Submit your Article

Lawmakers, youths and a section of Nepali society have started demanding the enactment of death penalty for the rapists, following the rape and murder of three-year-old Garima Chaudhary in Bara district of Madhes Province. Many argue that the death penalty goes against the spirit of the right to life. The right to life and the provision of the death penalty cannot go together, as they are like the thesis and antithesis of each other. Mahatma Gandhi argued that, “An eye for an eye makes the whole world blind.”

After all, the provision of death penalty would allow society to express its anger against a defendant who has allegedly committed a heinous offence and may prevent victims or their families from taking revenge on their own.  As per the reports by Amnesty International, around 140 countries—more than two-third of the world—have abolished the death penalty in law or in practice. Although much of the world has come around to the view that one killing cannot be avenged with another, most of the South Asian states maintain a preference for capital punishment, with Nepal, Bhutan and Sri Lanka as exceptions.

Practice in South Asia

The Constitutions of Nepal (Article 16) and Bhutan (Article 7, Sub-clause 18) both prohibit the death penalty. Although death penalty has a legal foundation in Sri Lanka's Criminal law, there have been no executions in the Buddhist state since 1976. Legal practice shows that the state has moved toward abolition, following global trend.

On the other hand, the Islamic Republic of Afghanistan, Bangladesh, India, Maldives, and the Islamic Republic of Pakistan all firmly maintain that the death penalty can deter people with evil intent.

The 2023 Bharatiya Nyaya Samhita (BNS), which replaced long-stayed Indian penal Code of 1860, prescribes the death penalty for as many as 14 offences, including waging war against the government, abetting mutiny by a member of the armed forces, acid attack, murder, rape and criminal conspiracy.

Meanwhile, in Bangladesh, there appear to be 33 offences punishable by death, 25 of which are non-fatal in nature. In Pakistan, capital punishment is provided for no fewer than 27 different offences, including blasphemy, sexual intercourse outside marriage, rape and drug smuggling.  In Afghanistan, various crimes—murder, apostasy, homosexuality, rape, terrorism, drug trafficking, adultery, treason—are punishable by death based on Islamic jurisprudence. The Maldivian legal position on the death sentence is similar to that of Afghanistan.

An accused may face the death penalty in India, Pakistan, Bangladesh, Maldives and Afghanistan when the crimes committed by them meet the threshold of "most serious crimes." Still, blasphemy, adultery, or drug trafficking don’t necessarily meet the threshold of "Most serious crimes" but are nevertheless punishable by death in Pakistan and many other Islamic countries, including Maldives and Afghanistan.

Judicial interpretation

The Supreme Court of India, in the landmark case of Bachan Singh v. State of Punjab (1980), formulated the doctrine of “rarest of rare,” holding that life imprisonment is the rule while the death sentence is the exception. The Court held that the death penalty could be imposed “when [society’s] collective conscience is so shocked that it will expect the holders of the judicial power centre to inflict the death penalty irrespective of their personal opinion as regards the desirability or otherwise of retaining the death penalty.”

Lord Denning of England once argued that, “The truth is that some crimes are so outrageous that society insists on adequate punishment, because the wrongdoer deserves it, irrespective of whether it is a deterrent or not.”

Collective conscience

It would set a wrong precedent if a section of society starts defining the metric of ‘collective conscience’ and determining the judicial fate of defendants through street protests.

The ‘collective conscience’ metric for awarding the death penalty is problematic. If a judge feels that the collective conscience is so shocked that it is desirable to inflict death penalty on the accused, then can he hear the case entirely on merits? Will the judge ensure a fair trial and presume the accused deserve some other sentences? Is it appropriate to determine the wave of collective conscience from the narratives shaped by street protest, reels, or social media? 

After all, in the digital age of the 21st century, social media, news channels, reels and televisions all have the potential to amplify the outrage. In turn, reality can be manufactured, distorted, and disseminated overnight.

