Killings, abductions, death threats, extortion and road blocks by armed men have been affecting the livelihoods and security of ordinary citizens in the fertile flatlands, and failure to resolve the conflict could mean an upsurge in violence in the near future, the activists warned.
Eastern and central Terai, in particular, have faced growing unrest since January 2007, as the militant groups push their demands for the establishment of an autonomous Madhesi state and greater rights for the Madhesi people, the dominant ethnic population of the Terai.
"The situation is becoming very volatile and there is a need to be transparent about how the peace talks are going to be held," human rights activist Subodh Pyakhurel told IRIN.
He explained that the government should also involve citizens' groups such as the human rights community to help in the peace talks.
On 3 October, the government invited all the armed groups to talks but so far it has been able to contact only eight of the 17.
Among the key ones are two factions of Janatantrik Terai Mukti Morcha (JTMM), Madhesi Tigers, Terai Madhesi Mukti Tigers, Terai Cobra, Terai Liberation Force and Madhesi Virus Killers.
Activists and analysts claimed both the government and militants lacked commitment to addressing the crisis as none was trying hard enough to make peace, nor had they sought mediation help from human rights groups or other political parties close to both sides.
"There is a need for genuine commitment and there is a need to get a clear picture of who will represent the various armed groups," independent conflict analyst Bishnu Upreti told IRIN.
He explained that until now the groups had not yet agreed on any common party or individual to represent them. Each group wanted to hold separate talks and this would complicate the negotiations.
However, state officials said the government had already formed a committee, including Janardhan Sharma, Minister for Peace and Reconstruction, and was still in the process of contacting all the rebel leaders.
The government has also agreed to release members of the armed groups arrested for alleged involvement in violence.
One of the key militant organisations, JTMM-Jwala Singh, said recently it would talk to the government if it announced a ceasefire, withdrew charges against its cadres, guaranteed security for its negotiating team and withdrew police and the army from the villages.
"Communalism [strong ethnic identity] is growing and impunity has not been addressed. These issues have to be strongly raised in the peace talks," said Pyakhurel, warning that failure could push the country into an even more dangerous situation.