Could plastic be Nepal’s gold?

A hotel guest arrives after a lengthy flight and asks the hotel staff for two small favors: water and toiletries. Until five years ago, these two things were at the bottom of the commodity ladder. They were considered inexpensive, standardized, and disposable.

This has changed. Single-use water bottles can now influence guest reviews. Miniature toiletries clash with sustainability commitments. In many countries, they are also being pulled into new regulations issued by local governments, tourism authorities, and industry associations.

For Nepal, this transition is more than an environmental issue. It reflects an industrial transition shaped by regulation, procurement requirements, and changing supply-chain. Policies governing plastic are increasingly functioning as industrial policy. It is influencing material choices, supplier relationships, and investment decisions across sectors.

Regulation Is Driving Structural Change

According to the Organization for Economic Co-operation and Development (OECD), global plastic production is projected to increase by roughly 70% by 2040, from 435 million tons in 2020 to 736 million tons. Recycled plastic is expected to make up only around 6% of that total. Mismanaged plastic waste could reach nearly 119 million tons.

These numbers explain why regulation is accelerating. OECD scenarios show that a comprehensive approach—covering design, production, consumption, and waste—could reduce environmental leakage by up to 96% by 2040. Under such scenarios, recycling rates could increase from around 9.5% in 2020 to roughly 42%.

This regulatory shift has implications beyond waste management. As policies expand to include design standards, recycled-content mandates, taxes on virgin resin, targeted bans on certain formats, and Extended Producer Responsibility (EPR) requirements, plastics are no longer treated as a waste problem alone. Regulations now reach upstream. As a result, plastics have become a cross-cutting constraint rather than a standalone industry. Packaging engineers, suppliers, logistics providers, aggregators, recyclers, auditors, and data service firms are being pulled into one connected value chain.

What Is Actually Working Globally

Across countries, several policy tools keep appearing. Here, we take a look at some of them:

1) Design rules and market access.

The European Union provides a clear example of regulatory direction. Its packaging framework prioritizes recyclability, reductions in packaging waste, and constraints on formats considered difficult to recycle. It includes targets for 2030, harmonized labeling, and explicit waste-reduction goals, 5% by 2030 and 15% by 2040. Certain hospitality formats, including mini toiletries, are already marked for phase-out.

2) Deposit Return Systems

Germany’s deposit-return scheme is often cited as a benchmark, with return rates near 98% for eligible single-use drink containers, though reporting methods vary by source.

3) Targeted bans that force substitution

Bans work best when enforcement is visible and alternatives are available. Early evaluations of Bali’s bans on plastic bags, straws, and polystyrene containers showed substantial reductions in targeted items. For small and medium enterprises, such bans can create predictable demand signals: where certain formats are prohibited, compliant substitutes gain immediate market access.

4) Corporate purchasing power

Multinational firms are tightening packaging specifications in response to regulatory and reputational pressures. Companies such as Unilever have committed to reducing virgin plastic use and increasing recycled content, including a stated target of 25% recycled plastic in packaging by 2025, alongside progress disclosures. Regardless of whether individual targets are fully met, procurement rules are changing. Suppliers that can demonstrate recyclability, recycled content, and traceability are increasingly preferred.

At the global level, negotiations on a UN plastics treaty have kept pressure on governments.

Where Nepal Can Start

Nepal does not need to reform the entire plastics economy at once. Some sectors concentrate plastic use in ways that are highly visible, regulated, and easier to control.

Nepal does not need to reform the entire plastics economy at once. Some sectors concentrate plastic use in ways that are highly visible, regulated, and easier to control.

Hospitality as an anchor market: The Hotel Association Nepal’s ban on single-use plastics, effective January 1, 2025, is a major demand signal. It applies to high-frequency items such as water bottles, straws, cutlery, stirrers, and toiletries, products for which alternatives already exist.

While smaller hotels face cost pressures, larger establishments have already begun phasing out affected items. The scale is significant. Nepal has approximately 1,416 star-rated and tourist-standard hotels with a combined daily capacity of 54,370.

This transition also shows the economics of reuse. Suppliers are trialing refillable glass bottle systems in which initial costs are higher, but unit costs decline over multiple refill cycles. This shift is not just about materials, but about building systems for returns, cleaning, and redistribution.

Tourism landscapes as enforcement zones: Certain tourism regions in Nepal have already adopted restrictive plastic policies. The Khumbu Pasang Lhamu Rural Municipality has banned plastic bags below 30 microns and prohibited plastic bottles and bottled drinks in the Everest region since January 2020.

These zones matter because they create exclusive demand for compliant products and systems. Suppliers that meet these requirements gain access to defined, high-visibility markets.

