Submit your Article

Recently, the International Monetary Fund has projected that the Indian economy will grow by more than seven percent per year. Even if India manages to sustain the GDP growth rate of six percent, India will become a $5trn economy by 2030.

With the current government, it is believed that this goal should be easily achieved. India’s gross domestic product (GDP) has crossed the $4trn mark in nominal terms, making it the fourth largest globally, several media reports said on Nov 19, citing a purported screenshot of the live GDP tracker of all economies based on International Monetary Fund (IMF) data.

With this development, India’s economy has made significant progress toward its ambitious goal of becoming a $5trn economy by 2025. India’s sustained efforts in several sectors, coupled with good governance and strategic policies, have also fueled this historic leap, highlighting India’s position as one of the fastest growing major economies in the world. India, having achieved the $4trn GDP milestone, stands tall as a beacon of economic prowess and global influence. It took the Indian economy nearly 60 years since independence (1990s) to reach the $1trn mark and added another trillion in just seven years. In 2014, India’s GDP crossed the $2trn mark. Now, India is working toward achieving a $5trn economy by 2025 and has prepared a roadmap for it.

Nepal’s GDP in dollar terms is estimated to be around $43.42bn in 2024 and $46.08bn in 2025. In terms of purchasing power parity (PPP), World Economics has estimated Nepal’s GDP in 2024 at $243bn and projected $255bn for 2025, while another estimate by World Economics has projected a real GDP of $35bn in 2024 and $36.5bn in 2025. In a nutshell, one of the major reasons why Indian GDP grew so rapidly in the early 2000s was foreign investment and investment in India.

The milestone of shared prosperity of the private sector of Nepal and India should be able to benefit from India’s economic growth. In this regard, regular dialogue, trade facilitation and policy coordination have been promoted by establishing a collective platform in the private sector in the past and even now, but it has not been seen in action and result. It is also necessary and imperative to implement the work of simplifying the trade process and utilizing the existing infrastructure to benefit from the easy opportunities for cooperation between the two countries. Although Nepal has developed a special economic zone in the border area, it has not been successful.

In addition, there should be no delay in ensuring collaboration, knowledge exchange and access to new markets between entrepreneurs and technology innovators of both countries by building startups and innovation bridges. The private sector must do this work. How will a $5trn economy affect the lives of Indians in this way? If India reaches a $5trn economy, the per capita income, which is $2,160, will double. The purchasing power of the people will double from what it is now. Thus, the people will live a better life.

The government will have more funds to invest in infrastructure development, create more jobs through industrialization, invest in higher education and research, etc. Instead of welfare measures, the government will empower the poor and lift them above the poverty line.
The government will invest heavily in providing drinking water to all. The government can also think of providing underground sewage systems in all villages.

Technology will be given importance. Investment will be in high technology like bullet trains, metros, smart cities, space and satellites, etc.

The government will invest in industries that provide large amounts of employment. A growing Indian economy presents both opportunities and challenges for Nepal. Increased trade, investment and infrastructure development are major potential benefits, while Nepal needs to strategically align its growth to capitalize on these opportunities and mitigate potential negative impacts like increased competition and dependence. 

Increased trade and investment: A stronger Indian economy could increase demand for Nepali goods and services, boost Nepal’s exports and attract Indian investment, especially in border areas. India’s focus on infrastructure projects could create opportunities for Nepal to improve its own connectivity and food production, potentially reducing trade barriers and transportation costs. A stronger Indian economy could boost economic activities in Nepal, fostering shared prosperity through greater trade, investment, and cooperation. 

As proposed by some, a start-up and innovation bridge could facilitate collaboration and knowledge exchange between entrepreneurs and technological innovators in both countries. Closer economic ties with neighboring India could strengthen Nepal’s position in regional and global value chains.

A stronger Indian economy could intensify competition for Nepali businesses, especially in sectors such as agriculture, manufacturing, and services. Nepal’s dependence on remittances from Nepali workers in India can be affected by economic slowdowns or policy changes in India. Disparities in infrastructure development, especially in rural areas, can hinder Nepal’s ability to fully benefit from increased trade and investment.