The offence of rape is, of course, an unpardonable offence. Such an act can leave an everlasting psychological impact on the victim. Rapists could instead be punished with rigorous life imprisonment until the convict's last breath. Section 41 of the National Penal Code, 2017 could be amended to provide that life imprisonment shall always be rigorous in nature. A separate provision could also be inserted stipulating that, in cases of rape, convicts shall be sentenced to life imprisonment for the remainder of their natural lives.

The concept of collective conscience is vague and is in want of healthy discourse in Nepal.

Beyond the specific issues with ‘collective conscience’ rule, many believe that the taking of a life by the judiciary is simply unjust and inhuman and that its continued practice is a stain on a society founded on humanitarian values. In addition to this, death penalty regime is a sheer violation of Article 6 (right to life) of the International Covenant on Civil and Political Rights (ICCPR) and Article 3 of the Universal Declaration of Human Rights. Interestingly, India, Pakistan, Maldives, and Afghanistan are signatories to these conventions.

Although the task remains unfulfilled, the second Optional Protocol to ICCPR was entered into force in 1991 with the aim of abolishing the death penalty globally. However, the instrument only succeeded to disallow capital punishment in the case of minors and pregnant women.

Despite this, Maldives has enacted a law under which the death penalty can be applied to a minor who commits intentional murder or another serious crime.

Way forward

Article 77 of the Rome Statute favours life imprisonment, not the death penalty. Even as the global trend roots for abolition, states imposing the death penalty justify their stated position.

They appeal to each state’s sovereign right to determine its own laws, as enshrined under Article 2(7) of the UN Charter, which embodies the principle of non-intervention in the domestic affairs of a state. They also argue that the death penalty is exercised in rare cases and insist that their legal systems guarantee the rule of law and provide ample procedural safeguards for a fair and speedy trial.

However, abolition is now an accepted principle of human rights jurisprudence, and the sovereignty defence is simply a frivolous justification.

Ultimately, the death penalty may not be a strong enough deterrent; rather, effective law and order are. Although a section of population in Nepal has, of late, voiced support for the death penalty for crimes involving women and children or for rape, a move toward a more enlightened approach could be initiated, and the government could enact a (mandatory) law providing that rapists be awarded life imprisonment until their last breath.

Prime Minister Balendra Shah, who assumed office on March 27, held a joint meeting with Kathmandu-based ambassadors on April 9. Though his decision was highlighted as a departure from the traditional practice of meeting ambassadors one-to-one, the event seems to have been ill-conceived, as any new prime minister would prefer to establish personal contact, at least with the envoys of countries with which Nepal has vital relations. In the parliamentary system, it is the prime minister who decides the course of diplomatic relations in the best interests of the country, the foreign minister who leads diplomacy, and the Foreign Ministry that executes it through ambassadors. 

On Aug 10, Prime Minister Shah walked back on his approach to diplomacy by meeting ambassadors individually. He met with the Indian and Chinese ambassadors on the same day, first the Indian envoy and then the Chinese. Why did the meetings take place on the same day, and why was the Indian envoy met first? Why did he not meet the Chinese envoy first, as alphabetically “C” comes before “I”? Perhaps the answer lies in geography: India is Nepal’s eastern, southern and western neighbor, while China is its only northern neighbor.

A few months ago, the new government unveiled its national commitment framework, portraying Nepal as a “buffer state” that aims to become a “vibrant bridge” between India and China. We have once again fallen into the old trap of diplomatic jargon, ignoring the reality that a bridge helps the two sides it connects to flourish, while the bridge itself merely serves as a means. Providing different routes for China to connect with India for its trade and strategic purposes can hardly benefit Nepal. We have to concentrate on developing our own economy so that our products can be exported to China and India to balance our trade deficits with them. We often forget that the balancing act appears easy but is difficult to practise. Putting two legs in two boats may look safe, but if the boats drift apart, the rider will fall.

