The exercise - Surya Kiran - was being participated by around 300 troops each side in Rupandehi district.
Senior Nepal Army officer Rajendra Karki inaugurated the exercise, according to a statement by the army.
The 12th edition of Nepal-India joint military exercise will conclude on September 16.
According to the Indian Army officials, the Surya Kiran is the largest joint exercise in terms of troop participation.
The battalion-level joint training between the two armies will focus on counter-terror operations in mountainous terrain by facilitating interoperability.
The Nepal Army said the joint exercise will provide the two armies a platform to exchange experiences, ideas and skills.
"The joint military exercises will further strengthen friendly relations existing between the two countries for centuries and will promote mutual understanding between the two armies," it said.
Surya Kiran series of exercises are held alternately in India and Nepal.
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