Strategic Communications and Investment Climate Programme (Nepal)

Strategic Communications and Investment Climate Programme (Nepal) is sponsored by U.S. Department of State. This opportunity supports mission-aligned projects and measurable outcomes.

_This Investment Climate Statement reflects information as of August 2025. _ Nepal’s annual GDP is approximately $54. 81 billion, with trade totaling $17.

5 billion. Despite significant potential in sectors like: * Inconsistent laws deter investment. The government aims to attract foreign investment, but practical implementation is lacking.

Political instability has slowed reforms, though foreign direct investment (FDI) has increased. The United States is among the top 10 foreign investors, contributing 3. 25 percent of total FDI.

The Millennium Challenge Corporation’s (MCC) $500 million Compact with Nepal, ratified in February 2022 and entered into force on August 30, 2023, focuses on electricity transmission and road maintenance, with an additional $197 million funded by Nepal. The Compact aims to boost economic growth, create jobs, and enhance cross-border trade opportunities.

Nepal’s strategic location between India and China and its natural resources offer investment opportunities. As of 2024, Nepal generates approximately 2,700 megawatts of electricity, primarily via hydropower. The Government has a plan to generate up to 28,500 megawatts by 2035, and experts assess the economically feasible hydropower potential to be 43,000 megawatts.

Investment opportunities also exist in agriculture, tourism, ICT, and infrastructure. However, investors face challenges such as: * Laws limiting foreign banks * Profit repatriation issues * Controlled currency exchange * Prohibition of FDI in certain sectors * Minimum foreign investment threshold of NPR 20 million (approx.

$154,000) * Government monopolies in sectors like electricity transmission and petroleum distribution * Political uncertainty and internal power struggles * Lack of understanding of international business standards * Inconsistent tax regime * Talent drain due to overseas employment * Cumbersome immigration and visa policies * Inefficient bureaucracy and high turnover among civil servants * Poor transportation infrastructure * Trade unions and general strikes * Intimidation and extortion risks Despite these barriers, Nepal offers opportunities for resilient investors with a long-term perspective.

## Openness to, and Restrictions upon, Foreign Investment ### Policies toward Foreign Direct Investment The Government of Nepal recognizes foreign investment is necessary to boost economic growth as Nepal graduates from Least Developed Country status in 2026. While the Government of Nepal’s stated attitude toward FDI is positive, this has yet to translate into much meaningful action.

The Investment Board Nepal (IBN), a high-level government body chaired by the Prime Minister, was formed in 2011 to promote economic development in Nepal. In addition to approving large-scale investment projects, the IBN is also the Government of Nepal’s body charged with assessing and managing public-private partnership (PPP) projects.

It has the task of attracting large foreign investors to Nepal and was a key organizer of the last three Investment Summits in 2017, 2019, and 2024. It is the primary point of contact for large investors (above $46 million), especially those engaged in public infrastructure projects.

The Department of Industry (DOI), which falls under the Ministry of Industry, Commerce, and Supplies is responsible for the implementation of industry-related policies, and the rules and laws focused on strengthening Nepal’s economy through industrial development. DOI approves any foreign investment project not exceeding $46 million.

The Nepal Business Forum (NBF) was formed in 2010 with the “aim of improving the business environment in Nepal through better interaction between the business community and government officials. ” The NBF does not meet regularly, and the Embassy is not aware of any formal mechanisms or platforms to enable on-going dialogue, aside from the IBN, DOI, and the NBF.

Local business associations such as the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and others have constant ongoing dialogue with the Government of Nepal, representing the private sector’s views and requests for policy reforms.

### Limits on Foreign Control and Right to Private Ownership and Establishment Foreign and domestic private entities have the right to establish and own business enterprises in Nepal and engage in various forms of remunerative activity. The Foreign Investment and Technology Transfer Act (FITTA) of 2019 opened additional sectors to foreign investment, such as renewable energy and infrastructure.

