Submit your Article

The Nepal Stock Exchange (NEPSE) plunged by 5. 30 points to close at 2, 594. 27 points on Tuesday. 

Similarly, the sensitive index dropped by 0. 50 points to close at 457. 67 points.

A total of 10,044,164-unit shares of 357 companies were traded for Rs 1. 50 billion.

Meanwhile, Sarvottam Paints Industries Limited (SAPIL) was the top gainer today with its price surging by 14. 99 percent.

Likewise, Dhaulagiri Laghubitta Bittiya Sanstha Limited (DLBS) was the top loser as their price fell by 10. 07 percent.

At the end of the day, the total market capitalization stood at Rs 4. 46 trillion.

Walk through any town in Nepal and you will find them around, the tea shop on the corner, the tailor down the lane, the small shop selling fruits and vegetables, the cooperative processing herbs grown in the hills. These are Nepal's Micro, Small, and Medium Enterprises (MSMEs), the backbone of the economy. They create jobs, generate livelihoods, and add value across the country, especially in sectors like high-value agriculture, Non-timber Forest Products (NTFPs), and Medicinal and Aromatic Plants (MAPs).  Beyond the numbers, MSMEs also do something harder to measure: they build inclusion, foster a culture of entrepreneurship, spread skills, and strengthen community bonds.

A joint study by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the International Finance Corporation (IFC), ‘State of Private Sector in Nepal: Contributions and Constraints’, puts this into perspective. The private sector, much of it made up of MSMEs, accounts for over 80 percent of Nepal’s GDP. In 2018 alone, it employed close to 4.94m people, of whom 333,077 worked at small and medium enterprises. The scale of growth is striking too, Nepal had just 28,660 registered businesses in 1983. By 2018, that number had climbed to 923,356.

These figures make one thing clear, MSMEs are not a side story in Nepal’s economy. They are central to it. Yet, despite their importance, most MSMEs are still fighting an uphill battle. Regulatory complexity, limited access to information and capital, poor infrastructure, and uneven treatment across regions all conspire to slow their growth, weaken their competitiveness, and threaten their long-term survival.

MSMEs are not a single, uniform group, their needs shift depending on what stage of business they are in, and the support system available to them, both public and private, is often thin and disjointed.

Before launching, entrepreneurs need help turning a raw idea into something commercially viable, building a business plan, running a market analysis, doing basic financial planning, and assessing risk. For agriculture, NTFP, and MAP-based businesses, there are added layers which are understanding sustainable sourcing, climate risk, and resource availability. Once an idea becomes a business, formal registration brings its own maze, PAN and VAT compliance, sector-specific permits, and a patchwork of municipal and provincial requirements. Owners then have to get to grips with financial management, record-keeping, and labor and tax obligations. As the business grows, new demands appear, managing staff, quality control, branding and packaging, and meeting national standards such as the Nepal Standard (NS) or various food-safety certifications requirements that are often out of reach for smaller players.

For those aiming beyond Nepal’s borders, the bar rises again. Organic certification, Good Manufacturing Practices (GMP), HACCP, export procedures, logistics, Sanitary and Phytosanitary (SPS) measures, traceability systems, and trade documentation are all essential and the support available for meeting them is weak. It is a wonder why a handful of MSMEs step into export markets.

Gender and climate gaps 

Nepal’s MSME landscape has a stark gender imbalance. Women own just 1.2 percent of registered SMEs. Women are heavily engaged in agricultural labor, yet government data shows that around 90 percent of women-led enterprises operate informally, often relying on high-interest loans because they lack the collateral formal lenders require. Social stigma compounds the problem, limiting women's mobility and their ability to network or take part in business platforms. Nepal’s Industrial Enterprise Act does offer incentives tax waivers and concessional loans for women-led businesses but awareness of these provisions remains low, largely due to gaps in education and business literacy.

Climate change adds another layer of pressure, particularly for agriculture and NTFP-based businesses. Droughts, floods, landslides, and increasingly unstable ecosystems disrupt raw material supply, production, and distribution. Policy does offer some support here too. Some tax benefits for recycling and environmentally friendly practices are available but many MSMEs simply do not have the capacity to complete the Initial Environmental Examinations (IEE) or Environmental Impact Assessments (EIA) these incentives often require. What is needed is capacity-building and affordable, locally accessible technical support to help businesses actually meet these standards.

Several structural problems hold Nepali MSMEs back. Businesses often have to navigate multiple layers of government registration, as local governments push to raise their own revenues which drives up costs and delays. Testing and certification services are concentrated in Kathmandu, so rural businesses lose money on travel and missed sales just to get basic paperwork done. 

Information about regulations, permits, taxation, labor laws, and international standards is hard to come by, and poor roads and outdated technology make it even harder for businesses to compete on price or quality. Selling farm products internationally is especially difficult without access to certified testing labs, a gap that hits rural entrepreneurs the hardest.

On paper, Nepal’s registration and renewal fees look modest, though they vary by municipality and business type. Municipal registration typically runs from Rs 1,000 to 7,000 (occasionally up to Rs 10,000), federal company or firm registration costs between Rs 500 and 10,000, PAN registration costs Rs 100 to 200, and VAT registration is free. All told, startup costs average Rs 5,000 to 20,000, with annual municipal renewals of Rs 300 to 3,000 on top of local taxes, income tax, and VAT.

Across the wider SAARC region Pakistan, the Maldives, Bhutan, and Nepal among them MSMEs share many of the same headaches: weak infrastructure, unreliable power, high transport and logistics costs, poor digital and physical connectivity, limited business development support, restricted access to finance, and slow uptake of new technology. These shared bottlenecks hold back productivity and make it harder for the region’s small businesses to compete regionally or globally.