The centuries-old saying of Prithvi Narayan Shah that “Nepal is a yam between two boulders” might have been relevant at the time, when the mighty Mughal Empire of India was losing its grip over its territories and the East India Company was expanding its political power by acquiring control over Bengal and Bihar, while mighty China was then a sleeping lion. However, Nepal fought wars with Tibet, while the Shah kings and Mukhtiyars sought help from China. The Rana prime ministers obtained support from British India to secure the continuation of their oligarchy. Sadly, even the present dispensation seems unable to depart from this usual course.

It should be realized that Nepal is no longer a yam between two boulders, but a growing plant between two giant banyan trees whose branches overshadow Nepal and prevent it from receiving the full rays of their development. We very often define our foreign policy by divorcing it from our internal policy and basic national needs. We forget that foreign and domestic affairs are inextricably linked in a symbiotic and often blurred relationship, in which domestic policy acts as the foundation for foreign policy. Foreign policy serves to protect national interests, which are defined by internal needs such as economic development, security, political stability and territorial integrity.

In short, foreign policy is an extension of domestic policy. These two, by their interdependent nature, shape national interest formulation and economic diplomacy, which are essential for the country's growth and existence. Since the days of Prithvi Narayan Shah, Nepal has been treated as a “political project” by its rulers. Even the Nepali intelligentsia has often supported the concept to suit its interests. The result is that around 6 to 7 million youths are working abroad as migrant workers, while nearly 2,000 youths queue up at Tribhuvan International Airport every day to leave the country for work. Sadly, villages in the far-western districts are being emptied as entire families migrate to India for employment. The fault lies with us, as we have never made the interests of the people our supreme goal by transforming Nepal into a “people’s project” while formulating our foreign policy.

It is a truism that China is superior to India in many respects. It is difficult for India to compete with China in economic, military and technological advancement, as well as in mass production. However, even today, China is not easily accessible by road for meeting our daily needs for heavily consumed items such as petrol, diesel, gas, food grains and sugar. It may take a decade or more to complete all-weather roads, while the distance to seaports remains a major barrier to international trade. Moreover, China is an export-oriented economy and may have little interest in importing our products on a significant scale to balance our trade deficit with it. Can we afford any further delay in transforming our policy?

On the contrary, the geographical situation with India is different. Our rivers flow southward due to geographical reasons. We can easily share water and hydropower resources for mutual benefit. We have both road and rail links to the sea for international trade, which also provide relatively easy procurement and transportation of food grains, petroleum products and other goods. Hence, the need of the hour is to be realistic and rebuild trust in our relations.

Trust can be built if genuine and practical expectations are brought from both sides to settle chronic issues. Only then can we be optimistic about the future. We must, first of all, understand the genuine grievances and needs of our people and try to address them. Our leaders must erase from their psyche the psychological fault line of mistrust created by history in order to usher in a new era of cooperation and mutual trust for the betterment of both peoples.

In more than five decades, Nepal’s tourism sector has been rollicking in its cradle with almost all of it—hope, distress, paradox, and vigor. The good thing is the optimism the sector self-creates.

On the eventful day of December 31, 1997, the country witnessed an unprecedented departure to hitherto unknown territory of public-private partnership, challenging the dogmatic notion of red tape. While realizing the wind of change, a dream institution was born. The overdue energy of the private sector had just transfused into a symbol of empowerment. Then, the Nepal Tourism Board entered the scene. It was not an act of desperation; rather, it was a sincere contemplation to honor the knock-at-the-door in the wake of growing demand for market liberalization and open economic policy. On a serious note, the enactment of NTB in 2054 BS was not an easy ride.

Long before, in 1972, the Master Plan funded by German Cooperation presented and echoed an indispensable public-private partnership in Nepal’s tourism. Coinciding with the fourth five-year plan, the 1972 master plan advocated for comprehensive legal and institutional arrangements for tourism. While the tourism sector found its place under the Ministry of Industry and Commerce, it was only in 1978 when the Ministry of Tourism and Civil Aviation took flight with the wings of tourism and civil aviation. It was heartening to turn over the pages of the master plan, realizing how two major private associations—NATTA and HAN—took center stage in the plan in the context of statistical imperatives.