Outside of the restricted sectors listed below, foreign investment up to 100 percent ownership is permitted in most sectors. The Government of Nepal announced the opening of FDI in the primary agricultural sector for exports in January 2021.

The sectors excluded from foreign investment are listed in the annex of the FITTA 2019 and include: * Primary agricultural sectors including animal husbandry, fisheries, beekeeping, oil-processing (from seeds or legumes), milk-based product processing (Note: FDI in this sector is now allowed if 75 percent of the products are exported.)

; * Small and cottage enterprises; * Personal business services (haircutting, tailoring, driving, etc.); * Arms and ammunition, bullets, gunpowder and explosives, nuclear, chemical and biological weapons, industries related to atomic energy and radioactive materials; * Real estate (excluding construction industries), retail business, domestic courier services, catering services, money exchange and remittance services; * Tourism-related services – trekking, mountaineering and travel agents, tourist guides, rural tourism including arranging homestays; * Mass media (print, radio, television, and online news), feature films in national languages; * Management, accounting, engineering, legal consultancy services, language, music, and computer training; and * Any consultancy services in which foreign investment is above 51 percent.

Investment proposals are screened by the DOI or the IBN to ensure compliance with the FITTA and other relevant laws. Historically, the lack of clear, objective criteria and timeframes for decisions have resulted in complaints from prospective investors.

While the Government of Nepal intended the FITTA to address these issues, the regulations enabling the implementation of the Act were only completed in January 2021, and anecdotal evidence suggests services to prospective investors through the One Window Service Center at the DOI is slowly improving. The IBN website provides resources to prospective investors including the Nepal Investment Guide.

Similarly, the DOI maintains an informational website for investors. U.S. investors are not disadvantaged or singled out relative to other foreign investors by any of the ownership or control mechanisms, sector restrictions, or investment screening mechanisms.

U.S. companies often note that they struggle to compete with firms from neighboring countries when it comes to cost, but this is not a factor resulting from any specific Government of Nepal policy. ### Other Investment Policy Reviews The last Investment Policy Review of Nepal was conducted by the United Nations Conference on Trade and Development (UNCTAD) in 2003.

UNCTAD has since produced a report on the implementation of the Investment Policy Review in 2019. The World Trade Organization (WTO) conducted a Trade Policy Review of Nepal in 2018. The International Finance Corporation conducted a Country Private Sector Diagnostics in 2018.

### Business Facilitation The Government of Nepal officials have proclaimed Nepal “open for business” and explicitly welcomed foreign investment. While the Government of Nepal appears enthusiastic in its efforts to attract foreign investors, the business community assesses the reality has not yet matched the rhetoric.

Three laws directly affecting foreign investment (FITTA, PPP, and SEZ) were revised and passed by Parliament but without time for sufficient stakeholder consultations or transparency in the process. Both foreign and domestic private sector representatives often state that the Government of Nepal has not done enough to improve the business environment.

While welcome provisions were included in the FITTA—for example, a streamlined approval process and single window service center—an assessment of the true effects of the reforms await full implementation. Nepal has not signed the WTO Investment Facilitation for Development Agreement. After obtaining a letter of approval from the DOI or IBN, foreign companies are able to register for incorporation online through OCR’s website.

OCR’s website includes an information portal, maintained by UNCTAD and the International Chamber of Commerce, with resources and information for potential investors interested in Nepal. According to the portal, registering a company takes “between three days and a week with the law authorizing up to 15 days.

” Independent think tanks, however, have noted the online system does not eliminate corruption, and bureaucrats frequently request additional documentation that must be submitted in person, rather than online. The Act Restricting Investment Abroad (ARIA) of 1964 prohibits outbound investment from Nepal.

Some enterprising Nepalis have found ways around the Act, but for most Nepali investors, outward investment is a practical impossibility. The Government of Nepal is currently in the process of revising the Foreign Exchange Regulation Act, which is expected to annul the ARIA, paving the way to limited capital account convertibility.