Nepal’s trade deficit with India, characterized by high imports and low exports, could widen further without strategic intervention. Effective policy coordination between the two governments is crucial to maximize opportunities and address challenges. Under the recommendations for Nepal, under strategic alignment, Nepal needs to align its development strategy with the economic trajectory of neighboring India, focusing on areas where it can leverage India’s growth for its own benefit. In infrastructure development, infrastructure development, especially in border areas, appears to be a priority to improve connectivity, reduce trade barriers, and facilitate the movement of goods and people across borders.

Under investment in special economic zones, there should be cooperation and emphasis on establishing special economic zones in border areas to attract foreign investment and promote export-oriented industries. Under border infrastructure, investment in border infrastructure can be expected to reduce logistical barriers and improve trade efficiency. Promoting private sector involvement is not only necessary but also imperative.

Private sector-to-private sector involvement can be expected to be encouraged, especially in areas such as energy and trade, to promote shared growth.

Policy coordination between the two governments should be strengthened to facilitate trade, investment and other forms of economic cooperation. By proactively addressing these challenges and capitalizing on the opportunities presented by the economic growth of neighboring India, Nepal can and should position itself for sustainable and inclusive development, otherwise Nepal will fall far behind.

A trillion-dollar question

There is a need to fight corruption, create political stability. All children should receive at least seven years of schooling. Women should be given the opportunity to access free birth control to decide whether family, education or work is best for them. Already developed sectors such as tourism and agriculture should be boosted by implementing new developed concepts for sectors with less technological maturity. New sectors and concepts should be created to drive future innovative areas of research and technology. The tax system should be refined to make it more efficient and fair. Taxes should be paid and support payments should be made when necessary. It would also be worthwhile to create rules that benefit entrepreneurs or students who are working in the country after completing their studies and taking risks by starting companies and providing jobs to people.

Nepal’s economic prospects may also depend on its relations with neighboring countries such as India and China, particularly in terms of trade and investment. Addressing challenges such as climate change, natural disasters and environmental sustainability will be essential for long-term economic health. While challenging to predict with certainty, creating a $1trn economy by 2050 will require extraordinary growth and development efforts. Current trends suggest that while ambitious, it is a feasible goal if Nepal can effectively utilize its resources and improve its economic situation.

India and Nepal share a long and open border stretched across five Indian states of Uttarakhand, Uttar Pradesh, Bihar, West Bengal and Sikkim. On Nepal’s side, Madhesh, Koshi, Bagmati, Lumbini and Sudurpaschim touch India’s border. A mix of Himalayan hills and Tarai marks up the geography of its open borders, effective since 1950. Indian paramilitary force Shashatra Seema Bal (SSB) guards these borders from the Indian side while the Armed Police Force (APF) of Nepal guards Nepal’s side. Barring some contention, the India-Nepal open border has served its purpose effectively, whether it is keeping the tradition of Roti-Beti alive or contributing to the economies of both countries. Open borders also kept the bioregion of the Himalayas intact, whose impact is visible on the flora and fauna between the borders. 

Nevertheless, for states, security is a non-negotiable, as is the question of the security of open and porous borders and people living around and beyond them. India has been a victim of terrorism for a very long time, and Nepal also has been a victim of organized violence for decades. In 2020, during diplomatic tensions, Prime Minister K P Sharma Oli backed India’s call for a standard definition of terrorism during the UNGA. Five years down the line, we do not have a standard comprehensive convention against international terrorism, which rocked South Asia two months back in Pahalgam. India and Nepal have an extradition treaty, and the political elites and intellectuals see the border security with grave concern. 

However, there are growing anxieties from both sides about illegal migration. Elites in Kathmandu point out the illegal migration coming from India, while India also occasionally finds people from Myanmar and Bangladesh on the border regions with Nepal. There has also been a growing movement of countries from the Gulf and Turkey promoting their specific ways of Islam through many organizations in the Tarai region of Nepal, which is home to the majority of the Muslim population of the country. The mushrooming of many infrastructure projects backed by Turkey near the border areas needs closer scrutiny. The Turkish NGO Foundation for Human Rights and Freedoms and Humanitarian Relief (IHH) has been flagged by Indian agencies as an entity of concern. Many reports in Indian as well as Nepali media from time to time report the activities of this organisation working with the Islamic Sangh Nepal as a security threat to both nations. A recently-released report has flagged specific concerns in India. 

