Kathmandu [Nepal], October 7 – Nepal’s exports of goods and services could increase by up to 112% over the next five years if major constraints facing exporters are addressed, according to a new study by the Asian Development Bank (ADB), Society of Economic Journalists Nepal (SEJON) and South Asia Watch on Trade, Economics and Environment (SAWTEE).
The study, titled ‘Constraints and Enablers of Nepal’s Exports of Goods and Services’, says Nepal needs to shift towards a growth model driven by competitive businesses, exports and private investment.
It identifies high borrowing costs, taxes on imported raw materials and other production inputs, weak logistics infrastructure and high transportation costs as major barriers to the competitiveness of Nepali products in international markets.
The study is based on interviews with 50 firms including 38 exporters while 45 firms completed a structured questionnaire. Almost all the firms reported facing constraints to exports.
Access to finance was identified as a major challenge by 84% of the surveyed firms, with 54% describing it as a major or serious constraint. Interest rates were the biggest concern followed by fluctuations in interest rates and collateral requirements with small and medium-sized firms particularly affected.
Logistics, trade infrastructure, affordable land and difficulties importing production inputs were also identified as major constraints. Firms exporting to markets other than India cited logistics and trade infrastructure as their biggest challenges.
The study also found that Nepal’s exports remain concentrated in a limited number of products and markets. Between 2022 and 2024, around 71.9% of Nepal’s average merchandise exports went to India, with an annual average value of about $958.7 million.
Arnaud Cauchois, ADB Country Director for Nepal, said Nepal’s goods exports have remained sluggish, with their share of GDP falling from 15.4% in 2000 to 5% in 2025.
He said Nepal needs to move beyond a remittance-based development model and focus on productivity growth, domestic private investment, foreign direct investment and competitive exports to become a high-income country.
Finance Secretary Ghanshyam Upadhyay said Nepal needs to make export growth sustainable, strengthen private-sector confidence and accelerate government capital expenditure.
He said the government should move from a remittance-based development model towards one focused on private investment, export competitiveness and job creation.
Upadhyay said the government would use the study and its policy recommendations in its work and in the formulation of upcoming fiscal policies.
The study also identified opportunities for expanding exports including Nepal’s diaspora, duty-free market access, trade fairs, digitalisation and the country’s positive image abroad. Growing hotel capacity, religious tourism and emerging tourism activities were identified as opportunities for expanding services exports.
The information technology sector was also highlighted as an area of potential growth. Nepal’s IT service exports were estimated at around $515 million in 2022, up 64.2% from the previous year.
However, the study identified gaps in data protection, cybersecurity and intellectual property rights, the absence of an overall IT export policy, difficulties obtaining foreign currency for software and other inputs, weak digital infrastructure and a shortage of skilled workers as major challenges for the sector.
The study also flagged limited government support, inadequate information about the impact of Nepal’s graduation from least developed country status, barriers to e-commerce and climate change as emerging risks for exporters.
The report supports the preparation of ADB’s Country Partnership Strategy for Nepal for 2025-2029 and is based on data and information available up to August 31, 2025.
A panel discussion on addressing constraints and opportunities in Nepal’s goods and services exports, merchandise trade, IT services and tourism was also held during the event.
