Evolution of Business in Nepal

The History of Nepal is very old and respectful in different events and time but Nepal could not develop is business level parallel to other countries. Nepal is surrounded by two business point from ancient time. China is famous for business since the starting days of business similarly India is famous for traditional business. Still, the technique of most of the business in Nepal is traditional.

We can classify the evolution of business in Nepal as follows:

1. Evolution of Industry:
   • Pre-unification stage
   • Unification Stage
   • Pre-Five year plan stage
   • Five-year plan stage
2. Evolution of Commerce:
   • Pre-unification Stage
   • Unification Stage
   • Nepal-China Trade Treaties
   • Nepal-India Trade Treaties
   • Trade Diversification Stage

Evolution of Industry:

1. Pre-unification stage: there was lacking of organised industry before unification stage of Nepal. Before Prithvi Narayan Shah unified Nepal, there was some small scale of business running within a small state or within the nearer state. Some cities were specialised in some kind of production like Palpa was famous for Dhaka. Before unification handicraft industry was more popular in Nepal.
2. Unification Stage: The unification of various scattered regime contributed to the institutional development of the industry. The unification stage created more areas for business operation and as a result the development in industrial productivity also increases.
3. Pre-five years plan (Post unification stage – Rana’s Ruling Time): This is the age of modern industrialisation in Nepal. ‘Udhyog Parisad’ was established in 1935 AD for the development of industries and to produce goods under medium and large scale industry. In 1936, Just after the government enacted the first company act  1936, First Joint-stock company Janakpur Jut Mill was established. Government establish the very first financial institution Nepal Bank limited in 1937 with the motto to help industry and commerce of Nepal. Nepalese government established 63 industrial unite by investing Rs72 million during 15 years of time.
4. Five-year plan: After the formation of democratic government in 2007, the government focused on the development of Industry in Nepal. Nepalese government introduce 5 years plan in 2013 for the uniform development of Industry and Commerce. Between 2013-2047, government establish various industry and commerce in a different region. Nepal implemented the policy of open market in 2047 which create an environment for the private business (industry and commerce).

Evolution of Commerce: 

• Pre-unification stage: This was the beginning stage of commerce in Nepal. There were a certain number of cities which had trade relation outside of Kathmandu, Bhaktapur & Lalitpur. They had traditional trade relation with Tibet and Northern state of India. At that time, merchants performed their trading operation on a traditional hand made products like tools, ornaments, weapons and other locally made products.
• Unification Stage: This period was the beginning stage of institutional development of commercial activities. Essential commodities were exchanged throughout the nation without any disturbance. The unification of the kingdom provided more scope for expansion of trade relation with Tibet and Northern Part of India. Unification Stage was the golden era for small and cottage industry.
• Nepal China Trades Treaties: Nepal China had a really good relationship from the centuries. The merchants of both countries had traditional trade relations with each other. Here are some date of treaties:
  • 1775 – First Treaties: Nepalese merchants were authorised of doing the commercial transaction in Tibet.
  • 1856 – Second Treaties: Free Trade and Tax-immunity to Nepalese merchants in Tibet.
  • 1974 – First formal agreement for trade and Payment between China and Nepal.
  • 1981 – Agreement to strengthen economic and trade relations between two countries. etc.
• Nepal India Trade Treaties: Nepal and Indian territory had traditional trade relation from the civilisation time. However, Nepal India comes to sit for the first formal agreement of business between two countries only after 1923 with British Government of India. Treaties between Nepal & India are:
  •  1923 – First Trade Treaty – Nepal & British Government in India which helps to expand business between two countries.
  • 1950 – Second treaties for 10 years (Between Nepal and Democratic government of India)
  • 1960 – Transit Treaty for 10 years
  • 1971 – Treaties for Expansion and diversion of the mutual trade relationship between two countries
  • 1978 – the treaty of trade, the agreement of checking unauthorised trade and the treaty of transit.
  • 1991 –
    • agreement in cooperation in controlling unauthorised trade
    • trade and transit
  • 2002 – treaty sign to minimize imbalance trade.
• Trade Diversification Period: Government which was formed after the democratic movement has taken liberal and market-oriented economic policy. liberal policy of the government has contributed more to the development of productivity in private sectors. This minimises financial over-burden to the government because of the policy of privatisation of public enterprises.