Nepal’s parliament passed the “Some Acts Related to Improving Economic and Business Environment and Enhancing Investments-2025” on March 6, 2025, which supports outward investment by Nepali companies for the first time, especially in the IT sector. Nepali IT companies will be allowed to open branches in foreign countries for business expansion.

An upcoming Nepal Rastra Bank (NRB; Nepal’s central bank) regulation should provide clarity on what additional sectors will be allowed outward investment. The new law also allows Nepali citizens residing and working abroad to invest in their countries of residence.

## Bilateral Investment Agreements and Taxation Treaties Nepal does not have a bilateral investment treaty or free trade agreement or bilateral taxation agreement with the United States but has a Trade and Investment Framework Agreement (TIFA). ### Transparency of the Regulatory System The Government of Nepal has many laws, policies, and regulations that look good on paper, but are seldom fully and consistently enforced.

Frequent government changes and staff rotations within the civil service result in officials who are often unclear on applicable laws and policies or interpret them differently than their predecessors. Many foreign investors note Nepal’s regulatory system is based largely on personal relationships with government officials, rather than systematic and routine processes.

Legal, regulatory, and accounting systems are not transparent and are not consistent with international norms. The World Bank gives Nepal a score of 1.

75 (on a scale of one to five) on its Global Indicators of Regulatory Governance index and notes ministries in Nepal do not routinely create lists of “anticipated regulatory changes or proposals” and do not have the “legal obligation to publish the text of proposed regulations before their enactment. ” Historically, rule-making and regulatory authority resided almost exclusively with the central government in Kathmandu.

Nepal’s 2015 Constitution outlines a three-tiered federalist model. In 2017, seven provincial governments and 753 local government units were established. Foreign businesses can expect to continue to interact with bureaucrats at the central government level in the near term, as national regulations remain the most relevant for foreign businesses.

However, this could change over time as provincial governments become more established. Traditionally, once acts are drafted and passed by Parliament, it has been incumbent upon the related government agencies and ministries to draft regulations to enforce the acts. Regulations are passed by the cabinet and do not need parliamentary approval.

Nepal still lacks an established mechanism or system for the review of regulations based on scientific or data-driven assessments, or for conducting quantitative analyses for such purposes. The World Bank notes the Government of Nepal is not required by law to solicit comments on proposed regulations, nor do ministries or regulatory agencies report on the results of the consultation on proposed regulations.

U.S. Embassy Kathmandu is not aware of any informal regulatory processes that are managed by nongovernmental organizations or private sector associations. Legal, regulatory, and accounting systems are neither fully transparent nor consistent with international norms. Though auditing is mandatory, professional accounting standards are low, and practitioners may be poorly trained.

As a result, published financial reports can be unreliable, and investors often rely instead on businesses’ reputations unless companies voluntarily use international accounting standards.

Publicly listed companies in Nepal follow the 2013 Nepal Financial Reporting Standards (NFRSs), which were prepared on the basis of the International Financial Reporting Standards (IFRSs) 2012, developed by the IFRS Foundation and their standard-setting body, the International Accounting Standards Board. Audited reports of publicly listed companies are usually made available.

Draft bills or regulations are sometimes made available for public comment, although there is no legal obligation to do so. The government agency that drafts a bill is responsible for undertaking a public consultation process with key stakeholders by issuing federal notices for comments and recommendations, although it is unclear in practice how many government agencies actually do so.

Additionally, all parliamentarians are given copies of the draft bills to share with their constituencies. This applies to all draft laws, regulations, and policies. Parliamentary rules, however, require draft amendments to bills be proposed only within 72 hours of a bill’s introduction, giving minimal time for lawmakers, constituents, or stakeholders to submit considered feedback.

In practice, post’s observation has been there is no clear timeline for the process of creating and passing bills, including the time period provided for public or stakeholder consultation. Generally, the government agency that drafted the bill, legislation, policy, or regulation posts the actual draft (in the Nepali language) online.

