A Review of Investment, Industrial and Trade Policies of Nepal

This policy paper critically examines the evolution, effectiveness, and shortcomings of Nepal’s investment, industrial, and trade policies over the past nine decades. Despite various reforms and liberalization efforts, Nepal has failed to attract substantial foreign or domestic investment, achieve meaningful industrialization, or reduce its growing trade deficit. The study traces three major policy eras: self-reliance and import substitution (1936–1965), state-led industrial growth (1965–1985), and the open-market economy post-1992. It highlights how policy fragmentation, lack of evidence-based planning, and weak institutional coherence have hindered economic progress. The paper argues for a comprehensive ecosystem approach that integrates investment, industrial, and trade strategies, emphasizing domestic resource mobilization, infrastructure development, and market research. Recommendations include fostering public-private partnerships, enhancing export competitiveness, and aligning policies with Nepal’s socio-economic realities to promote sustainable development and social justice.