I am arriving DEL from KTM on Jet on the afternoon flight and leaving on the noon 12:55 AC code share Jet operated flight the next day to LHR and on to Canada on a separate ticket. I will have several bags full of Nepal purchases (folkart, textiles and jewelry etc a couple thousand $ worth) all with appropriate Nepal certificates, invoices etc. I originally was thinking of taking the AM flight but was advised that 2 hours would be too tight for DEL...

My question, I want to check my bags through to the AC/ Jet flight and not have to have them enter India, go through customs the leave again with having to explain that I was just in transit and not purchasing anything in India. Would I have to stay in the international transit are and can I check the bags through from that side. If need be I will sleep in the transit area / lounge, I am arriving Jet business and am AC Elite...

Secondly, if I change my plan (the KTM-DEL ticket is full fare changeable) do I have any options if I want to spend a couple days in India, I don't want to set my self up for a big hassle with the famous Indian customs / security bureaucracy.

Get yourself an Indian tourist / transit visa before you try to go landside into India. You can't get one on arrival (though I hear they are going to move to that sometime this year)

9W should be able to check our bags through to Canada.

Jet will check your luggage thru to the final destination and you can stay airside without going thru indian immigration and customs in DEL.

One option is to ship your purchases from KTM with a reputable shipping company. That will leave you free and flexible, especially as you are toying with the idea of spending a few days in Delhi.

As suggested above, get yourself a tourist visa before leaving for India. You can't get it stamped in India and the bureaucracy is pretty inflexible.