Once approved, the Department of Printing, an office that is part of the Ministry of Communications and Information Technology (MOICT), posts all acts online. Regulatory actions and summaries of these actions are available at the Office of the Auditor General and the Ministry of Finance (MOF). Both government agencies post periodic reports on the regulatory actions taken against agencies violating laws, rules, and regulations.

Such summaries and reports are available online in Nepali. Individual ministries are responsible for enforcement of regulations under their purview. The enforcement process is legally reviewable, making the agencies publicly accountable.

There are several government entities, including the Parliamentary Accounts Committee, the Office of the Auditor General, and the Commission for the Investigation of Abuse of Authority (CIAA) that oversee the government’s administrative and regulatory processes. U.S. Embassy Kathmandu is not aware of any regulatory reform efforts. Nepal’s budget and information on debt obligations are widely and easily accessible to the public.

The annual budget is substantially complete and considered generally reliable. Nepal’s supreme audit institution reviews the government’s accounts, and its reports are publicly available.

### International Regulatory Considerations Bangladesh, Bhutan, India, and Nepal – known collectively as BBIN – are working together to develop a platform for sub-regional cooperation in such areas as water resources management, power connectivity, transportation, and infrastructure development. The four BBIN nations agreed on a motor vehicle agreement (MVA – for both cargo and passengers) in 2015.

In early 2018, Bangladesh, India, and Nepal also agreed on operating procedures for the movement of passenger vehicles, and in early 2020, the same three countries met to draft a memorandum of understanding to implement the MVA, without obligation to Bhutan.

Nepal’s regulatory system generally relies on international norms and standards developed by the United Nations, World Bank, World Trade Organization (WTO), and other international organizations and regulatory agencies. Nepal joined the WTO in March 2004. According to its WTO accession commitments, the Government of Nepal agreed to provide notice of all draft technical regulations to the WTO Committee on Technical Barriers to Trade.

However, Government of Nepal officials are unable to confirm whether this procedure is followed consistently. Nepal ratified the WTO’s Trade Facilitation Agreement (TFA) in January 2017. As a least developed country (LDC), Nepal could benefit from additional technical assistance from WTO members through the TFA Facility.

A 2017 Asia Development Bank report noted, “Nepal has been making progress in undertaking trade facilitation reforms over the years, particularly those related to the customs.

” The WTO’s December 2018 policy review noted Nepal’s efforts to diversify its narrow production and export base and encouraged Nepal to pursue further economic reform, including through its National Trade Integration Strategy as well as address its supply side constraints, most notably high transit and transportation costs.

According to the TFA Facility’s website, Nepal has submitted provisions for all three categories, a key step for implementing TFA Category A, B, and C requisites. ### Legal System and Judicial Independence Nepal’s court and civil and criminal legal systems are based on common law. Contract law is codified.

In theory, contracts are automatically enforced, and a breach of contract can be challenged in a court of law. In practice, enforcement of contracts is weak. Nepal’s contracts are guided by the Contract Act of 2000.

Nepal does not have a commercial code. All civil courts are authorized to hear commercial complaints. A “commercial bench” has been established at the Supreme Court, but judges who preside on this bench are the same judges dealing with civil and criminal cases as well.

The judicial system is independent of the executive branch. Regulations or enforcement actions are appealable, and they are adjudicated in the national court system. In general, the judicial process is procedurally competent, fair, and reliable.

In some isolated or high-profile cases, however, court judgments have come under criticism for alleged political interference favoring particular individuals and groups. There remains widespread public perception that bribery and judicial conflicts of interest affect some judicial outcomes.

Some cases of bribery, nepotism, and other forms of misconduct have been documented, undermining public trust in the justice system and reinforcing perceptions of favoritism. State-owned enterprises (SOEs) or other government institutions are generally treated the same as private institutions, but some people assert that favorable treatment has been given to SOEs.

