The Indian government's encouragement of the information and technology sector through the budget could have both positive and negative impacts on Nepal.
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Nepal-India Chamber of Commerce and Industry (NICCI) President Sunil KC has said that despite the separate relations with India, Nepal has been allocated a low budget in the budget for the fiscal year 2026/27.
In an interaction organized by the Society of Economic Journalists of Nepal (SEJON) on Monday on the topic of ‘Indian Government’s Budget and the Benefits and Challenges Nepal Can Take’, KC also said that India has allocated a low budget. ‘India-Nepal relations are people-to-people, culture-to-culture, and world-class relations. In that regard, it seems that the budget allocated to Nepal is low,’ he said. ‘We will lobby to increase the budget in the coming days.’
The Indian government’s encouragement of the information and technology sector through the budget for the fiscal year 2026/27 may have both positive and negative effects on Nepal, the participants in the interaction said.
CA Sheshmani Dahal said that Nepal’s market may be challenged as India has emphasized safe harbor software development and study and research in information technology. India has announced tax exemptions until 2047 for foreign companies providing global cloud services through its data centers there through the budget. He said that by giving tax exemptions like this, Nepali startups will have the opportunity to use India's cheap cloud infrastructure along with the risk of skilled manpower fleeing from Nepal.
While Nepal is seeing opportunities in the IT sector, Dahal said that if India changes its policies and regulations at the same time, those coming to Nepal may also go to India. 'It is a competition to bring those who come to India to work in the IT sector to Nepal and those who come to Nepal to India,' he said, 'Since India has given many exemptions and facilities, now it is a question of whether those who come to Nepal will also go to India.' He said that great facilities have been provided in software development, information technology enabled services, research and development, etc.
Dahal believed that Nepal can benefit from sectors such as agriculture, tourism, cloud services due to the provisions in the Indian government's budget. He said that the development of technology in India's agriculture can facilitate the availability of cheap seeds and modern agricultural equipment in Nepal. In addition, due to the large subsidies and technology received by Indian farmers, there will be a risk that their products will be cheaper, which will prevent Nepali farmers from competing with Indian products in their own market, he said. Dahal said that India's policy of making the digital customs process completely digital and paperless within two years will reduce delays at the border and provide relief to both Nepali importers and exporters. KC said that Nepal's export industry will be more stable and expanded as the Indian government has set a target of seven percent growth in the gross domestic product in the budget. He said that the budget will have a positive impact on production, employment and export earnings in Nepal. KC said that India's increase in its public capital expenditure to 12.2 trillion will make Nepal-India trade easier, cheaper and more competitive by improving infrastructure and logistics. He also mentioned that both countries can benefit in sectors such as health, tourism and education.
‘India’s expansion and modernization are both opportunities and challenges for the country, we believe that the provisions in the budget will open doors of opportunity for the supply of goods produced in Nepal and human resources,’ he said.
KC also said that informal trade should be controlled by 90 percent. ‘Since there is an open border, informal trade is more in Nepal, the government should control it. Until that happens, domestic entrepreneurs cannot compete,’ KC said.
Dahal also said that production costs in the border market could increase as India has reduced subsidies on chemical fertilizers. ‘India has cut the amount allocated for chemical and fertilizer inputs, which means that production costs in border markets are increasing when they are coming from India to Nepal informally,’ he said. ‘There is a possibility that the cost of fertilizers could increase. It has not been announced yet, so it is not possible to say how much it will increase or decrease.’
