Why industrial federalism is necessary

Without a stronger industry, domestic production and empowered provinces, prosperity will remain elusive.

Nepal frequently speaks of industrialisation, entrepreneurship, self-reliance, import substitution and economic transformation, yet public policy and public spending do not reflect those ambitions. The long-term economic evidence is deeply concerning. The industrial sector’s contribution to Gross Domestic Product (GDP) has steadily declined over the past decade. In FY 2015-16, the broader industrial sector accounted for 14.1 percent of GDP; by FY 2024-25, that figure had fallen to 12.8 percent. The manufacturing sub-sector presents an even more alarming picture, shrinking from nearly 10 percent to below 6 percent of GDP in three decades. They signal structural economic weakness, declining productive capacity, reduced industrial competitiveness and lost employment opportunities.