It certainly is hard to define in the case of the Gurkha troops serving in the Indian and British Armies. Personally I have only served with Gurkha's in the British Army (in a highly peripheral role).
They look and 'feel' the same as British soldiers, wear the same uniform and are very much admired, even loved, by the public who the protect. However, as Tom Holt has pointed out though, they certainly aren't treated the same!
The tradition of serving with the British began in 1818, a mere forty two years after the USA was created, so they have a respectably long history to draw on.
In some cases, particularly during the first world war, the King of Nepal offered Nepalese troops and military aid as an ally of the Empire. Not too sure what happened during the second world war, but no doubt the forum can enlighten us...
So... Initially, probably it is fair to say that the Gurkha troops serving with the Indian army were mercenaries. Later (how much later? - Impossible to say! 25? 50 years? 70 years?) the Gurkha forces became members of a regular force, the Indian Army.
With the onset of the first world war in 1914 there is a definitive change, as the Gurkha's fought as allies of the British Empire, so emphatically we could say those troops were not mercenaries.
But what of the end of the Empire? From 1947 onward, the Indian Army and the British Army took different roles as different entities. A purist may say that the original contract was to serve with the Indian Army, and that the troops that have served so honorable with the British Army are, in fact, mercenaries.
This is a thorny question, and as we can see from other posts, the boundries are being blurred as Gurkha's frequently serve in Europe, and nationality issues are being questioned. Tom Holt post has shown us that a soldier born in Britain, with British nationality, served with the Brigade.
This further confuses the issue...
As puzzled as you are SgtD!
Dave
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"Kaphar Hunno Bhanda Marnu Ramro"