Nepal began implementing its Domestic Product Directive for Public Institutions in 2014 in order to promote local production while decreasing reliance on imported goods, however one decade later there has been little implementation of this policy.
The Domestic Product Directive required government offices to give first preference to locally manufactured items when they were available and only allowed imported items to be procured when there was no equivalent locally produced item. All products must also be certified to the Nepal Standards and registered with the appropriate authorities. Even so, public institutions are still mainly procuring foreign products and using them for everyday business.
Although the government updated the Domestic Product Directive in 2024, overall compliance with the directive has not improved. According to private sector representatives, weak enforcement and a lack of accountability have kept the directives from translating into practice. “It has been almost two decades since we started demanding implementation,” said Umesh Prasad Singh, president of the Federation of Nepalese Cottage and Small Industries.
Business leaders say the policy could have provided critical support during the Covid-19 pandemic and the economic slowdown that followed. The directives allow public institutions to purchase domestic goods even if they are up to 15 percent more expensive, a provision designed to help local producers compete with imports.
A key requirement of the revised directives is the creation of an online platform, ‘Swadeshi Utpadan’, to catalogue certified domestic products. Officials acknowledge that delays in developing the portal, along with budget constraints, have slowed implementation.
The Ministry of Industry, Commerce and Supplies says it has raised the issue repeatedly with procurement authorities and is considering amendments to address concerns raised by domestic producers. Until monitoring mechanisms and digital systems are put in place, however, the policy remains largely symbolic.