Gen Rawat was honoured at a special ceremony at the president's official residence 'Sheetal Niwas' in Kathmandu.
She handed over a sword, an insignia and a certificate with regard to the honorary title to Gen Rawat.
The practice follows a six-decade-old tradition of decorating army chiefs of each other's country with the honorary title. Commander-in-Chief Gen Kodandera Madappa Cariappa was the first Indian Army chief to be decorated with the title in 1950.
During his stay in Kathmandu, Gen Rawat separately met Nepal's Prime Minister Prachanda and Defence Minister Bal Krishna Khand and his Nepalese counterpart Rajendr Chhetri.
Gen Rawat, who was appointed to the top post of Indian Army on December 31, was invited by Gen Chhetri to visit Nepal. He is on a four-day visit to the Himalayan country.