### Laws and Regulations on Foreign Direct Investment International investors have raised the issue of sovereign credit rating (SCR) since fiscal year 2018/19 for easier access to foreign loans.

Following the Nepal Investment Summit in April 2024, the Government of Nepal actively pursued an SCR and on November 21, Fitch, an international credit rating agency, issued Nepal a Long-Term Foreign-Currency Issuer Default Rating (IDR–more commonly known as an SCR) of “BB-” with a stable outlook, which is also the second-highest credit rating in South Asia after India.

In the preparation for and during the April Investment Summit, international development partners urged the Government of Nepal to amend its anti-money laundering laws to avoid Financial Action Task Force’s (FATF) ‘grey listing. ’ Unfortunately, Nepal did not make sufficient progress, and FATF grey listed Nepal at its February 17-21, 2025 plenary meeting in Paris.

Nepal’s grey listing is expected to increase financial transaction costs with foreign banks and to decrease FDI into the country. Nepal’s SCR is also expected to drop with the FATF grey listing. On March 6, 2025, Nepal’s parliament approved an “Economic and Business Environment Improvement and Investment Growth-Related” ordinance which now will be replaced by a new bill to give continuity to the new provisions.

Some of the major provisions of the new bill that are expected to positively impact FDI include: * Support Outward Investment as already mentioned above. * Allows Nepali industries to get loans from banks and financial institutions abroad, with the approval of Nepal’s central bank. * Companies are no longer limited to 20 percent profit.

* Special Economic Zones (SEZ) can house service-related industries like ICT. Workers in Nepali companies can now have stock-buying options. * Definition of FDI has increased.

The new bill will allow Specialized Investment Funds to fundraise abroad and invest in Nepali companies/sectors in the form of FDI. * The new bill will make it easier for Nepali companies to get domestic loans from Nepali BFIs by using Project Development Agreement (PDAs), SEZ agreements and non-land fixed assets as collateral.

### Competition and Antitrust Laws The Competition Promotion and Market Protection Board, comprised of officials from various Government of Nepal ministries and chaired by the Minister of Industry, Commerce, and Supplies (MOICS), is responsible for reviewing competition-related concerns. However, private sector representatives argued MOICS’s Department of Supplies Management interferes with the free market.

They claim it is used by businesses with political connections to target competitors, rather than protecting consumers. Nepal’s private sector is often influenced by business associations that limit competition from new market entrants in multiple sectors. ### Expropriation and Compensation The Industrial Enterprise Act of 2016 states that “no industry shall be nationalized.

” To date, there have been no cases of nationalization in Nepal, nor are there any official policies that suggest expropriation should be a concern for prospective investors. However, companies can be sealed or confiscated if they do not pay taxes in accordance with Nepali law, and bank accounts can be frozen if authorities suspect money laundering or other financial crimes.

#### ICSID Convention and New York Convention Nepal is a member of both the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID) and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Nepal’s Arbitration Act of 1999 allows the enforcement of foreign arbitral awards and limits the conditions under which those awards can be challenged.

#### Investor-State Dispute Settlement As a signatory to the New York Convention of 1958, Nepal recognizes foreign arbitral awards as binding. The Agreement between the Government of India and the Government of Nepal for the Promotion and Protection of Investments also discusses arbitration as a means to resolve investment disputes.

In the past five years, there have been two key disputes concerning U.S. companies and a third dispute involving a large foreign company. In the first case, a U.S. company’s subsidiary was criminally charged with VAT tax evasion for exporting services to its corporate headquarters (even though VAT is not owed on exports).

In the second case, a U.S. company was levied taxes/penalties the business community asserts were exorbitant for failing to pay capital gains tax allegedly triggered due to a corporate restructuring of the parent’s corporate structure. In the third case, a foreign company faced a similar situation where the government levied fines for failing to pay capital gains tax owed by the seller of stock.

