The government has taken a significant step toward fostering Nepal’s startup ecosystem by amending the Industrial Enterprise Regulation. The revision, among others, introduces a legal definition for startups, establishing a structured framework to support their growth.
Under the new provisions, businesses older than 10 years or with annual transactions exceeding Rs 150m will no longer qualify as startups. The revised regulations also require startups to commence operations within one year of registration and to notify authorities accordingly.
According to the regulations, a startup’s registration will be automatically revoked under three conditions: when it surpasses the 10-year threshold, if its annual turnover exceeds Rs 150m, or if its registration is canceled for any other reason. Authorities are required to update their records and notify affected businesses within seven days of such changes. However, losing startup status will not prevent companies from continuing their regular operations.
To further support startups, the government plans to establish a Startup Promotion Center to strengthen the ecosystem.
Nepal’s startup landscape has long struggled with inconsistent policies and unfulfilled government commitments. Past initiatives, often stalled at the planning stage, have eroded trust among entrepreneurs.
Additionally, external shocks such as the 2015 earthquakes, India’s trade embargo, and the Covid-19 pandemic have hindered growth. Despite these challenges, the ecosystem has evolved over the past decade, democratizing entrepreneurship through improved access to capital, networks and knowledge.
The rise of alternative investments—such as private equity and venture capital—alongside accelerators and incubators has also supported the sector’s expansion.
Even though the government has announced plans to promote startups since as early as 2015, they have not been effective. In 2015/16, the government announced a Rs 500m fund, followed by a Rs 5m subsidy in 2019/20. However, these programs were never implemented.
Similarly, an interest-subsidy program announced in 2021 failed to take off. In 2023/24, a loan program launched with the Industrial Enterprise Development Institute and Rastriya Banijya Bank offered up to Rs 2.5 million at 3 percent interest, but only 165 of 1,658 applicants received funding. For 2024/25, the government has allocated Rs 1bn, targeting 600 startups.
Despite these setbacks, Nepal’s startup ecosystem has demonstrated remarkable growth, particularly in technology, agriculture, tourism, fintech, and e-commerce sectors. While still in its early stages, the sector holds significant potential with the right policy support and investment.
The government has pledged to enhance the legal framework and establish entrepreneurship development centers to foster sustainable growth in the startup landscape.
On a positive note, increasing mobile internet access and growing youth entrepreneurship are fostering new opportunities in the digital economy.
