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Nepal has a lot of untapped investment potential especially in the areas of infrastructure development, renewable energy, green hydrogen, hydropower, tourism, agri-business, and information and communication technology. Manufacturing is another area where Nepal could attract projects.

KPMG in India has a track record of supporting government agencies on investment promotion programs, business reforms and investment summits. We will be happy to advise the Government of Nepal on the Nepal Investment Summit. For the success of the investment summit, along with inter-ministerial collaboration, laying the platform with a stronger policy environment, effective promotion and targeting investors across key sectors, it will be essential to showcase investable projects that are ready to execute.

The workshop on ‘Unlocking Nepal’s Investment Potential’ organized by KPMG in India, along with the Investment Board Nepal (IBN) in Kathmandu was a precursor to the proposed summit in April. The focus was on promoting private investments, particularly Foreign Direct Investment (FDI), to unlock the country's full potential. The speakers elaborated on potential strategies which could be adopted to reduce compliance burden for investor fraternity and simplify the business processes for obtaining requisite clearances and approvals by investors. Drawing from its extensive experience, KPMG shared success stories from other similar economies and drew parallels to offer indicative actionable recommendations for Nepal. Nepal is on the cusp of transformation, and the workshop concluded with a commitment to enhance the country’s investment climate through legal, procedural, and regulatory reforms.

To foster economic expansion and enhance investment potential in Nepal, a comprehensive strategy should focus on strengthening the policy environment, infrastructure development, regulatory reforms, ensuring ease of doing business, and targeted sector-specific investment promotion. Strengthening key sectors like tourism, technology, renewable energy, green hydrogen, and manufacturing can also play a pivotal role in attracting investors and fostering sustainable economic growth. Additionally, building a business-friendly environment, easing process friction, and encouraging innovation will further contribute to creating an attractive investment climate in Nepal.

There are several areas where India could increase investment in Nepal, particularly in areas of synergies and leveraging learnings from each other in ease of doing business (EODB), managing large programs, and infrastructural development through public-private partnerships (PPPs). By fostering collaboration in key sectors such as renewable energy, green hydrogen, manufacturing, digital public infrastructure, technology centers, agriculture, and tourism infrastructure, services, both nations could drive mutual growth and development. Several factors could contribute to the gap between promised investments and actual outcomes. Identifying and addressing these issues, improving transparency, and ensuring a stable investment climate could help bridge this gap.

The author is CEO of KPMG, India 

It is a good thing that the Ministry of Youth and Sports is formulating a new policy to bring national sports to the next levels. There is a lot of work to be done but asking for feedback, advice from the general population is certainly a great way to start.

A key way to elevate Nepal’s sports is to formulate a program for high potential achievers, an initiative that strategically identifies and supports athletes who have a real chance to compete at highest levels. I am talking about athletes whose performance is already very promising, athletes who have already shown their worth.

It is obviously essential to ensure that such a program is capable of selecting the most promising athletes when they are still very young rather than when they are already mature. Nepal could learn a few things from Australia, which has a very rigorous and holistic process of grooming the best potential competitors. It is not surprising for Australia that their athletes are among the best and Australia always stands very high for the medals won.

Something that perhaps might be discounted is that Australia has been investing a lot also in its adaptive sports athletes or para-athletes and they are among the best worldwide.

I am writing about this because Nepal also has dynamic para-athletes, who deserve a much higher level of recognition. This is the reason why the new policy being formulated should give equal chances to parasports to excel and compete in the region and worldwide. It is not just about equality and social justice. It is really about competition and giving a level playing field to athletes living with disabilities.

Nepal’s taekwondo is probably, at the moment, the most recognized para sport.

This is thanks to Palesha Goverdhan winning a bronze medal in the 2022 Asian Para Games in China and recently she was awarded the ‘Best Taekwondo Practitioner of the Year’. She is also going to represent Nepal at the upcoming Paralympics games in Paris. We should not forget that Shrijana Ghising has also been doing very well internationally with Para taekwondo.

Then there is also wheelchair basketball. It is very positive that Minister for Youth and Sports Biraj Bhakta Shrestha recently attended a two-day Intervalley Wheelchair basketball tournament organized by Nepal Spinal Cord Injury Sports Association (NSCISA), one of the pioneering organizations promoting adaptive sports in the country.

At the moment of writing, Nepal has the chance of having another top para-athlete competing in Paris, Keshav Thapa, the most successful para-table tennis athlete of the country.

