Nepal sees India as pivotal to its economic transformation, with hydropower, tourism, youthful labour, and tighter supply-chain linkages forming the pillars of a new growth vision. Ambassador Shankar Sharma, Nepal’s envoy to India, outlined a roadmap that places institutional reform, capital mobilisation, and regional integration at the heart of the country’s development ambitions.

Highlighting the urgency of translating potential into tangible growth, Sharma said Nepal must now act decisively to harness its demographic dividend. Nearly 29 per cent of Nepal’s population is between 15 and 29 years of age, “slightly higher than even in India,” he added, yet much of this workforce continues to migrate abroad for employment. “This 29 per cent workforce is a great advantage. But we have not been able to take that advantage in the country,” he said, calling for policies focused on skill development, job creation, and entrepreneurship to convert this youth bulge into an engine of growth.

Hydropower emerged as the centrepiece of Nepal’s immediate economic agenda. With an estimated potential of 83,000 MW, the country already exports more than 1,300 MW of electricity to India and aims to raise that to 10,000 MW within a decade. Sharma spoke of transmission corridors “in the pipeline” and positioned energy trade as a cornerstone of a future South Asian power grid connecting Nepal, India, Bangladesh and Bhutan, potentially extending to Sri Lanka and Southeast Asia.

Sharma also said the shared benefits of water-resource management. He said that roughly half of the Ganga’s summer flow and about three-quarters of its lean-season flow originate in Nepal, a natural advantage that could underpin joint storage projects for flood control, irrigation and power generation. He suggested that such projects could double as tourist destinations, citing examples from abroad where reservoirs contribute to both economic and environmental sustainability.

Tourism, too, features prominently in Nepal’s growth blueprint. Sharma urged a shift from ad hoc services to planned, high-value tourism development, pointing to religious and cultural destinations like Lumbini, Janakpur and Pashupatinath as low-hanging opportunities. He proposed linking Nepal’s mountain, heritage and safari circuits with India’s expanding domestic tourism market, alongside promoting hill-station and eco-tourism ventures and niche offerings such as wedding destinations for Indian tourists.

On trade and manufacturing, Sharma advocated greater integration with Indian and Chinese value chains. He proposed an “intra-industry” model where intermediate goods and components move across borders before final assembly, enabling Nepal to complement rather than compete with its larger neighbours. He cited Nepal’s preferential trade agreements with India and low tariff regime as potential attractors for investment, provided institutional efficiency and business incentives improve.

However, Sharma did not shy away from acknowledging the structural bottlenecks holding Nepal back. Weak governance, political instability, and an oversized bureaucracy, he said, have constrained growth. Nepal’s foreign direct investment remains at a meagre 0.2 per cent of GDP, far below the South Asian average. “Capital is also very important for the development of the country,” he noted, urging regulatory reforms to make the investment climate more predictable and transparent.

The envoy also emphasised the need to close a 45 per cent skills gap between the labour market’s supply and demand through vocational training and digital education. He called for “smart institutions” that leverage technology to streamline governance and enable private-sector employment. Returnee migrants and remittances, he added, offer fertile ground for entrepreneurship, particularly in sectors such as herbal agriculture, medicinal plants, and information technology, which already export talent and earn foreign exchange.

Sharma’s overarching message was one of conditional optimism. Nepal’s path to prosperity, he said, lies in marrying ambition with institutional strength, mobilising capital, and deepening ties with India. If realised, this could transform bilateral relations from an aid- and remittance-driven model to one rooted in trade, investment, and shared growth. But the window of opportunity, he warned, is finite and Nepal must act swiftly to turn potential into prosperity.

Businessworld