Companies assert there is a history of unwarranted inspections. Companies operating in Nepal say the Nepali government lacks clear, consistent tax policies, which leads to unpredictable tax treatment. Investors say the government is too aggressive in levying high taxes, whether there is justification or not.

The Nepali government’s taxation is overtly aggressive because it is short of revenue, say investors. #### International Commercial Arbitration and Foreign Courts Apart from arbitration, U.S. Embassy Kathmandu is unaware of any alternative dispute resolution mechanisms available in Nepal. The Government of Nepal encourages disputes involving a foreign investor to be settled through mediation with the Department of Industry.

If mediation is unsuccessful, cases may be settled either in a Nepali court or in another legal jurisdiction, depending on the contractual agreement and investment amount. However, commercial disputes in Nepali courts often drag on for years. Domestic courts have a history of siding with SOE and government entities in investment disputes.

There have been cases where local courts refused to determine whether documents issued by an SOE were genuine. ### Bankruptcy/Insolvency Regulations Nepal does not have a single comprehensive bankruptcy law. The 2006 Insolvency Act provides guidelines for insolvency proceedings, while the General Code of 1963 covers additional bankruptcy-related matters.

Creditors, shareholders, or debenture holders can initiate insolvency proceedings by filing a petition in court. * If a company is solvent, its liquidation falls under the Company Act of 2006. * If a company is insolvent (unable to pay liabilities or has liabilities exceeding its assets), the Insolvency Act of 2006 applies.

**Order of Claimant Priority:** The Company Act allows monetary judgments to be made in local currency. Firms or entrepreneurs who have declared bankruptcy are blacklisted from receiving loans for 10 years. ### Investment Incentives The Nepal Laws Revision Act of 2000 eliminated most tax incentives, however, exports are still favored, as is investment in certain “priority” sectors, such as agriculture, tourism, and hydropower.

Incentives for these sectors usually take the form of reduced or subsidized interest rates on bank loans. There is no discrimination against foreign investors with respect to investment incentives, export/import policies, or non-tariff barriers. The Government of Nepal also offers tax incentives to encourage industries to locate outside the Kathmandu Valley.

Newly formed provincial governments are likely to consider offering their own investment incentives in the future. U.S. Embassy Kathmandu is unaware of the Government of Nepal issuing guarantees for FDI projects, but it has been open to joint financing arrangements.

### Foreign Trade Zones/Free Ports/Trade Facilitation In August 2016, Nepal’s Parliament approved the SEZ Act, which provides numerous incentives for investors in SEZs, including exemptions on customs duties for raw materials, streamlined registration processes, guaranteed access to electricity, and prohibition of labor strikes.

A revision to the SEZ Act in 2019 provided more incentives, including reducing the export requirement from 75 percent to 60 percent. The Government of Nepal maintains plans to have a network of up to 15 SEZs throughout the country with one in Bhairahawa already operational and another in Simara partly so. Both are located in southern Nepal near the border with India.

### Performance and Data Localization Requirements The Government of Nepal does not use “forced localization” policies designed to compel companies to relocate all or part of their global business operations within its borders.

## Protection of Property Rights The Secured Transactions Act (2006) applies to all transactions involving mortgages or liens where the effect is to secure an obligation with collateral, including pledges (when lender takes actual possession of goods), hypothecation (when possession remains with the borrower), hire-purchase, sale of accounts and secured sales contracts, and lease of goods.

The Government of Nepal has established the Secured Transactions Registry Office for registering notices under this Act. Pursuant to this Act, the Government of Nepal may also designate any office to perform the notice registration function. There are no debt markets in which securitization (use of a physical asset to back up a financial instrument) would be used.

However, physical assets, particularly property and land, are often used to secure personal and small business loans. There are no exclusive regulations for land lease or acquisition by foreign and/or non-resident investors. Registering property requires four procedures that typically take six days to complete.