After Operation Sindoor and Turkey’s open support to Pakistan in the same, Turkey and Pakistan are being viewed by India as security threats. This is why these new developments in the border regions of both countries are being viewed cautiously. It is also worth noting here that Indian anxieties over these developments are not only part of rhetoric, but India has faced multiple security risks, most notably the IC-814 hijacking and the fake Indian currencies printed with the help of Pakistan’s ISI. They have also used the traditional criminal networks between India and Nepal to further their means. Well-documented sources suggest that ISI has used Nepali soil to harm India since the 1980s. It has also harmed Nepal, as the country is currently on the FATF’s grey list due to ‘deficiencies in anti-money laundering (AML) and counter-terrorist financing (CFT) regimes.’ Terrorists and financiers use any loopholes in any country to achieve their end results. The Nepal government, however, has taken the list very seriously, and the officials are working to remove the country from the list. 

If we look at the Turkish involvement in this already complex scenario, which is constantly working in tandem with Pakistan, it fuels more of India’s anxieties. There are multiple infrastructure projects IHH is taking with other organizations in the Tarai region, making up a thorny issue for Indian agencies. IHH’s record also backs these issues, as the organization has been accused of planning a bombing in Los Angeles in 1999 and is said to have ties with Al Qaeda. Many international agencies also flagged their concern about IHH, which is also known to support Erdogan and is said to have close relations with the Turkish government. 

In this context, the broader border security arrangements between India and Nepal need to be examined. The India-Nepal open border stands today at the intersection of tradition and shifting geopolitics. As external actors with divergent strategic ambitions insert themselves into the region, the onus is on India and Nepal to jointly future-proof the border against vulnerabilities that neither side can tackle alone. The task is straightforward: border management must evolve from merely guarding physical space to understanding and disrupting transnational networks that exploit social, religious and financial channels.

This calls for institutionalised cooperation, not just between security agencies, but also through shared platforms for intelligence, financial scrutiny and civic engagement along the border regions. A proactive approach would also mean enhancing community resilience in the Tarai and adjoining areas, ensuring that developmental gaps are not filled by opaque foreign entities with unclear agendas. Both governments can explore structured dialogues at the level of home ministries and central banks to counter emerging threats like terror financing and ideological radicalisation. At stake is not just bilateral security, but the health of the broader Himalayan bioregion, where open borders have historically sustained both people-to-people ties and ecological continuity. Preserving this openness while safeguarding sovereignty will require vigilance, trust-building and a strategic alignment that reflects the realities of an interconnected and contested neighborhood. India and Nepal have the history, goodwill and institutional frameworks to achieve this; what is needed now is the political will to update and act on them with clarity and foresight.

The author is a PhD Candidate at the School of International Studies, JNU, New Delhi

The private sector accounts for more than 80 percent of the national economy, according to the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).  According to the apex body of the Nepali private sector, the number of private sector establishments surged from 28,600 in 1983 to 923,356 in 2018.

This growth accelerated after Nepal adopted liberal economic policies and embraced privatization in the early 1990s. The 1990 constitution, one of South Asia’s most progressive charters at that time, created an enabling environment for private sector investment, including in the media industry. In the years that followed, the private sector boomed which strengthened the economic health of private media houses. From the late 1990s through 2015, many media houses thrived financially, fueled largely by advertising from both the private sector and government. However, some also collapsed due to economic instability.

During the Maoist insurgency and the transition to the 2015 constitution, donor funding became another key source of income for Nepali media. Many outlets received substantial support to produce content aligned with the interests and agendas of international donors. In recent years, however, such funding has come under criticism, with concerns that it influenced politics and public policy in problematic ways. These funds are now in decline, leading to the shutdown of many legacy media outlets, particularly private and community radio stations that had played a critical role in informing and empowering rural communities. 

