Nepal’s tech sector has had a run of developments over the past 12 months that would have been hard to imagine even five years ago. IT exports crossed a billion dollars, foreign investment rules were rewritten overnight, and the country hosted its first major bilateral tech forum with India. For a country that introduced its first IT policy only in 2000, the pace of change heading into 2026 is worth paying attention to.
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1. IT Exports Crossed $1 Billion — But the Hard Part Comes Next
This IT service exports crossed the $1 billion mark as early as 2025, when the Nepal Association for Software and IT Services (NAS-IT) estimated it to be more than doubling in just three years. Kathmandu Post reported the milestone in February 2026, calling it a symbolic but important moment for the sector.
The number is impressive in itself, but the context is what is more important. Nepal generates more than 10,000 ICT graduates annually. Most of them leave within two years of graduating- to Bangalore, Dubai, Australia, or wherever the salaries are better, and the infrastructure is more reliable. That brain drain is the single biggest threat to whether the $1 billion figure becomes a foundation or a peak.
The government’s answer is ambitious: 500,000 tech-enabled jobs over the next decade. Whether that’s realistic depends on a few things happening at once. The new IT/ICT Ordinance, issued on January 13, 2025, made some of the most significant policy changes the sector has seen:
- 100% Foreign Direct Investment is now permitted in Nepal’s ICT sector
- Investment caps removed in Special Economic Zones
- Non-Resident Nepalis can now invest in Nepal’s ICT sector, launch businesses, and contribute capital
- Nepali IT firms can establish subsidiaries or branch offices abroad with approval from the Ministry of Communications and Nepal Rastra Bank
These aren’t minor adjustments. Before this ordinance, foreign investment in Nepal’s tech sector was restricted enough to discourage most serious international players. Opening the door to 100% FDI puts Nepal in direct competition with other South Asian countries for tech investment — a competition it couldn’t even enter before January 2025.
The UNDP’s ‘Next Great Divergence Report’ flagged exactly this kind of moment, noting that countries that harness digital transformation and education reform will move ahead, while those that don’t will fall further behind. Digital governance expert Niraj Bhusal put it more directly in a post on X: “Nepal’s opportunity isn’t low-wage work, it’s AI-enabled services and becoming part of the global AI value chain.”
2. Nepal-India Tech Forum 2026 Signals a Bilateral Digital Push
On February 27, 2026, the PHD Chamber of Commerce and Industry (PHDCCI) hosted the Nepal-India Tech Forum 2026 in New Delhi — the first event of its kind focused specifically on tech cooperation between the two countries. Nepal’s Ambassador to India, Dr. Shankar Prasad Sharma, used the platform to directly call on Indian IT companies to explore investment in Nepal.
A few concrete details came out of the forum that are worth tracking.
UPI-Nepal integration has already processed more than 1 million transactions since it went into operation in 2024, with peer-to-peer remittances about to launch. Given that remittances are a massive portion of the GDP of Nepal, digitizing that flow via UPI infrastructure could be truly transformative for household-level economics across the country.
Infosys already works in the banking sector in Nepal, and the forum identified cloud computing, FinTech, cybersecurity, and AI as the next areas of collaboration. For Nepal, the idea of having an Indian IT major already operating in the country is a proof-of-concept that other companies can follow.
Nepal is positioning itself for data centers that are energy-efficient. Shekhar Golchha, the former president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) made the case during the forum that Nepal is on track to become power surplus, thanks to the development of hydropower. His argument – cheap, clean electricity plus an expanding IT workforce equals a natural advantage to host data infrastructure. “Nepal is well-positioned to become a serious digital economy,” Golchha said, “not just a consumer of technology, but a creator and host of technology.”
Whether India’s tech industry takes that pitch seriously enough to move real capital into Nepal is the open question. But the fact that this conversation is happening at a formal bilateral level, with government officials and industry leaders from both countries in the room, is a shift from where things stood even two years ago.
3. National AI Policy and the IT Decade Vision
Nepal released its National AI Policy in 2025 alongside what the government is calling an “IT Decade Vision” — essentially a long-term planning framework for where the country wants its tech sector to be by the mid-2030s.
The operational framework underneath is called FASG:
- Foundation — digital public infrastructure, including data centers, payment systems, and citizen service platforms
- Access — expanding internet connectivity and closing the urban-rural digital gap
- Skills — ICT education reform, workforce development, and talent retention
- Growth — creating conditions for private sector expansion, foreign investment, and export growth
The most concrete commitment so far is the plan to establish AI Excellence Centers in each of Nepal’s four provinces. The policy work is in place on paper — the question is implementation, which is where Nepal has historically struggled with ambitious government plans.
There are some supporting indicators, though. The World Bank estimates Nepal’s real GDP growth to be 5.1% in the year 2025. The macroeconomic basics that Golchha mentioned at the tech forum – foreign reserves for almost 20 months of imports, inflation at 3-4%, interest rates at as low as 5.2%, stable currency – point to the fact that the economic base is more than one might think.
The AI policy also coincides with the January 2025 IT/ICT Ordinance FDI reforms, meaning that foreign AI and tech companies now have a legal pathway to invest in Nepal that didn’t previously exist. Combined with the hydropower surplus positioning for data centers, the India partnership infrastructure through UPI integration, there’s an argument that Nepal is putting the pieces together for a tech economy faster than it’s getting credit for.
The mismatch between policy and implementation is real, and no one in the tech community in Nepal pretends otherwise. But the direction is clear, and the regulatory and investment frameworks being put into place in the late 2025-early 2026 period are the most substantial that the country’s tech sector has ever seen.
References
- “Nepal’s IT exports near $1 billion. Can the momentum be sustained?” — Kathmandu Post, February 25, 2026 – https://kathmandupost.com/national/2026/02/25/nepal-s-it-exports-near-1-billion-can-the-momentum-be-sustained
- “Nepal-India Tech Forum 2026 promotes regional tech hub vision” — B360 Nepal, 2026 – https://www.b360nepal.com/detail/27838
- “Nepal-India Tech Forum 2026 held in New Delhi” — Rising Nepal Daily, February 28, 2026 – https://risingnepaldaily.com/news/76316
- “Nepal-India Tech Forum 2026 held in New Delhi to strengthen bilateral cooperation” — Spotlight Nepal, March 1, 2026 – https://www.spotlightnepal.com/2026/03/01/nepal-india-tech-forum-2026-was-held-new-delhi-strengthen-bilateral-cooperation-digital-innovation-infrastructure-and-investment/
- “Nepal Information and Communications Technology” — US International Trade Administration (Trade.gov) – https://www.trade.gov/market-intelligence/nepal-information-and-communications-technology
- “Nepal’s Growth Trajectory and Digital Future” — CEO Insights Asia – https://www.ceoinsightsasia.com/editorial/nepal-s-growth-trajectory-and-digital-future-nwid-13861.html
