KATHMANDU: The Confederation of Nepalese Industries has welcomed the government’s budget for fiscal year 2026/27, describing it as a positive and industry-oriented plan that could provide a new direction to Nepal’s economy if implemented effectively.
In a statement issued on Tuesday, the Confederation said the budget places industrial promotion at the center of economic policy and contains measures that could boost domestic production while attracting foreign investment.
According to the CNI, the government’s decision to reduce customs duties on 273 items to maintain a one-tier difference between raw materials and finished goods for manufacturing industries will enhance the competitiveness of domestic products and accelerate industrialization.
The organization also expressed confidence that the removal of excise duties on 360 items would help lower production costs for businesses.
The Confederation welcomed the budget’s emphasis on the sustainable use of forests and natural resources, green industrialization, employment generation, and import substitution. It also praised the proposal allowing the private sector to develop and operate industrial zones such as Motipur and Mayurdhap, saying it would encourage greater private-sector participation.
CNI further highlighted provisions aimed at improving industrial competitiveness, including a review of electricity demand charges, electricity tariff concessions for industries, and allowing industrial structures built on land leased within industrial estates and Special Economic Zones (SEZs) to be used as collateral for banking purposes.
The organization described the introduction of an automatic Value Added Tax (VAT) refund system as a practical reform. It also welcomed the provision allowing taxpayers to settle disputed tax cases by paying an additional one percent, with exemptions from interest and penalties.
“Many entrepreneurs and investors have remained tied up in legal disputes for years. These measures will provide significant relief and allow them to focus on productive activities,” the statement said.
The Confederation also praised measures facilitating profit repatriation and royalty payments, arguing that such provisions would help attract foreign investors and strengthen Nepal’s investment-friendly environment.
It noted that increasing the personal income tax threshold to Rs 1 million and reducing the maximum tax rate by 10 percent would help enhance consumer purchasing power and stimulate demand across the economy.
Among other positive measures identified by the CNI are the development of employment-linked production zones, legal and policy reforms to promote investment, the formulation of a debt recovery law, and amendments to dozens of laws, regulations, and procedures related to investment promotion.
The organization also welcomed plans to streamline government agencies through mergers and closures, simplify approval procedures for projects endorsed by the Investment Board Nepal, and mobilize private investment through alternative financing instruments such as diaspora bonds, offshore bonds, clean energy bonds, and climate funds.
Additional provisions praised by the Confederation include loan guarantee mechanisms for small and medium-sized enterprises, business revival loans for industries operating below capacity, incentives for private-sector green urea production, corporate social responsibility legislation, and the establishment of a Nepal Enterprise Facility to support startups and SMEs.
The statement also welcomed policies promoting high-value tourism, wellness tourism branding, and the regulated extraction and supply of construction materials such as stone, gravel, and sand from environmentally suitable locations.
However, the Confederation said the budget had overlooked measures to strengthen quality standards and promote the import of high-quality goods.
It also recommended exempting productive industries from landholding limits, arguing that industrial projects should be allowed to acquire land as approved in their registered project plans without being subject to existing land ceiling provisions.
The CNI further suggested introducing a mechanism that would allow businesses to offset payments owed to the government against refunds or payments due from government agencies, saying such a system would benefit both the private sector and the state.
While broadly welcoming the budget, the Confederation stressed that its success would depend on implementation. It urged the government to ensure effective execution of the announced measures to achieve the targeted seven percent economic growth rate, promote investment, and revitalize the national economy.
Comment