Following the promulgation of the new Constitution in 2015, and even before that, many donor organizations began shifting their focus to other regions, particularly in Africa and other conflicted-hit areas. In response, the Biden administration allocated support for independent media, including Nepal. But with the return of Donald Trump to the US presidency and the subsequent dismantling of USAID programs, media outlets that depended on American funding are now facing a deepening crisis. Across Asia and Africa, dozens of USAID-funded media organizations are on the brink of collapse. In Nepal too, media revenues from advertising are falling and international support is drying up.

Given this context, the time has come for Nepal’s private sector to step in, not as an act of charity, but as a commitment to safeguarding democracy. The private sector bears a huge responsibility that goes beyond profit-making. While some business houses with political connections may continue to benefit in the short term, a truly strong and sustainable private sector can only flourish in a democratic environment.

Around the world, there are examples of the private sector and middle class investing in the independent media to counter partisan journalism and to support civil society movements.

In their recent opinion piece, prominent scholars Semuhi Sinanoglu, Lucan Way and Steven Levitsky argue that a healthy private sector and a strong middle class form the backbone of a robust independent media. They have cited the example of Malaysia’s popular newspaper Malaysiakini, which, supported by the private sector and a growing urban middle class, broke the political monopoly over the media landscape.  They also highlighted several other cases where the private sector has stepped in to support independent journalism, ultimately contributing to the strengthening of democracy.

According to a 2023 study by Center for International Media Assistance, case studies in Czechia, Romania and Serbia show that the private sector can and does play a meaningful role in protecting information integrity.  While most of these efforts are modest in scale, they demonstrate the potential for private sector engagement in addressing information disorder and the wider challenges facing independent media in the region, the study states.  

In India, too, the private sector has backed some independent media platforms practicing free and fair journalism. For instance, individual investors have supported ‘The Print’, an online portal led by veteran journalist Shekhar Gupta. The portal has publicly disclosed the names of its backers.

In Nepal, however, beyond advertisement, there have been few initiatives where the private sector has provided direct funding to independent media houses, enabling them to report without business or political interference. One exception, though still debated, is Ukaalo.Com, which focuses on investigative reporting. Since its launch, questions have been raised about its funding model and sources. While the outlet positions itself as a not-for-profit entity and maintains no affiliation with political or corporate groups, there is speculation that Buddha Air provided seed funding, along with other private sector individuals. However, the media house has not made its funding details public, limiting open discussion on the issue. 

There are no major initiatives in Nepal where the private sector is supporting independent journalism for the sake of strengthening democratic discourse. The issue is not about private media houses funding outlets to serve their own business interests. Rather, it is about the private sector contributing to media that can produce genuinely independent content, countering politically and commercially influenced narratives, and tackling misinformation and disinformation.

This is undoubtedly a difficult period for Nepal’s private sector. But some business houses have seen remarkable growth and are in a position to provide seed funding for new independent media ventures. The middle-class could also step in to support such initiatives.

Now, more than ever, the private sector is becoming the victims of misinformation and disinformation. In private conversations, top business leaders have expressed concern that they are being targeted by false or misleading narratives, often amplified by certain media outlets. The most effective way to counter this is through investment in independent media for fact-checking initiatives. 

Major media organizations throughout the world have begun creating dedicated departments to counter misinformation and disinformation. In Nepal, however, effective efforts on this front are lacking. The private sector should consider investing in this area, as information integrity is vital for the business to grow.

However, the private sector is hesitant to openly support independent journalism. Many fear backlash from political parties or the government. Even those few business leaders, who have recognized the importance of independent media, choose to remain silent out of fear that any critical reporting on those in power could result in retaliation under various pretexts.

Compounding the issue is the lack of trust and communication between independent media outlets and business houses. Many business leaders feel that their issues are not adequately represented in the mainstream media. One top businessman recently told me that the media only reached out for collaboration after a crisis had already hit. This means, there is a clear need for more dialogue and consultations between independent media houses and the private sector. 

At the same time, it is important to acknowledge that the private sector has not turned its back on independent media entirely. Despite the challenges, some businesses are still providing financial support. They deserve credit for recognizing the role of independent journalism in upholding democracy.