Cities as feedstock hubs: Effective circular systems depend on consistent collection and sorting. Kathmandu Metropolitan City (KMC) has moved beyond bans toward broader system rules, prohibiting plastic bags and products below 40 microns in 2023 and introducing enforcement measures. In 2025, KMC also banned the open burning of waste and plastics, with fines to support enforcement. This is relevant not only for environmental and health reasons, but also because burning destroys material value and undermines the economics of recycling.

Pokhara offers a potential secondary-city model. Its stated objectives include waste segregation, zero-waste targets, and business models implemented through contracted waste collection companies. If viable, such approaches could be replicated elsewhere.

The Domestic Value Chain Opportunity

Nepal effectively pays for plastics twice: once through imports and again through collection and disposal. Kathmandu metropolitan area alone generates approximately 600 tons of waste daily, nearly 15.96% of which is plastic. In 2021, Nepal imported plastic products worth approximately Rs 85.1 billion ($627.96 million).

From an industrial perspective, reducing certain plastic imports while substituting domestic alternatives represents both import substitution and employment creation.

A “plastics-as-cluster” approach can be understood across five commercial lanes:

Substitute manufacturing: Paper-based packaging, molded fiber products, jute and natural-fiber bags, compostable liners (where standards and disposal pathways are credible), and durable catering alternatives.

Reuse systems: Refillable glass bottles, returnable crates, bulk dispensers, and service models that manage cleaning, logistics, and quality control.

Processing and aggregation SMEs: Ward-level collection, hotel-corridor take-back schemes, and dedicated PET/HDPE streams that deliver higher-value feedstock.

Sorting & Recycling: Small- to mid-scale materials recovery facilities (MRFs), washing and pelletizing operations, and partnerships capable of meeting packaging and consumer-product quality specifications.

Compliance and Data services: EPR reporting, packaging redesign advisory, labeling, and traceability. EPR is particularly relevant because it can shift collection costs to producers, formalize informal labor, and convert waste from a municipal liability into a manufacturing input.

Is This Realistic?

The circular plastics narrative risks appearing aspirational if detached from existing industrial realities. Nepal’s context suggests otherwise.

First, the conventional plastics industry is already significant. Sector overviews indicate more than 500 plastic manufacturing units, mostly SMEs, with an estimated scale of roughly Rs 67.7 billion ($500 million). Other profiles cite investments of around Rs 37 billion ($281.5 million) and employment exceeding 10,000. These firms are geographically concentrated in corridors such as Morang-Sunsari, Bara-Parsa, the Kathmandu Valley, and Rupandehi, patterns that typically support supplier specialization and service clustering.

Second, recovery systems are becoming more formalized. In the Kathmandu Valley, private operators have begun establishing sorting and recovery facilities, including a plastic recovery facility launched in 2025 under the regional PLEASE program. Outside the capital, Pokhara demonstrates industrial-scale PET recovery: Himalayan Life Plastics reports recycling approximately 40 million bottles annually into food-grade rPET pellets used in packaging and textiles.

Additional reporting identifies recycling centers across Kathmandu, Pokhara, Chitwan, and Dang producing plastic pellets and downstream products. These outputs are already recognized and valued in markets.

Third, Nepal has prior experience developing export-oriented clusters from fragmented beginnings. Carpets and pashmina evolved into significant industries through standardization, buyer requirements, and dense supplier networks. Plastics could follow a similar trajectory if procurement standards, collection systems, and quality specifications align.

A Practical Way Forward

If the objective is a real industry not just bans, three steps matter:

Clarify sector-based procurement signals: Hospitality associations and regulators can publish standardized specifications covering approved substitute materials, recyclability or compostability criteria, and preferred reuse formats. While bans create demand shocks, specifications translate them into investable signals for SMEs.

Develop clean feedstock through city pilots: Targeted collection corridors with source separation for PET and HDPE, combined with contracted offtake, can demonstrate viability. International experience shows that clean streams, rather than volume alone, determine the economics of recycling.

Standardize early, then scale: Packaging standards similar to those emerging in the EU increasingly function as market-access requirements. Early alignment of domestic standards can allow Nepali producers to serve both domestic procurement needs and future regional export markets.

Conclusion

The transition underway is from low-cost convenience toward managed material systems. OECD projections suggest that regulatory pressure on plastics will continue to increase incrementally, with outcomes determined by lifecycle approaches spanning design, demand reduction, collection, and recycling.

For Nepal, circular plastics are not primarily a moral or symbolic issue. They represent an industrial opportunity embedded within regulatory change. By focusing on hospitality and urban systems, the country can establish domestic alternatives, develop reverse-logistics infrastructure, and reduce reliance on imports while building a new, standards-driven industrial cluster.

(Thapa is an analyst at Business Brainz, a research and insight firm empowering B2B sales and marketing teams globally from Nepal.)

(This opinion article was originally published in February 2026 issue of New Business Age magazine.)