I personally know Thapa for many years as he is also very active in the social sector, being a strong advocate for accessibility and for the rights of persons with disabilities and he is the founder of the Spinal Cord Injury Network Nepal (SCINN).

SCINN provides a family environment, including lodging and food to more than 20 youths living with spinal injury, many of whom are also wheelchair basketball players with the SCINN Wheelchair Basketball Team.

Thapa, who, according to the International Table Tennis Federation-Para Table Tennis (ITTF PTT)’s classification, currently is ranking at number 88 but he has a huge potential to raise the world ranking even further.

He is trying to find the resources to attend the Paralympic World Qualification Tournament, which is going to be held in Pattaya, Thailand from the 23rd of this month to till 26th.

This is the only way for him to be in Paris.

I am really wondering if the high potential program for promising athletes of the country were in place, where Keshav would be standing in the world ranking.

I am sure he could, confidently, be among the top 15-20 and certainly the best in South Asia and among the strongest competitors to the Chinese peers who have been dominating table tennis ever since.

What struck my interest in the work of Thapa is the fact that he is also very concerned with the whole development of the para-sector in Nepal.

It is outrageous that the country still has two different Paralympics Committees, one working with the government and the other with the International Paralympics Committee. I sincerely hope that Minister Shrestha uses his powers to solve this ridiculous conundrum.

It is a ridiculous situation because athletes like Thapa are slowed down, unsupported and mostly on their own to achieve the great things they aim for.

I recently had a chat with Thapa. We talked about his goals and aspirations but also about his concerns about para-sports in Nepal.

“Well, about my goals I have a dream to be a Paralympian and want to win an international medal for my nation. If I get a chance to participate in various competitions and have good training and exposure I trust myself that I can win an international medal. Ultimately, my goal is to be a Paralympian and I really want to work in the disability community.”

Despite being very focused to succeed in Thailand and then in Paris, Thapa really wants the whole para-sports to grow in the country.

“My priority will be on para sports development. Para sports have been helping me to make my life better such as mentally strong, physically fit and name and fame in the community”.

He further explained to me, “I feel proud that I am eligible to participate in Paralympic world qualification. It’s one great achievement in my life. I wish I can be a role model in the para sports sector and in this way, many other young fellows may inspire and be involved in the sports”.

I asked him what could be done to reverse the status quo.

“Overall, for promoting adaptive sports there should be encouragement and direct investment of government to para-athletes. There should be regular training, training equipment, expert manpower such as coach, disability-friendly playing grounds, financial support, chances to participate in national and international competition, and there should be salary for players so that adoptive sports can be boosted.”

I do not only hope that Thapa will qualify for Paris but also he will find the resources to be able to compete full time without being always overstressed about fundraising.

Big corporate houses have a big role to play.

This would be smart CSR, something that can truly make a difference while also elevating their corporate profiles.

I feel sorry that there are so many great athletes with disabilities in the country who are unable to shine. They are blocked, incapable of showing the nation and the whole world what they can do.

I truly hope that the new policy that Minister Shrestha is formulating will try to address this huge gap.

Para-taekwondo, para table tennis, wheelchair basketball, para-swimming, blind cricket are some of the disciplines where Nepal can show its brilliance and greatness while showcasing to the world its difficult but worthy journey toward inclusion and accessibility.

Views are personal

Itahari, a fast-developing town in the Koshi Province of Nepal, is locked in a recurring battle with floods. Its location seals its fate—hemmed in by the Chure hills on one side and rain-fed rivers and streams on the other, the town is precariously perched on a path of raging waters. Itahari's story is one of nature's delicate balance being tampered with. Once a verdant expanse with the Charkose Jhaadi (CKJ) forest acting as a natural sponge, absorbing and channeling rainwater, the landscape has undergone a drastic transformation. A large part of the forest has been cleared for settlements and infrastructure, erasing the very buffers. These encroachments have choked the natural flow paths of streams and creeks, turning them into ticking time bombs waiting to burst at the seams of a heavy downpour.

Gushing streams and creeks

The culprit behind Itahari’s woes is the rapid flow—rain hammering the Chure hills creates flash floods. These surges of water race down the denuded slopes, overwhelming the already-burdened streams like Shera Khola, Tyangra Khola, Budhi Khola. Kheti Khola and many others. The peculiar topography of the area further amplifies the problem. The land slopes channelize the floodwaters in a southwesterly direction, inundating Itahari in its path. Itahari’s woes are compounded by its complex river system. The CKJ forest once housed a web of streams and creeks; today, many are buried, diverted, or even closed, their paths lost under the urban sprawl. This tangled web makes it incredibly difficult to predict and manage floodwaters.