The private sector must fully understand why independent media is essential to democratic governance and why a healthy democracy is, in turn, necessary for sustainable private sector growth. There has been little public discussion about the private sector’s role in strengthening civil society and supporting free and fair journalism. If the private sector wants unbiased, balanced and trustworthy information in the public domain, now is the time to invest in independent media that can operate freely and fearlessly without political or corporate interference.

The year 2025 has been a roller coaster ride for the development sector. Some development partners have discontinued; others have downsized and focused on certain geographies/sectors and others still have changed course completely. What is clear is aid is not what it used to be, the pot is shrinking and shrinking fast. Developing countries must find alternative sources of finance to fund development outcomes—and strategically leverage grants and concessional capital to maximise financing of development needs. The British Embassy Kathmandu has been designing and implementing financial instruments that unlock and mobilise public and private sector finance to support economic growth, private sector development and climate change mitigation.

Nepal is a unique country and has been on a unique development trajectory. Nepal received more than $10bn in remittance in the last fiscal year supporting a positive macro-economic outlook. Still, challenges and vulnerability remain. Dependence on remittance has, sometimes, taken attention away from private sector development and local job creation. Nepali businesses are not adequately integrated with global value chains and attract the lowest levels of foreign investment in South Asia. This limits access to foreign partnerships, technology and know-how. Nepal’s tourism sector, for example, remains stagnant, largely due to a lack of innovation and market access. Despite this and other obvious challenges in the Nepali economy, there are attractive business and investment opportunities across several sectors which remain untapped.

Access to finance is critical to ensuring inclusive growth in Nepal. A study conducted by the British Embassy calculated the funding gap from formal financial channels to small and medium enterprises (SMEs) at over $950m. More than 80 percent of the SMEs rely on informal financing sources and almost 60 percent rely on family and personal savings to fund their financing needs. Even on the formal financing side, SMEs in Nepal have very limited options for raising capital outside of collateralised bank loans. This puts many women, for example, at a disadvantage when so few of them own property or have access to savings. Limited access to finance also stifles growth, innovation and job creation. While the recent fiscal and monetary policies are more supportive of the private sector and SMEs in Nepal, SME development requires strong collaboration between all stakeholders—the government, development partners and the private sector.

Many developing economies like Nepal struggle to attract foreign investments or local capital into high risk/high rewards investment opportunities. Bilateral and multilateral development finance institutions (DFIs) are keen to invest in Nepal as is shown by the number of DFIs active in the country and those that are keeping a close watch for the right investment opportunities. Bridging the gap between interest and investment requires all stakeholders to join forces to mitigate challenges and find and develop opportunities. Designing innovative financial structures will be key in terms of crowding in large amounts of private sector capital.

Blended finance platforms invite the government, development partners, and development finance institutions (DFIs) to collaborate and unlock access to finance. Blended finance strategically uses development finance (grants) to mobilise local and international private capital (commercial capital) into strategic sectors. Further, a reform-oriented public sector that builds a supportive business environment through policy stability and effective partnerships is essential to achieving sustainable development outcomes. 

The British Embassy Kathmandu has been using a blended finance approach to support access to finance in Nepal. Funds such as Business Oxygen and Dolma Impact Fund achieved the dual goal of supporting development outcomes and enhancing returns to investors. International Finance Corporation (IFC), the investment arm of the World Bank Group, has used UK official development assistance (ODA) to de-risk investments and mobilise finance for SMEs in Nepal. The right financial structuring can help further reduce the gap between demand for capital and supply of capital in the growing SME ecosystem.

Building on previous experience, the British Embassy is establishing Nepal in Business—Catalytic Finance to unlock new sources of capital for SMEs, from the Private Equity and Venture Capital (PEVC) space and financial institutions. This financing facility will be managed by the Dutch Entrepreneurial Development Bank- FMO. Demonstration effects from blended finance facilities—investment leveraged, strengthened capacity of the financial sector, and shifting understanding of risks—can be catalytic in this ecosystem. The facility is also expected to create well above 10,000 new jobs.

The author is the Development Director at the UK’s Foreign, Commonwealth and Development Office (FCDO) in Nepal