1950s: When the Theatricals Began Up in the Thin Air

The story of Nepal’s tourism in the decade of the 1950s was all about expeditions. It was more of a battle of giants—the British and the French. The French took over Annapurna while the British stamped their authority on Everest. It was nothing short of an Oscar-esque display drawing cinematic brilliance. After the drubbing and drowning of the Second World War, both colonial powerhouses looked to rise from the ashes. They chose the might and the mystery of the eight-thousand-meter peaks of Nepal. The battle turned and moved to Nepal from the Alps. June 3, 1950, was nothing short of a blockbuster. May 29, 1953, proved to be colossal—a feat compared to nothing less than mankind’s triumph over the moon in later years. In both cases, Nepal emerged as the winner. We took an international flight to global tourism. The mystery of the mountains cajoled the world. The spirit of the mountains embraced the best of the brave for the next 10 years.

It was a theater for some improbable acts of human spirit and skill, where the whole world kept its eyes glued for a miraculous play of bravery. The year was 1953—one of the biggest turning points in the history of mankind‘s bravery and skill with the ascent of Mt. Everest. It threw Nepal into the global limelight. For ages, Mt. Everest stood as testimony to mankind’s daredevil imagination. In 1953, a year after the Olympics in Norway and Finland, two of the finest gentlemen from New Zealand and Nepal were braving their way up into the thin air of Everest. Their triumph proved to be a major cultural turn in climbing history.

Being a relatively new democratic state in the aftermath of World War II, Nepal’s own foray into statehood entered a period of socio-economic paranoia. The euphoria of the ascent of another eight-thousander, the first in history—Mt. Annapurna in 1950—brought the country to top calibration and celebration much before the Everest saga. While the tiny Himalayan nation was caught in its own political struggle, its friendly citizens continued to look up to the mountains as a metaphor for life’s pursuits amid the global political chaos in the wake of the Cold War era.

While Nepal was caught napping in its own imagination as a sought-after destination in the new global limelight, the British regime had long been contemplating a universal claim to conquering the mighty and improbable challenge of climbing the summit of Everest. Facing the fading supremacy of the British Empire in the wake of a new global order after the Second World War, the empire had already funded eight expeditions to Everest, but to no avail. The ninth expedition, however, was a different story.

Now, Everyone Has Something to Do with Tourism: Tourism Has Become a Social Fact

The dawn of the era of travel and tour had just begun. The 1960s carved trails to the institutional strengthening of the tourism sector, particularly of private companies—more precisely, consolidating the early leaders who dreamed of pulling the strings together in travel and tourism. The incorporation of two of the largest institutions (still key by sheer volume and importance), the Hotel Association of Nepal (HAN) and the Nepal Association of Tour and Travel Agents (NATTA), kickstarted the formation of a spectrum of leadership and ownership in Nepalese tourism. Arguably, this happened before the state had woken up to the newfound global stare at Nepal. Nonetheless, for the state of Nepal, which was still in awe of freedom from an autocratic regime, such an act of fraternity by the private sector was a harbinger of leadership from oblivion. However, it took 15 years for our players to formally organize, whereas the Indians were already at the touchline with the announcement of TAAI (Travel Agents Association of India) in 1951.

Now entered the fourth five-year plan and the box-office hit—the 1972 Tourism Master Plan. It was no frantic scramble, but a well-thought-out initiative by the government of the day to pre-design the long road of tourism in Nepal. Supervised by German Cooperation, the plan laid out major strategic and pivotal underpinnings to structure tourism and civil aviation in Nepal. Kathmandu, quite obviously taking center stage powered by the country's only international airport, became the axis for eastward and westward tour, trekking, and pilgrimage round trips. Nepal’s effort to extend tourism beyond the mystery and mysticism of mountains coincided with the ascent to the throne of King Birendra. One astounding act of brilliance by the government was the enactment of the National Parks and Wildlife Conservation Act of 1973. It proved to be a masterstroke as it invigorated the southern plains as a tourism attraction. It gave flight to Chitwan, and the rest is history. The 1970s was all about national parks—Chitwan, Sagarmatha, Langtang, Rara, and Shuklaphanta. In the context of their own eventuality, all these parks now form the core of conservation and ecotourism in Nepal.

