaspora in India. An estimated 3.5 million Nepalis work or live in India, but experts say the actual number could be much higher.
The relationship is further complicated by Nepal's longstanding dependence on India for essential goods and a significant number of Gurkha soldiers serving in the Indian Army.
As stability in Kathmandu appears fragile, experts caution that India must engage diplomatically with the new administration while addressing the needs of the disillusioned youth in Nepal.
The ongoing crisis in Nepal not only reflects internal discord but also underscores the geopolitical complexities in South Asia, especially as India grapples with its relationships with neighboring nations amidst political shifts and economic dependencies.