Nepal has set an ambitious target of Rs 300 billion in annual IT exports, for which the central bank, Nepal Rastra Bank (NRB), has introduced new, investor-friendly policies. These measures include relaxed rules on foreign investment, easier profit repatriation, and permission for Nepali IT firms to invest abroad. These changes come as the IT sector is expanding rapidly. The number of IT companies has risen from 40 to 400 in just two years, with annual exports reaching around USD 1 billion. The nation aims to achieve Rs 300 billion in IT exports within a decade and generate employment for 1.5 million people, positioning IT as a key driver of future economic growth. Nepali IT professionals are increasingly working remotely for companies in the US, Europe, Australia, India, and elsewhere, earning well without leaving home. This combination of skilled youth, lower costs, and improved regulations has encouraged the government to attract foreign direct investment (FDI) to the sector, as it provides opportunities to earn foreign currency while reducing youth migration.
Tech Sovereignty: A Quest for Nepal
The IT sector has outpaced other industries, aided by wider internet access, lower mobile data costs, and more reliable power supply in cities and towns. Young entrepreneurs are building software, apps, digital content, and online services for global clients. However, informal exports remain high, revealing gaps in policy. When services bypass formal channels, the nation loses crucial data, tax revenue, and trust. Effective policies are needed to address these challenges. FDI is crucial for several reasons: it brings capital, opens global markets, introduces new practices, and helps local businesses meet international standards. Regulators also find the IT sector attractive because it is clean, has low environmental costs, and offers quick returns. Digital services are especially suited to Nepal’s context, where the domestic market is small and logistics costs are high, as they can easily cross borders with just a click. Recent NRB measures demonstrate commitment: allowing companies to invest abroad, removing prior approvals for profit repatriation, and enabling banks to handle foreign exchange directly. These steps reduce friction and respond to longstanding complaints from local founders and foreign partners.
To become a regional IT hub, Nepal must address basic infrastructure and policy gaps. Clear and stable tax rules are critical, as startups need predictability in income tax and value-added tax. IT parks should move from concept to reality, with reliable power, fast internet, and easy access. Cities like Butwal, Pokhara, and Biratnagar have potential to become tech clusters if connectivity is improved. The government should act as a facilitator rather than a gatekeeper by speeding up company registration, simplifying compliance, and providing one-window services for investors. Public procurement can further support domestic IT firms by favouring local solutions where feasible. Nepal is gaining momentum. With ongoing reforms, clear guidelines, and trust in young talent, the country can turn today’s promise into a sustainable IT export base.
