Weak intellectual property protection is one of the major factors hindering Nepal’s economic transformation. Although the government and political leaders have long prioritized foreign direct investment (FDI), investors still perceive investing in Nepal as involving conflicts with crony capitalists.
Nepal cannot afford a flawed intellectual property system if it hopes to attract FDI, which is vital for knowledge transfer, job creation, and sustainable development. While existing laws offer protection in theory, they are largely ineffective in practice due to outdated laws and lengthy administrative delays. The country urgently needs reform, including a digital trademark system that meets global standards to attract more FDI.
The country’s already fragile FDI environment is facing renewed strain as trademark disputes involving multinational companies are escalating. Some of these cases have reached the highest courts in the country. Although Nepal is a member of the World Trade Organization (WTO) and a signatory to the Paris Convention for the Protection of Industrial Property, recurring trademark conflicts show that the country is drifting from international norms.
In a notable move, the Department of Industry, acting on complaints from foreign companies, has issued notices to local firms involved in such disputes, asking them to furnish clarification with supporting evidence within seven days. This signals the state’s willingness to protect foreign entities. While there still are gaps in the system, the government’s recent engagement is a step in the right direction.
Many multinational companies face legal battles in Nepal because local entities have registered identical or similar trademarks. Instead of focusing on their core business by expanding operations and creating jobs, they are forced to pursue legal remedies. Although these concerns have been repeatedly raised across various industry platforms, the slow resolution has discouraged investors.
The problem is evident in disputes involving global brands such as Adidas, Nike, KFC, Casio, and Coca-Cola. These cases highlight how crony capitalism and political interference can undermine innovation. Stronger due diligence by the Department of Industry before approving trademark registrations can prevent many of these conflicts. Officials must ensure that renowned international trademarks are protected from opportunistic local registration.
Nepal risks losing credible investors if these issues persist. Over the past decade, such challenges have discouraged many reputable multinationals from entering Nepal. These investors bring not only capital but also contribute to employment, innovation, and government revenue. However, instead of a welcoming environment, they encounter a system mired in legal uncertainty.
Experts argue that Nepal could unlock significant FDI potential by addressing these concerns in a timely and transparent manner. Protecting genuine multinational brands from avoidable legal hurdles will be crucial to building long-term investor confidence. At the same time, many Nepali industrialists are shifting from manufacturing to trade, while foreign investment shows little sign of growth. Meanwhile, politically connected actors appear more focused on exploiting trademark loopholes than on fostering innovation.
The data reflects this struggle. According to the UNCTAD World Investment Report 2025, FDI has decreased by nearly 70% over the past six years. In 2024 alone, inflows to landlocked countries, including Nepal, fell by 10%.
As a member of the WTO, Nepal must uphold its commitments under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. It must be sincere about protecting intellectual property.
Nepal’s path to economic progress depends on these reforms. By streamlining registration and curbing opportunistic practices, the government can promote genuine innovation. As the country works towards the Sustainable Development Goals, it must transform its intellectual property framework from a barrier into an enabler.
A pragmatic question also arises: why are successful Indian businesses just across the Tarai border not more deeply engaged in Nepal? This is a missed opportunity. The Prime Minister and the provincial chief ministers must address these legal barriers. Until then, unlocking Nepal’s full economic potential will remain an uphill task.
