The proposed site for Pancheshwar dam project. Pancheswar a multi-purpose project conceived under 1996 Mahakali treaty between India and Nepal got a fillip when Prime Minister Narendra Modi visited Nepal in 2014
The homemade device went off late Monday at Biratnagar, 200 kilometres (125 miles) southeast of Kathmandu and close to the Indian border.
In New Delhi, an external affairs ministry spokesperson said there was a "minor explosion along the rear boundary wall of the camp office".
After an explosion at the camp office of the Indian Embassy in Nepal on Monday night, a senior official here said on Tuesday that the incident is being probed. He said it is a temporary office which was set up during the recent floods in Nepal and North Bihar.
None of the employee was present inside the building at the time of explosion.
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Nepal police, which is investigating the blast, are suspecting cadres of a local political group. There have been repeated calls from various quarters to evacuate the field office, Kumar said.
Morang district's Superintendent of Police Arun Kumar said the blast caused minor damage to the wall and that the police are investigating the case, the Kathmandu Post reported.
However, Indian Embassy in Kathmandu has not yet issued any formal statement on the incident.
The security near the site has been beefed up after the blast. Biratnagar is the industrial capital of Nepal and 6 km north of the border of Bihar.
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