The FITTA and related laws governing foreign investment clearly state that investors can own property, but the title rests with the business/company rather than the foreign investor in an individual capacity. The Government of Nepal does not maintain official statistics on untitled land.

The Ministry for Agriculture, Land Management and Cooperatives (previously known as the Ministry of Land Reform and Management) has been working for decades to identify property titles and registration. Poor record-keeping and resistance from stakeholders, however, has made this a difficult task. Most arable land has a title, although titles have sometimes been acquired in a fraudulent manner.

For legally purchased property, ownership does not revert to other owners. But if that property remains unoccupied or unused for an extended period, there is the possibility that squatters may occupy and claim the land. Although such occupation is not legally enforceable, there are hundreds of cases of unsettled or unlawful occupation of property languishing in Nepal’s court system.

In 2007, Nepal ratified the International Labor Organization’s (ILO) Indigenous and Tribal Peoples Convention (1989), which guarantees the rights of indigenous peoples. U.S. Embassy Kathmandu is not aware of any legal case in Nepal citing this convention. Nepal is not a party to the 2001 Cape Town Convention on Mobile Equipment or the Protocol on Matters Specific to Aircraft Equipment.

### Intellectual Property #### Legislative Environment #### Legislative Developments In 2017, the Government of Nepal finalized an Intellectual Property Rights (IPR) Policy to serve as the foundation for new IPR legislation. In 2018, Government of Nepal introduced a comprehensive draft law on IP, which is under governmental review.

The proposed legislation aims to enhance existing IP laws and regulations and endeavors to codify all industrial property laws in one place. The United States provided extensive comments in August 2019, and though Nepal claims to have included these inputs there has been no follow-up or further engagement on the draft act.

The Department of Industry serves as a quasi-judicial body overseeing industrial property protection, dispute resolution, and administrative procedures. Currently, the Director General of the Department of Industry manages matters related to patents, designs, and trademarks, facing burdensome administrative and judicial responsibilities.

Experts advocate for establishing a dedicated tribunal under the Department of Industry for handling IP cases staffed by knowledgeable personnel. The absence of robust enforcement methods, coupled with the lack of a specialized appeal system, allows infringers to exploit loopholes for personal gain.

Nepal’s limited IP ecosystem faces significant challenges due to a lack of technically qualified examiners and the absence of a dedicated IP office. Examiners and officials are rotated very frequently, which hinders effective IP application examinations that require specialized expertise.

Furthermore, the Director General, who is supposed to be the head of the IP office, also rotates frequently, sometimes every few months, and often lacks IP expertise. These frequent rotations, combined with a lack of IP expertise, raise concerns about the importance Nepal places on fostering its innovation ecosystem.

Enforcement of existing IPR violations in Nepal is challenging as law enforcement officials lack adequate training on IPR issues. Offenders can often evade prosecution due to lenient penalties under outdated laws, or by bribing officials as some have alleged. There is low awareness of IPR issues and the legal system generally by the private sector, leading to challenges in combating the sale of counterfeit and illicit goods.

Unauthorized use of trademarks owned by multinational and national companies is increasing, adding IPR enforcement weakness to foreign companies’ market entry challenges. The primary marketplaces in Nepal are flooded with counterfeit products, including electronic equipment, clothing, digital media, beverages, and pharmaceutical products.

Nepal does not track seizures of counterfeit goods, nor does it have a strong track record of prosecuting IPR violations. The United States Patent and Trademark Office (USPTO) along with U.S. Embassy, Kathmandu has conducted many training courses on the various aspects of IPR policy for Nepali officials.

These efforts resulted in Nepal’s Cabinet approving a new IPR policy in March 2017 that has served as the foundation for new IPR legislation. The Bill is still awaiting clearance by the MOF before being presented to the cabinet and parliament for approval. USPTO and the U.S. Embassy continue to advocate for stronger IPR protection in Nepal through the US-Nepal Trade and