Kathmandu, June 4: The Confederation of Nepalese Industries (CNI) has welcomed the budget for fiscal year 2026/27, describing it as a positive and reform-oriented plan focused on industrial promotion and economic revitalisation.
In a statement issued on Wednesday, CNI said effective implementation of the budget could provide a new direction to the economy by strengthening domestic production and attracting foreign investment.
The private sector body praised the government’s decision to reduce customs duties on 273 products while maintaining tariff differentials between finished goods and raw materials, saying the measure would enhance the competitiveness of domestic manufacturing industries. It also welcomed the removal of excise duties on 360 items, which is expected to lower production costs and support industrial growth.
According to CNI, the budget’s emphasis on the sustainable use of forest and natural resources, green industrialisation, employment generation and import substitution aligns with the needs of the industrial sector.
The federation also welcomed provisions allowing the private sector to develop and operate industrial estates, including Motipur and Mayurdhap, saying the move would encourage greater private sector participation in industrial infrastructure development.
Similarly, CNI praised the review of electricity demand charges, tariff concessions for productive industries, and a provision allowing industries to use structures built on leased land within industrial estates and special economic zones as collateral for bank financing. These measures, it said, would improve industrial competitiveness and ease access to credit.
Highlighting tax reforms as one of the budget’s strongest features, CNI said the introduction of an automatic value-added tax (VAT) refund mechanism and the provision allowing taxpayers to settle disputed tax cases by paying only one percent of the disputed amount without interest or penalties would provide significant relief to businesses and investors.
The organisation further welcomed provisions related to business succession and restructuring, including exemptions for certain involuntary ownership transfers from Section 57 of the Income Tax Act. Measures to facilitate profit repatriation and royalty payments were also described as positive steps towards attracting foreign direct investment.
CNI noted that raising the personal income tax threshold to Rs 1 million and reducing the maximum tax rate by 10 percentage points could boost consumer purchasing power and stimulate demand across the industrial, trade and service sectors.
It also appreciated the government’s commitment to legal and regulatory reforms, including plans to amend or replace dozens of laws and regulations aimed at improving the investment climate and public service delivery.
However, CNI said several important issues remain unaddressed, including stronger measures to promote quality standards and imports, exemptions from land ceiling provisions for productive industries, and mechanisms allowing businesses to offset government receivables and payables.
Despite these concerns, the federation said the budget provides a strong foundation for achieving the government’s target of 7 percent economic growth, stressing that its success will depend largely on effective implementation.
Meanwhile, the Chamber of Industries Morang also welcomed several reform-oriented measures announced in the budget while expressing concerns over tax policies and the neglect of key industrial infrastructure projects in the Morang-Sunsari industrial corridor.
In its preliminary review released on Wednesday, the chamber said the industrial sector had expected significant reforms from the first budget of the current government, particularly at a time when businesses are grappling with weak domestic demand, rising production costs and prolonged policy instability. It nonetheless praised the government’s efforts to simplify investment procedures, improve governance and reduce regulatory hurdles. #nepal
