Act Now or Be Left Behind

Nepal is at a pivotal movement in its digital transformation. The country’s growing IT industry, driven by young, globally connected talent, is showing immense promise. With annual digital service exports now exceeding half a billion dollars, the sector has become a vital contributor to both foreign exchange reserves and gross domestic product (GDP).

Yet the real story lies not just in growth, but in what is at stake. Despite this momentum, Nepal risks falling behind if policy implementation, investment reform, and infrastructure support fail to match the speed of technological change. This momentum could easily stall if the government fails to follow through on its policy intentions with bold, timely action.

The government has taken some meaningful steps. Recent policy reforms that allow Nepali tech firms to invest abroad were a long-overdue step in the right direction. Long-overdue legal reforms now allow Nepali IT firms to invest abroad and open global branches. However, restrictions such as the requirement to show three years of foreign earnings end up sidelining those very startups that have the most potential to build scalable, global products. This persistent disconnect between policy goals and implementation continues to limit the sector’s growth.

Nepal’s IT industry already outpaces many traditional exports in value addition, with most earnings staying within the country. Yet, the sector is still largely dominated by freelancers and service-oriented work. Industry leaders argue that the real opportunity lies in product development, artificial intelligence and high-end innovation. Without the ability to register companies abroad, attract investment and scale globally, Nepal risks becoming stuck in a cycle of cheap digital labor, much like what happened with its garment industry.

Reforms in education are just as critical. The current system, which is built around rote learning, must evolve toward skill-based, STEM-focused and adaptive models that can prepare youth for a fast-changing digital economy. Infrastructure issues, ranging from unreliable electricity to the absence of unified digital platforms and a coherent data governance policy, must also be addressed urgently.

Entrepreneurs are not asking for protectionist policies. They are demanding smart, supportive policies like tax reforms, easier access to capital and inclusion of Nepali firms in public digital projects. These changes would give local IT firms the tools they need to grow, innovate, and compete globally.

The government must act with urgency, vision and a commitment to execution to fully embrace the digital revolution. In an era defined by AI, automation and real-time innovation, Nepal cannot afford to lag behind. Time is running out; and with it, the opportunity to secure our digital future.

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