Despite Nepal's request to India for help in the repatriation of Bhutanese refugees, Indian External Affairs Minister Pranab Mukherjee ruled out Indian involvement in the crisis.
The problem was a bilateral one between Nepal and Bhutan, Mukherjee said.
Over 105,000 Bhutanese refugees have been living since the early 1990s in camps run by the UN High Commissioner for Refugees in far eastern Nepal.
Over a dozen rounds of ministerial meetings between Nepal and Bhutan have failed to solve the problem.
Recently the US offered to take in about 50,000 refugees, a proposal rejected by the Bhutanese refugee leaders who said the first choice should be to go back to Bhutan.
Mukherjee, who arrived here Sunday to invite Prime Minister Girija Prasad Koirala to attend the South Asian Association for Regional Cooperation (SAARC) summit in April, told media persons that Nepal and Bhutan should take the initiative to solve the problem.
Referring to the political changes in Nepal, Mukherjee said he felt "true political change" had come in Nepal.
He said India would continue to assist Nepal in its move towards peace and stability. India had always wanted "peace and stability" in Nepal, he added.