But cost relative to income tells a sharper story. Measured against per capita income, starting a business in Nepal costs about 20 percent compared with seven percent in India, nine percent in Bangladesh, and nine percent in Sri Lanka. Bhutan and Pakistan fare even better than Nepal on this measure.

The entrepreneur and author Scott Belsky once observed that success is “not about ideas, it’s about making ideas happen” and that holds true well beyond Silicon Valley. How well a country turns ideas into growing businesses often comes down to scale and structure. India and China, for instance, offer their MSMEs enormous domestic markets and a path into national value chains, backed by capital incentives that let businesses experiment, scale, and eventually go global. A strong base of commercial finance, alternative funding, venture capital, and foreign investment gives their enterprises room to grow before they ever have to compete internationally.

Bangladesh took a different route, betting heavily on export-oriented manufacturing and weaving MSMEs directly into national value chains. Deliberate government policy, industrial clustering, trade facilitation, and targeted incentives have helped the country emerge as a serious global supplier in textiles, agriculture, pharmaceuticals, and infrastructure.

Bhutan chose differently again. With a clear government vision, it has leaned into sustainability, organic agriculture, and environmentally responsible enterprise. Even with a small domestic market, this consistency of policy has given Bhutanese MSMEs a distinct identity proof that a clear strategic direction matters as much as market size.

Nepal, by contrast, is held back by structural disadvantages and, frankly, weak political will. Despite being part of the South Asian Free Trade Area (SAFTA), the country has struggled to turn regional trade integration into real benefits, thanks to high transaction costs, non-tariff barriers, and cumbersome registration, renewal, and customs procedures. Nepal’s limited leverage in regional trade negotiations has made it hard to secure favorable terms with its larger SAARC neighbors, and many donor-funded or government-backed MSME initiatives end up fragmented, with little lasting national impact.

Even so, Nepal has real strategic advantages. Its comparative strengths lie in natural resource-based and niche sectors high-value agriculture, non-timber forest products, medicinal and aromatic plants, eco-tourism, and specialized artisanal goods. Rather than trying to go head-to-head with large manufacturing economies, Nepal is better positioned as a source of premium, green, and differentiated products. Getting there will take sustained work: better infrastructure, stronger value chains, higher quality standards, wider digital financial access, and trade and industrial policies that are actually implemented consistently, not just announced.

The government has taken some encouraging steps recently. New regulatory reforms have streamlined business operations, including free, fast-tracked registration for industries with capital up to Rs 250m, and dedicated support for innovative startups. Digital registration is now mandatory for e-commerce businesses, fines for missed filings have dropped by 90 percent, and exiting a business has become simpler.

These reforms are also aimed at formalizing the informal economy, allowing unregistered businesses to legalize with modest fines, and introducing a two-day ‘Startup Fast Track’ for businesses with turnover under Rs 150m. Entrepreneurs can access registration and track official notices through the Office of the Company Registrar and the Ministry of Industry, Commerce and Supplies.

Registration itself is being decentralized to local offices, and a dedicated SME trading platform has been set up on the Nepal Stock Exchange to widen access to capital. A new National Enterprise Promotion Facility is also in the works, intended as a one-window service for financing and technology support. How well these initiatives work in practice, though, remains to be seen.

On the fiscal side, startups with transactions up to Rs 100m now get a five-year income tax exemption, VAT has been removed from digital payments, and ventures in sectors like agriculture and herbal products can access loans at just three percent interest, all steps meant to cut costs and encourage entrepreneurship.

If Nepal wants to slow the outflow of young people leaving for the Middle East and elsewhere in search of work, it needs to create real business opportunities and jobs at home and that means strengthening the MSME sector, particularly around niche and differentiated products. That starts with simplifying and aligning business laws across all levels of government, cutting red tape, and lowering costs. Core services like registration, renewal, and testing should be available locally, saving entrepreneurs the time and money they currently lose navigating a fragmented system. MSMEs also need clear, consolidated information and affordable, locally available business support that is inclusive and climate-conscious, with a particular focus on improving women entrepreneurs' access to finance and other resources.

Investment in green infrastructure, insurance, cold storage, testing labs is essential to help farmers and small producers manage climate risk. A genuine one-window system for local business promotion and support could unlock new enterprises and lasting opportunities. Rather than trying to compete with countries built for large-scale manufacturing, Nepal’s government would do well to back nature-based businesses and the niche markets where the country can genuinely compete on value, not volume.

The author has worked in private sector promotion and market systems development with several international agencies in Nepal and abroad

The Nepal Stock Exchange (NEPSE) plunged by 19. 13 points to close at 2, 599. 58 points on Monday. 

Similarly, the sensitive index dropped by 3. 17 points to close at 458. 18 points.

A total of 8,572,970-unit shares of 350 companies were traded for Rs 1. 50 billion.

Meanwhile, Sarvottam Paints Industries Limited (SAPIL) was the top gainer today with its price surging by 14. 99 percent.

Likewise, Panchakanya Mai Hydropower Ltd (PMHPL) was the top loser as their price fell by 9 83 percent.

At the end of the day, the total market capitalization stood at Rs 4. 47 trillion.

The price of gold has increased by Rs 3, 200 per tola in the domestic market on Monday. 

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 322, 700 per tola today. It was traded at Rs 319, 500 per tola on Sunday. 

Similarly, the silver is being traded at Rs 4, 965 per tola.