Doing Business in Nepal

CVE 2022 37238



Nepal is a landlocked country in South Asia with an area of 147,516 square kilometers. Situated on the Himalayas' southern slope, Nepal is bordered by India to the south, east and west, China to the north. A beautiful country with a rich culture and history, it is also a country with great potential for business opportunities. Being located between the two world's largest economies, China and India, the country's geographic location has a significant impact on its development as a corporate center. Though considered one of the least developed nations in the world, Nepal offers enormous growth potential, particularly in the areas of agriculture, hydroelectricity, tourism, and natural resources. 

Nepal's economy is currently growing rapidly at an average of 6.2% per year. It also has a long history of being a country with many opportunities for foreign investors. Because of its location, Nepal is ideal for doing business.  

Opportunities for investment in Nepal

  • More fertile land: Although land costs in Nepal's Terai region and rural areas are beginning to rise, they are still reasonable. While waiting for the land's worth to rise in a few decades, it can pay rewards in the form of crops.  
  • Investments in tourism: The nation of Nepal is situated between the two major economies with the quickest growth rates. The major population in both China and India will rapidly expand and be keen to travel. By anticipating where Chinese and Indian travellers may wish to spend their money, Nepal can capitalize on the expanding tourism sector.  
  • Hydropower: The hydroelectric potential in Nepal is enormous. Large-scale hydropower plant investments may require significant capital, but it is feasible to purchase shares of connected businesses when they go public. In Nepal, several hydropower projects are in progress. Several of them will go public over the next ten years. For a regular investor without millions of rupees to invest, this will be a terrific opportunity. Projects abound for large-scale investors. In 2014, Nepal and India finalized their long-awaited Power Trade Agreement, opening the door to the trade of electric power alongside other tradable goods. As a result, once electricity is produced, the market is now predictable.  
  • Foreign outsourcing: The majority of foreign businesses seek to outsource some of their work processes to emerging nations as it keeps businesses profitable through lower production costs. Due to the availability of skilled human resources in Nepal, there is a huge prospect of outsourcing for foreign firms. Some of the work processes that are outsourced in Nepal by foreign firms are related to software development, web design, customer care, translation, audio transcription,  
  • Medical Sector: Some of the best doctors around the world has been produced by Nepal. The surgeons from Nepalese hospitals have performed surgeries in UK, USA, Singapore, etc. Though Nepalese hospitals lack the technology and infrastructure that are readily available in developed nations, the quality of doctors is quite superior. As the healthcare services in the developed nations is costly, Nepal can perform the same services at a fraction of that cost. Hence, there is a good opportunity to invest in the medical sector in Nepal. 

Advantages of Doing Business in Nepal

  • Comparative benefit: Nepal has easy access to the thriving markets of China and India, two of the most populated nations in the world. Investment opportunities in Nepal's natural and cultural resources are significant.  
  • Size of the market and accessibility: Despite having a small population and a small market, the country benefits from significant access to the main markets in the region thanks to its unique relationships with its neighbors. The nation has simple access to the global market. Since Nepal is a WTO member as well, it benefits from the multilateral trading system's universally based rules.  
  • Population and labor force: Nepal provides skilled, semi-skilled, and highly skilled workers to numerous nations that import labor due to its labor surplus.  
  • Availability of capital in Nepal: The Government of Nepal (GON) strongly encourages foreign investment to develop social and economic systems that can guarantee reliable access to high-quality goods and services. Additionally, the nation strives to achieve political stability, peace building, trade facilitation, and economic capacity building through sustainable economic development.  
  • Return on investment (ROI): Compared to other South Asian countries, Nepal has convenient access to the vibrant marketplaces of China and India, two of the most populous countries in the world for business. Some of the factors contributing to Nepal's relatively high ROI.  
  • Ease of Doing Business: In the World Bank Group's "Ease of Doing Business Report 2019," Nepal is placed 94th globally and 3rd in South Asia.  
  • Open Border: India can enter Nepal through an open border. China offers Nepal duty-free access to almost 8,000 different products. From 2016, Nepal will get duty-free access to the US market for 77 products.  

Challenges of Doing Business in Nepal

  • Lack of local knowledge: One of the biggest mistakes new investors make when doing business in Nepal is the lack of local knowledge. It is important to remember that Nepal is a developing country, and things work differently here than in developed countries. For example, the legal system is not as developed, it is important to do your homework and understand the local business environment before launching your business. 
  • Failing to account for the infrastructure constraints: Another mistake new investors make is failing to account for the infrastructure constraints in Nepal. Nepal is a developing country, and the infrastructure is not as developed compared to other developed countries. This can be a challenge for businesses, as for the smooth operation of business, suitable infrastructure in the form of a road transportation system, power, and airports are a must. Inadequate infrastructure not only prevents development but also adds to the business's time, effort, and financial expenditures.  
  • Not being prepared for the bureaucratic hurdles: One final mistake that new investors make is not being prepared for the bureaucratic hurdles. Nepal is a bureaucracy, and several procedures and approvals need to be obtained before starting a business. This can be a time-consuming and frustrating process, but it is important to be prepared for it. Still, the work processes in Nepal are not automated, so they will take longer even for a small service. 

If you are thinking of doing business in Nepal, it is important to be aware of these common mistakes. By doing your homework and being prepared, you can set your business up for success. 


Since there are many investment opportunities available in Nepal, each with its benefits, if we are aware of the challenges and are sure that we are ready to face them, we can take full advantage of the benefits of doing business in Nepal. With the different government policies, geographic location, and skilled manpower available, we can see that Nepal is the best place for conducting business compared to any other country. There is also a chance for growth, which is the most important thing to check before doing business.