Shera Khola, a vital artery carrying water from the hills, splits into two upon entering the CKJ forest. The main branch, Shera, and its distributary retaining the name Shera as well, snakes through the forest. It eventually merges with Tyangra Khola, originating from the rainwater reservoir, Taltalaiya, located within the CKJ forest. The two streams merge just before entering Itahari, their combined might creating a formidable challenge. Tyangra's journey through Itahari is fraught with peril. Years of human intervention have taken their toll. The stream is heavily channelized, encroached upon, and choked with sediment, debris and waste. Culverts meant to regulate the flow are often inadequate, overwhelmed by the sheer volume of water. As Tyangra snakes its way through the town, it cuts across the East-West highway and the North-South highway several times, acting as barriers. The narrow and clogged culverts under these highways become bottlenecks, further aggravating the flooding. Shera Khola merges with Budhi Khola further downstream, diverting some of the floodwaters away from Itahari. This diversion might lessen the burden on some parts of the town, but it comes at a cost. The increased water flow in Budhi Khola increases the risk for the eastern part of the town as well as downstream areas including the capital of the province—Biratnagar.

Itahari’s woes are not limited to Shera and Tyangra. Smaller streams like Kheti Khola, Hakraha Khola, Sukumari Khola and many others, all receiving water from the CKJ forest, create problems in the central and western parts of the municipality. Seuti Khola, another major stream, flows westward, seemingly separate from the others. However, its proximity to Shera Khola where it begins its journey in the CKJ forest suggests a possible exchange of flows. The East-West highway, a vital transportation link, has unwittingly become a flood risk amplifier. Built on higher ground, it severs the natural flow paths of the streams. Culverts along this highway are frequently clogged, causing water to flood the areas on the north side. Further downstream, the Sunsari-Morang irrigation canal also presents a hurdle with narrow and clogged culverts and flow passages.

Learning from losses

Itahari’s recent encounters with floods in 2017 and 2021 offer valuable insights into the town's vulnerabilities. The 2017 flood highlighted the dangers of river morphological changes in Budhi Khola, where erosion and overflowing riverbanks caused inundation in the eastern part of the town. Encroachment on the river corridor further exacerbated the problem. This flood also exposed the shortcomings of the suspension bridge, whose blockage led to upstream flooding and a disastrous burst downstream. The 2021 flood painted a different picture. Here, the culprit was Shera Khola, overflowing its banks and spilling into Tyangra Khola. This surge of water, coupled with overland flow through the already encroached CKJ forest, caused problems in the western part of Itahari. The heavily built-up nature of Tyangra Khola and other streams, reduced to a narrow, choked drainage ditch, further amplified the issue.

The way forward

The road to a flood-resilient Itahari and surrounding areas lies in adopting a holistic and integrated approach. Here are some key takeaways for moving forward:

Revitalizing the forest: The degraded CKJ forest is a vital piece of the puzzle. Restoration efforts should focus on creating new water bodies and wetlands, managing fluvial deposits and debris, and replanting native vegetation. This will enhance the forest's capacity to store and regulate floodwater. Regular assessments to identify strategic depressions for temporary water storage can further improve flood control while maintaining ecological balance. This would not only reduce flood risk and improve the biodiversity of the CKJ but also replenish the groundwater supply favorable for Dharan municipality.

Managing major streams: Effective management of streams originating from the Chure hills is essential. Focusing on the major streams—Budhi Khola, Shera Khola and Seuti Khola—a riverfront development plan incorporating nature-friendly solutions can offer a multi-pronged approach to flood mitigation and create lively public spaces. Optimizing the flow distribution between Shera Khola, Budhi Khola and Seuti Khola through the CKJ, seizing the opportunity provided by nature, to minimize flood risk in Itahari and other neighboring municipalities.  

