Nepal’s digital transformation is guided by three strategic pillars: Policy, Infrastructure, and Finance. These are designed to foster a vibrant ecosystem for IT and AI innovation, with a strong emphasis on leveraging the global Nepali diaspora.
1. Enabling Innovation through Regulation
The Policy pillar aims to create a startup-friendly environment by introducing legal and regulatory reforms that support innovation and attract investment.
Key Focus Areas rtartup Legislation supported by Industrial Enterprise Act 2020 streamlines startup registration and operations and business incubation centers supported by policy. Intellectual Property (IP) Protection strengthening laws around patents, trademarks, copyrights, and designs. Implementing digital Governance digital one-stop platform for FDI approvals with transparent and efficient e-governance systems. ICT sector to contribute 1.94% of GDP in FY 2024/25. IT service exports reached USD 515 million in 2022, growing 64.2% YoY. Nepal ranks among the top 110 startup ecosystems globally. NPR 1 billion allocated for Startup Fund FY 2024/25. 83% of IT freelancers are aged 20–29. IT is sector exempted from FDI threshold since October 2023. FDI approval simplified for investments up to NPR 500 million.
2. Infrastructure is the building the Digital Backbone. The Infrastructure pillar is focused on delivering the physical and digital foundation required for a globally competitive tech ecosystem. Key Initiatives are Broadband Expansion for nationwide fiber-optic rollout, especially in rural regions and $29 million investment from IFC and partners. New directives for cloud and data center operations for Data Center development with major investments by Ncell and WorldLink in secure and green data centers. Digital & AI Frameworks to be friven by Digital Nepal Framework (DNF 2.0) with an objective AI for All with the government-led programs focused on ethical and inclusive AI, innovation acceleration, and startup support.
3. Mobilizing Capital for Innovation Access to capital remains a critical barrier for startups. The Finance pillar seeks to unlock funding—particularly by engaging the Nepali diaspora. Strategic Components are diaspora VC Funds implementing models like the Nepal Development Fund (NDF) enabling NRNs to invest in tech and development potential to create sector-specific VC funds targeting tech and innovation. Innovation Grants for structured funding like the Startup Nepal Seed Fund Scheme to support early-stage ventures encouraging Public-Private Partnerships (PPP) co-investment models between government and diaspora/private sector implementing easier direct investment mechanisms for NRNs in startups.