Budget reforms will not bring immediate economic transformation: NICCI

KATHMANDU: Nepal-India Chamber of Commerce and Industry (NICCI) on Sunday said the budget for the upcoming fiscal year appears relatively balanced and combines new initiatives with the continuation of existing programmes.

The government’s annual budget for fiscal year 2026/27, presented on Friday, includes several reform-oriented measures but stops short of offering a blueprint for rapid economic transformation, NICCI said.

The budget’s total outlay is Rs 2.124.34 trillion. Proposed financing includes Rs 1.405 trillion from revenue collection, with the remaining Rs 657.29 billion to be met through grants and public borrowing, of which Rs 410 billion is planned as domestic borrowing and Rs 247 billion as foreign borrowing.

NICCI said the budget appears relatively balanced and combines new initiatives with the continuation of existing programmes. The chamber welcomed measures aimed at easing business operations, improving industrial competitiveness and facilitating investment.

On trade and tariffs, NICCI highlighted plans to keep customs duties on imported raw materials at least one level lower than on finished goods, reduce customs duties on raw materials for 243 types of goods, and remove excise duties on 360 products. The customs tariff structure will be simplified, with tariff slabs reduced from 11 to 7.

On investment and financial rules, NICCI pointed to proposals to simplify arrangements for Nepali citizens to invest abroad and an amendment to the Foreign Investment and Technology Transfer Act that will replace prior Nepal Rastra Bank (NRB) approval for repatriation of investment with a notification requirement. The budget also proposes streamlined procedures for payment of service fees, royalties and technology-transfer related remittances.

NICCI drew attention to digital and technology initiatives, including plans for Nepal’s first computer/data centre in Syuchatar and special initiatives aimed at preparing the country for the adoption of artificial intelligence. The chamber welcomed concessional loans and incentive programmes for women entrepreneurs and the government’s commitment to involve the private sector in the operation and promotion of Gautam Buddha and Pokhara international airports.

The budget includes measures to promote tourism and health-wellness services, with preparations under way for Visit Nepal Year 2085 and Nepal Arogya Year 2027. NICCI also noted provisions intended to strengthen market integrity, including a stated policy of zero tolerance towards cornering, market manipulation and artificial control in the stock market.

On taxation and capital mobilisation, NICCI highlighted revisions that include a 1% tax rate on income up to Rs 1 million while maintaining a maximum tax rate of 28%. The chamber welcomed legal changes to ease Non-Resident Nepali participation in the secondary securities market, clearer rules on profit repatriation and capital gains tax, and the announcement of diaspora bonds to attract investment from Nepalis living abroad.

NICCI also pointed to arrangements enabling the private sector to trade electricity in international markets and the planned implementation of an 'Investment Express' automatic route within three months, under which projects approved by the Investment Board would not require additional approvals from other agencies.

However, while calling the measures generally positive and reform-oriented, NICCI said the budget alone is unlikely to bring immediate, broad economic change and urged timely and effective implementation to ensure the announced measures yield tangible benefits for industry and investment.

The chamber concluded by reaffirming its willingness to work with the Government of Nepal and relevant stakeholders to strengthen trade, investment and industrial cooperation between Nepal and India.