Nepal - 3 Services and Supply


Agriculture is the major sector of Nepalese economy. It provides employment opportunities to 66 percent of the total population and contributes about 36 percent in the GDP. The Ministry of Agriculture and Livestock Development bears overall responsibility for the growth and development of agriculture sector. The Ministry is the central apex body of Government of Nepal to look after the agriculture and allied fields. The Ministry of Agricultural consists of five divisions, two centres, one research and development council, four departments, four projects and autonomous bodies of one research council, four corporations and a few development committees and boards.  

(Source: Agriculture Sector



Nepal’s investment opportunities in hydroelectricity, tourism, service, and mega infrastructure developmental projects call for large amounts of funds which cannot be supplemented by the existing capacity of commercial banks and financial institutions. Therefore, the government has established Infrastructure Development Banks (IDB) under the Banks and Financial Institution Act (BAFIA), 2074 (2017). Also, the Nepal Rastra Bank is shrinking the number of banks and financial institutions (BFIs) to increase the capacity of a BFI to invest in mega projects rather than the current practice of consortium financing. No new license is being issued to banks and financial institutions by the central bank. The Banks and Financial Institution Act (BAFIA), 2074 (2017) opens establishment of Infrastructure Development Banks (IDB) though it is reluctant to issue new licenses to commercial banks and other financial institutions. Section 107 of the same Act provides that the central bank can formulate the policy with respect to Infrastructure Development Banks.  

As per the Licensing Policy, a minimum paid up capital of IDB must be 20 billion rupees. If IDB is established from local investment only, and promoters’ group shall hold a minimum 51% of the shares and 30% shares would be allocated to the public. If IDB is established with foreign investment, foreign investors can own 20% to 85% of the shares but it must allocate at least 15% shares to the public. If foreign shareholding is 20% or more but less than 50%, the public shall be allocated, at least, 30% of shares.   


Information Technology (IT) 

Information technology sector in Nepal has seen a strong growth in last decade. The sector mainly comprises of small companies undertaking outsourced jobs from around globe. The National ICT Policy, introduced in 2015, seeks to enhance the vision of transforming Nepali society into knowledge and information-based society by harnessing rapid advances in the ICT sector. Similarly, the National Broadband Policy announced in 2016 puts forth a framework for stimulating broadband access and availability across the country. Along with the national broadcasting act and regulation, radio act and radio communication license regulation are critical frames for the development of the ICT sectors. 



Although manufacturing sector represents a major portion of the industry in Nepal, the development of this sector has not been as robust compared to the service sector. The trade deficit in major part is contributed by a weak production base in Nepal.  

As of September 2022, there are currently 294,620 companies registered in the Office of Company Registrar in Nepal under different categories. Among them 37% are registered under others sector with 109,758 counts while the manufacturing (Industrial) sector is the second largest category with 71,520 (24%) registered companies, followed by agriculture and health sectors. As the manufacturing sector represents a major portion of the industry in Nepal, the development of this sector is important to the government in terms of generating employment opportunities, promoting trade, enhancing national income growth, and alleviating poverty. It also offers economies of scale, technological progress, output growth, productivity, positive spill-over effects, and efficiency in terms of resource utilisation (compared to the agricultural sector, for example). 

Hydro Power 

Nepal’s hydropower development started in 1911 with 0.5 MW plant in Pharping near Kathmandu (one of the earliest in Asia), according to the Nepal Electricity Authority (NEA) annual report 2022/23 the current generation capacity of hydropower projects in Nepal is around 2684 MW.  MW of hydropower is being exported to India on the Day-Ahead basis through the Indian Energy Exchange (IEX).   There are over 100 micro hydropower plants (not connected with the grid) generate around 5 MW in total. As per the Department of Energy, the hydropower plant-based capacity is classified into 3 categories: a) Large Hydropower Plant that generates power over 10 MW, b) Small Hydropower Plant which generates between 1 and 10 MW, and c) Micro Hydropower Plant that produces less than 1 MW.  



The following sections contain information related to logistics services and supply in Nepal. 

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