In the last decade, both Nepal and India have taken significant initiatives to expand their digital infrastructure and platforms. Their technological relationship has thus reached a critical juncture- attaining better cross-border connectivity, strengthening the ICT sector, and improving overall bilateral ties. Despite this progress, the Nepal-India tech ecosystem remains underutilized compared to the scope of its potential. Although the opportunities are huge, the collaboration efforts and leveraging them into effect are still ongoing.
India’s ICT sector has been developing rapidly, accompanied by solid policy frameworks and increased global competitiveness. If there was a comparison to be made, it would reveal exactly why there is an uneven pace for Nepal’s progress as well. Nepal is still struggling to surmount basic challenges: minimal availability of domestic ICT infrastructure and investment, shortage of manpower, and delays and uncertainties with policymaking. Consequently, Nepal’s pace lags considerably behind India’s speed of innovation, making the cross-border synergy less seamless. These restrictions continue to affect Nepal’s ability to take full possession of regional tech growth. These include inconsistency with digital regulations, inadequate investment incentives, and logistical challenges in cross-border data exchange. Although Nepal’s private sector is promising, it often faces inconsistencies and constraints in scaling up technology-driven services. Many startups do not have access to mentorship, markets, and funding. Collectively, this tends to reduce the country’s capacity to participate meaningfully in broader South Asian tech value chains.
According to the World Bank, Nepal’s ICT services sector accounted for 1.7% of Nepal’s nominal GDP in 2022, which is larger than in most South Asian countries except India. Moreover, this sector contributed an average of 0.3% points to real GDP growth annually between 2012 and 2024. According to the same source, Nepal’s digitally delivered service exports grew at a compound annual rate of 11.6% from 2005 to 2023, and by 2023 these exports accounted for over 50% of Nepal’s total service exports.
The Nepali government also has a key role to play in attracting investments from India’s booming tech sector to fast-track cross-border collaboration. The Indian Embassy has been holding various programs in Nepal, like their event on AI for Inclusive Growth, to highlight opportunities in Nepal and attract Indian participation and capital. Panel discussions in this event circled around leveraging AI for Nepal’s growth, and conversations like these are crucial to have to accomplish reciprocal progress. Not only do these engagements build awareness around technology, they also help outline regulatory gaps to welcome high-value investments. This puts the spotlight on Nepal’s growing digital economy, making it a more visible player in the tech landscape beyond South Asia. Over time, sustained engagement with India’s tech ecosystem can position Nepal as a dynamic hub for emerging technologies in the region.
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It is important to recognize that efforts like these are holistic: they brush upon a lot more than technology and artificial intelligence. Agro-industries, governance, cultural tourism, healthcare, and businesses can all profit from collaborative strategies like these. For instance, Nepal’s agricultural sector could benefit from India’s precision farming, drone-based crop monitoring, and cold-chain logistics. This reduces post-harvest losses and increases rural incomes. In governance, a digital platform can be laid out jointly, like shared e-governance modules, cybersecurity frameworks, or cross-border digital payment systems (e.g. UPI and its partnership with Fonepay), thus modernizing public service delivery and accountability.
Cultural tourism also has great unexplored potential. Coordinated Buddhist and Ramayana tourism circuits, joint heritage restoration projects, and shared marketing campaigns using technology could attract millions of visitors from India and abroad. Health sectors can also be involved through telemedicine partnerships with Indian hospitals and AI-enabled diagnostic tools. Some of these are also means of expanding access to specialized care, especially in districts located far from the capital.
Businesses and startups similarly stand to gain from programs that link Nepali innovators with India’s major tech hubs like Bengaluru, Hyderabad, and Pune, providing mentorship and market integration opportunities. In terms of education sectors, Nepali students could be provided with opportunities to tap into India’s vast academic ecosystem through jointly designed research fellowships and digital learning platforms. This sort of cooperation may boost efficiency and drive more economic returns for the two countries.
To augment these efforts, the Government of Nepal can design and provide clearer, more consistent, and investment-friendly policies in order to decrease uncertainty for foreign investors and attract long-term clarity and commitments. Incentives such as tax breaks for technology startups, simplification of business registration, and specific digital innovation zones will make the market more tempting. Further investment in digital public infrastructure, in line with the frameworks of India’s Digital Public Framework (DPF), is essential.
Strengthening cybersecurity regulations can also be indicative of Nepal’s preparedness toward tech collaboration. This sort of proactive engagement is imperative to showcase Nepal as a favorable environment for technology-driven investment and to increase Nepal’s effective participation in regional technology growth.
There are pre-existing dialogues that are facilitated specifically for bilateral trade, digital investments, and industry linkages between these two countries, and there is potential for these gaps to be efficiently filled by institutions like the Nepal-India Chamber of Commerce and Industry (NICCI) as well as the National Association of Software and Service Companies (NASSCOM). As the ICT industry body for India, NASSCOM spearheads innovation, skill development, and global outreach of India’s technology sector. Similarly, as a bi-national chamber, NICCI works with government and non-government bodies in Nepal and India to link entrepreneurs and other major stakeholders in both countries. Such linkages enable businesses to share information faster, ensure wider access to cloud services, and participate in collaborative initiatives regarding cybersecurity. This could potentially develop joint solutions in emerging areas like AI, fintech, and e-governance.
Beyond policy and infrastructure, a study by IIDS ignited the conversation around deeper structural issues: it found that about 70% of respondents said there is no proper policy framework for developing the IT sector, highlighting gaps in intellectual property protection, data privacy, and cross-border data flow regulations. The same study reported that 74.2% of company directors questioned the quality of education in Nepal, pointing directly to the manpower shortage and the need for better training and education to strengthen the talent pool.
Nepal has much to adopt from India’s experience in scaling digital public infrastructure, and India can draw from Nepal’s growing pool of tech-ready talent. Overcoming existing barriers thus requires both nations to focus on integrating and lobbying for digital policies, building infrastructure, and promoting innovation within the private sector. Greater regulatory cooperation and increased investment incentives will be among the key ways to develop a resilient and interlinked regional technology ecosystem and a bigger job market in both nations. A strong tech alliance will go on to catalyze innovation and economic growth, and subsequently create deeper bilateral ties between Nepal and India
The author is a research assistant at the Asian Institution of Diplomacy and International Affairs (AIDIA). She recently graduated from The University of Tampa with a degree in Political Science, International Relations and Sociology.