Ensuring a smooth flow: Restoring the whispers of forgotten streams, Itahari can embrace a future where water is both managed and celebrated. Upgrading drainage and exploring natural solutions like sustainable urban systems is key. But a more intriguing vision lies in creating a network of canals, weaving life back into existing, neglected waterways. Imagine a network of canals snaking through Itahari, interconnecting all the existing, albeit encroached, creeks and streams. These canals, strategically designed and integrated into the urban fabric, could become lifelines during floods. Floodwater overflowing from streams like Tyangra Khola, Kheti Khola, and others could be efficiently channeled. Drawing inspiration from water management strategies in some European countries like the Netherlands, this approach proposes a network of interconnected canals. Strategically placed pumping stations, powered by renewable energy sources, would regulate water flow during both floods and low-flow periods with designated retention areas. This stream network wouldn’t just be functional; it could be a thing of beauty. The canals, lined with native vegetation and landscaped walkways, could become a defining feature of Itahari. Encroached areas along the streams could be transformed into vibrant public spaces with cafes, recreational areas, and green walkways. This approach eliminates the need for demolishing houses, fostering community buy-in and creating a win-win situation.

Early warning systems: These systems are the lifeline for disaster preparedness and management. Effective flood and sediment management hinges on a robust network of monitoring, forecasting and early warning systems.

For a sustainable future

Implementing these strategies requires careful consideration of their technical, economic, social and environmental impacts and feasibilities. Challenges like limited space due to rapid urbanization and competition for land use make proposed strategies difficult. Integrating new measures with existing infrastructure and securing funding require innovative approaches. Public perception also plays a role, as some may have misconceptions about the proposed measures, fearing land loss or disruption. Overcoming these hurdles involves clear communication with stakeholders, and fostering community engagement to address concerns and highlight the long-term benefits.  By working together and embracing a sustainable approach, Itahari can transform itself from a flood-prone town to a thriving, resilient city.

The author is a specialist in river basin management and water infrastructure, currently employed at the international organization Royal HaskoningDHV, headquartered in The Netherlands. With over 28 years of professional experience, he actively contributes to river management projects globally

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Oscillating between periods of cooperation and setbacks, the India-Nepal bilateral relationship is considered ‘special’ and ‘unique’ by all who observe their dynamics. Thus, the failure of the two sides to maximize their potential and fully capitalize on the factors that make this partnership different is often criticized. In the past decade, under India’s ‘Neighbourhood First’ policy, the focus of the Indian leadership has been on working on the convergences, while preventing the issues of contention from casting a shadow on progress. This approach has found a receptive audience in Nepal as well, with the two sides increasing cooperation. Even as China strives to solidify its presence in the country, Nepal, owing to its strategic location, has (in)voluntarily become a part of the geopolitical churning that is taking shape in South Asia. As the current government in India completes its second stint in power, the timing is opportune to briefly reflect on the trajectory that the bilateral relationship has taken up in the past decade and the course it will adopt in the coming years.

Unprecedented developments

For India, Nepal is an integral part of its ‘Neighbourhood First’ policy. New Delhi has consistently supported Nepal in its developmental endeavors and is the country’s top development partner. This year’s budget saw InRs 700bn earmarked as developmental assistance for Nepal, the second highest amount followed by Bhutan. Beginning with the Indian Prime Minister’s visit to the country in 2014, the two sides have seen a flurry of high-level visits throughout the decade. This is a testament to the consensus on both sides regarding the need to build the relationship further and also a response to the change in the geopolitical environment and the growing cleavages between India and China.

While the decade began on a positive note with the Prime Minister’s visit, a multitude of factors derailed the progress that was made at the time. The devastating earthquake in Nepal, followed by concerns regarding how Indian media portrayed the aid delivery, the adoption of a new constitution in 2015, the subsequent protests and the alleged economic blockade placed by India cumulatively dented the goodwill that was generated the previous year. At around the same time, China’s expanding presence in the country also complicated the dynamics between the two countries.

Fast forward 2024, while some endemic issues of contention have persisted between the two sides, the priorities have significantly altered for both countries. There is a subtle shift in how both Kathmandu and New Delhi want the relationship to move forward—a focus on pragmatic considerations and working together to enhance cooperation in connectivity and economic integration. Back in 2014, India committed to supporting Nepal with the ‘HIT’ model i.e. the construction of highways, information ways and transmission lines. In the last few years, India has refocused its attention on these aspects of the relationship.

For both India and Nepal, the complementarity that they share in terms of hydropower, i.e. Nepal’s willingness to export it and India’s need for energy has been one avenue in which the two sides have cooperated extensively. At present, as per some estimates, Indian companies have licenses for the generation of 4000 MW of hydropower. Starting in November 2021, India also began to buy Nepal’s hydropower with the latter selling Rs 11bn worth of hydropower to its neighbor between June and Dec 2022. On his maiden visit to India, Prime Minister Dahal oversaw the signing of memorandums of understanding (MoU) on the Arun Hydroelectric Project and the Upper Karnali project. A project development agreement was also signed for the 669 MW Lower Arun Hydroelectric Project. The two sides also inaugurated and laid the foundation stones for new integrated checkposts.

