Anti-India protests erupted on the India-Nepal border on the eve of the 59th anniversary of India's Independence, resulting in a transport strike and a halt to business activities.
Following the unrest, the Indian consulate in Birgunj cancelled all programmes scheduled for the Independence Day celebration on Tuesday, a local daily reported. However, the report could not be officially confirmed.
The row was triggered by the death of a Nepali bus driver in Raxaul in India's Bihar state Sunday.
Krishna Bahadur Lama, 49, was heading towards Birgunj from India's Jharkhand state when he reportedly hit a cyclist near the India-Nepal transit point and was severely beaten up Saturday. Lama died of severe head and other injuries Sunday.
According to Nepal's media, Lama was assaulted by Indian police at the customs office in Raxaul.
A letter carried in the Kathmandu Post Tuesday alleged, that according to eyewitnesses Lama was thrashed for refusing to pay a bribe to the policemen.
His death resulted in transport workers calling an indefinite strike from Sunday, demanding compensation for his family and punishment to the guilty.
On Monday, angry protesters demonstrated in front of the Indian consulate in Birgunj in southern Nepal.
Protests kept vehicles off the roads in Birgunj, the hub of Nepal's commercial activities.
Imports and exports were affected badly, media reports said. Other southern towns were also hit with hundreds of airport-bound passengers left stranded.
The protests were called off after an agreement was reached between the local authorities and transport workers' unions on Monday.
Besides a compensation of NRS 500,000 (about $8000), Lama's family is to be given money to meet the funeral expenses as well as another NRS 500,000 for the education of his youngest son.
A member of the family would be given a job in addition, Nepal's official media said Tuesday.
Meanwhile, the Indian government gifted 15 Mahindra ambulances to various non-profit charitable organisations in Nepal to mark the anniversary of Indian Independence.
Since 1994, India has presented 106 ambulances to various Nepali organisations to bring healthcare services at the doorsteps of people, who have limited access to such services, especially in remote areas.
Apart from the ambulances, India's ambassador to Nepal Shiv Shankar Mukherjee announced at a public function in Kathmandu Tuesday that six buses will be presented to different schools and educational institutions.