What is the important industry in Nepal



Nepal is an agricultural state that is largely characterized by subsistence farming. Agriculture employs 69% of the workforce and contributes 32% to the gross domestic product.

A rapidly growing population with simultaneously decreasing soil productivity leads to food shortages. While Nepal was still exporting food in the 1980s, it can currently only secure the food supply for the population through steadily increasing imports. An expansion of the agricultural land is difficult due to the topographical nature of the country.

Of the three very different agricultural zones, the Terai region is the most important with around two thirds of all agricultural areas in Nepal. Rice, corn, wheat, millet, soy, barley, jute and legumes are grown here. The situation is far less favorable in the hilly regions, where only a third of the agricultural land is available, but almost half of the Nepalese live. The most important crops are food grains, areas unsuitable for arable farming are used for livestock farming. Agriculture in the mountain regions is mainly based on cattle breeding (sheep, goats, yaks) and arable farming (growing potatoes, buckwheat, barley).

Agricultural production often does not bring in enough to cover the living costs of farming families. The rice harvests in particular are subject to fluctuations. The animal populations are increasing steadily, but the associated overgrazing damages the very limited land area. The high food prices, bad harvests and natural disasters exacerbate the already extremely tense situation of many families.


The restricted domestic market, the low purchasing power of the population, the strong Indian competition, the lack of the necessary infrastructure, the inadequate supply of electricity and the lack of access to the sea hinder the development of the industrial sector in Nepal.

The country's underdeveloped industry is concentrated in the Terai. Most of the businesses are part of the small and house industries. They are used to process agricultural and forestry products, which provide 80% of the raw materials for the processing industry. The most important branches of industry are the food and beverage industry, the textile and carpet industry, the building materials industry, the leather processing industry and the plastics industry.

The mineral resources are believed to be in the inaccessible regions of the Himalayas. Mica, limestone, brown and hard coal are already being mined.

Energy sector

Nepal has neither oil nor natural gas deposits, nor any significant deposits of other important raw materials. However, there are great hopes for the energy sector because of the hydropower potential estimated at up to 83,000 MW. Of this estimated high potential, only 8% are used to generate electricity today. The largest hydropower plant in the country, Kali Gandaki A (144 MW), started producing electricity in 2002. The expansion of the numerous smaller hydropower plants, which, once completed, are expected to generate a combined output of over 2,300 MW, is making slow progress. The total capacity of the power plants in Nepal is currently around 3,342 MW; the demand increases by around 50 MW annually. Only 84% of the population are supplied with electricity. As an energy source, wood covers 7% of the energy requirement.

The Nepal Electricity Authority has responded to the steadily increasing demand for electricity with a project to increase electricity production and security of supply: a tender for electricity supply contracts for operators of new solar parks has been launched. The prerequisite is that the systems have an output of more than one megawatt. The maximum output per project must not exceed five megawatts.