Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Last Published: 2/14/2018
Nepal is a landlocked state, which makes market access a challenge.  Surface transport into and out of Nepal can be difficult.  The one reliable road route from India to the Kathmandu Valley is 84 miles and takes a minimum of six hours to traverse.  As recently as 2016, political unrest and general strikes have disrupted movement of goods in and out of Nepal, sometimes for months at a time, and future disruptions cannot be ruled out.  The primary seaport for entry of goods bound for Nepal is Kolkata, India, about 460 miles from the Nepal-India border.  With only one international airport in the country, challenges in the air transport sector are also acute.

Political instability, including 25 governments in the past 27 years, has created an uncertain environment for foreign and private investment.

The GON claims to be open to foreign direct investment, but implementation of its policies is often hindered by bureaucratic delays and inefficiency.  Foreign investors frequently complain about complex and opaque government procedures and a working-level attitude that is more hostile than accommodating.

Foreign investors must deal with a non-transparent legal system, where basic legal procedures are neither quick nor routine.  The bureaucracy is generally reluctant to accept legal precedents, and businesses are often forced to re-litigate issues that had been previously settled.  Legislation limiting foreign investment in financial, legal, and accounting services has made it difficult for investors to cut through regulatory red tape.

U.S. firms and foreign investors have identified corruption as an obstacle to maintaining and expanding direct investment in Nepal.  There are frequent allegations of corruption by GON officials in the distribution of permits and approvals, procurement of goods and services, and award of contracts.

High customs tariffs imposed on most manufactured products increase the price of U.S. products in the Nepali market.  Additionally, cheap consumer goods imported from neighboring countries also present market challenges for U.S. products.
Qualified workers are in short supply.  Nepal produces technical manpower, but a lack of economic opportunity and low wages compel millions of workers to seek jobs overseas.  Rigid labor laws make it difficult to terminate employees.  Moreover, militant and highly politicized unions commonly abrogate negotiated agreements to press new demands, making it a challenge to assemble and retain qualified staff.  However, a new Labor Law is expected to come into effect soon and ease some of the rigidities.

Nepal was struck by major earthquakes in April and May 2015, resulting in tremendous damage to buildings and infrastructure in certain districts in Nepal.  Roads, schools, power plants, heritage sites, private houses, and buildings throughout the affected zone suffered extensive damage.  Reconstruction is underway, but it will be several years before rural areas in hard-hit districts have completely recovered.  Kathmandu Valley suffered less damage compared to rural areas and visitors to the capital might not see much evidence of the quake, besides several historic buildings and temples that were damaged, many of which are now being repaired.

While the earthquakes caused billions of dollars in losses, the reconstruction work will create opportunities for businesses and investment.  Many countries and donors have announced assistance worth hundreds of millions of dollars to be used to rebuild Nepal's damaged public facilities and infrastructure.  A GON-hosted donor’s pledging conference in June 2015 resulted in more than $ 4 billion pledged towards reconstruction efforts.

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Nepal Trade Development and Promotion