The signing of a power trade agreement during India’s EAM S. Jaishankar’s visit to the country in January this year, under which Nepal will export 10,000 MW of power to India over the next 10 years, is considered a major landmark in the growing partnership between the two countries. This was also discussed during Prime Minister Pushpa Kamal Dahal’s visit to the country along with the Nepal-Bangladesh power-sharing agreement, which will be facilitated by India. Another manifestation of connectivity has been in the sphere of digital connectivity with Indian nationals now able to make payments through the Unified Payments Interface (UPI) starting Feb 2024. This, as evidenced by some analysts, will smoothen the flow of remittances and also give a push for increased tourism in the country.

In trade, India is Nepal’s biggest trading partner with the total volume of bilateral trade reaching
Rs 1,134.53bn in the fiscal year 2022-23. It also has the highest FDI stock in the country, close to 33 percent of the overall volume. The transit trade agreement between the two sides was also renewed, revised and signed by the two last year. India’s High Impact Community Development Programs also completed 23 years last year, with New Delhi successfully finishing 475 of the 535 projects that it took up. India’s lines of credit were pegged at $1.65 as of Aug 2023 and 73 percent of the assistance offered by India goes into infrastructure development.

Observers see India’s relationship with Nepal on a strong footing, as the three important components of India’s relationship—security, economy and connectivity—have all seen progress in the past decade. But while there is optimism about the trajectory of the relationship, there is also some caution, with calls for ‘strategic reformulation’ and discarding the ‘roti-beti’ lens of looking at the country. This is because of how the world and the region around them is in a constant state of flux.

The impediments

Despite the progress made in enhancing economic integration and connectivity between the two countries, certain bilateral issues have persisted. The degree to which they can affect the positive momentum in the relationship depends on multiple factors. Recently, a cabinet meeting in Nepal decided to have a picture of the country’s map on the new Rs 100 notes. The map was the one that the then Prime Minister Oli released in 2020, showing the Kalapani, Lipulekh and Limpiyadhura regions as a part of the country. At that time the relations hit a new low. India deemed the decision as  ‘unilateral actions which don’t alter the reality on the ground.’ While there is no denying that the issue won’t have any immediate adverse impact on the positive momentum of ties between the two countries, the act itself and its timing indicate how long-standing issues can suddenly prop up with the potential to dampen the relationship. In a recent lecture, Nepal’s Foreign Minister articulated commitment to resolving bilateral issues through bilateral consultative mechanisms that have been set up for that purpose, based on historical facts. India’s External Affairs Ministry also highlighted that the issues are being discussed through established platforms. So, while the consensus is there on both sides to take this up mutually, the delay allows certain sections to use them for the perpetuation of their power or for making a political point, more often for a domestic audience.

The calls for the revision of the 1950 Treaty of Peace and Friendship, the boundary issue as mentioned above, the report of the Eminent Persons’ Group, and the opening of new air routes are all issues, which have propped up in the conversations between the two countries in the past decade. While for the time being it seems prudent to focus on the positives and create enough trust and goodwill that can then help in addressing the more contentious issues—as has been the sentiment in Nepal as well—a long-term approach will require active engagement on these issues.

With China’s growing presence in Nepal, there is a need for New Delhi to recalibrate its options and further push in areas where it has already achieved significant progress. The obstacles that delay the completion of projects like the Pancheshwar Multipurpose Project, other concerns related to delay in implementing projects on loans granted by the Exim bank, and assuaging Nepal’s concerns about the rising trade deficit are all issues that should be taken up with the other side. As Nepal’s then Prime Minister had articulated in 2016, remarking on the country’s ‘historic tilt’ toward India, security and development can’t progress in isolation.

As the growing cleavages between China and the US start playing in the neighborhood, for India and Nepal to strengthen their partnership, it is imperative to rejig the bilateral relationship. The two countries have the potential to build on the positives and adopt a pragmatic approach. However the rather quick changes in government in Nepal and the limits that it imposes on adopting a consistent foreign policy toward India does affect progress. With India on the cusp of concluding the voting for the general elections, one hopes that the two countries sustain the progress that they have made in the last decade and become more open in resolving the issues that plague the relationship.