The story propels forward now with strong plots. Enter the Tourism Act of 1978, repealing the Tourism Industry Act of 1964. The Ministry of Tourism was established with a strong mandate for regulating the sector. These proceedings were in line with the policy recommendations of the 1972 Master Plan. The review of the master plan in 1984 shed light on the active engagement of the private sector in hospitality and service operations, contributing to overall tourism growth in terms of both tourist arrivals and revenue generation. The decade-long progress of the 1972 master plan had fostered the expansion of tour-based activities along the eastward axis based on the Koshi River and the southeastern plains, as well as the westward axis based on the Karnali and Bheri rivers and the southern plains of Bardiya and Shuklaphanta. However, despite activity-based expansion in the plains of Nepal, administrative-structural bottlenecks remained a tough nut to crack in laying the foundation for the geographical expansion of tourism. The decade also witnessed another consolidation of the private sector in the form of the Trekking Agencies Association of Nepal (TAAN) in 1979, bringing policy lobbying for trekking tourism under a single radar.

1990s: The Decade That Changed the Rules of the Game

The start of the decade was charged with unprecedented opposition to the regime in Nepal. All of South Asia was under tremendous turmoil due to the need to jump into political-economic shifts toward open markets, economic liberalization, and structural reforms in the development economy. Nepal, too, could not resist the temptation of joining this new yet uncharted regime change. Amid the chaos, there came the Nepal Tourism Development Program. It strongly delved into three major areas: limitations on foreign capital in tourism, transport constraints, and inter-departmental coordination issues. The Constitution of 2047 (1990) guaranteed sovereign power to the people and changed the economic landscape. One notable departure into this new journey was the Tourism Policy of 1995 (2052 BS), which paved the way for establishing the Nepal Tourism Board. The existing Nepal Tourism Development Program had also made inroads to advocate for its creation. The draft of Tourism Policy 2052 had proposed the chairmanship of the Tourism Minister. This changed over the course of drafting, and the final installation placed the Tourism Secretary as chairman.

Nepal Tourism Board: A Long-Rehearsed Romance of the Private Sector

It was never an impromptu call to create the Nepal Tourism Board (NTB), as it is affectionately called with much pride by the private sector. It is the pride of the private sector as they hold, technically and structurally, more than half of the stake in the board. For an economy like Nepal, the enactment of an institution with such a self-functioning, autonomous structure was itself a massive achievement for the tourism sector. We were frontrunners among many destinations during the 1990s in foreseeing such an outward approach to the tourism economy. We continue to surprise many by maintaining this one-of-a-kind, exemplary institution in Nepal. The proliferation of its essence has been sublime across every political epoch and rule. It has withstood the storms of chaos and conflict and has sailed through calm waters. It belongs to the private sector.

However, one of the most obscure paradoxes of our institution is that of its own empiricism. The plurality of reasoning for an institution of such acclaim and value must find its own propensity for long-held alienation. Though still young, the expectations of the private tourism sector have been both overwhelming and overarching.

The changing context of fiscal federalism presents an opportunity. The ramifications of comprehensively complex fiscal federal arrangements and the contours of overlapping political and administrative federal realms have been slowly but surely bringing future implications. The nascent federal state of Nepal has begun to experience a tangible foretaste of the potential consequences of its own profligacy. NTB, in its preface, is and can be an unprecedented opulence. Beyond the pretext, tourism in federalism still has its own story to write. The affairs of tourism continue, still rollicking—if not rocked and rolled.

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