Speaking at the Fourth AIDIA Distinguished Lecture Series in Kathmandu, Foreign Minister Shisir Khanal said Nepal’s foreign policy must evolve from traditional diplomacy into an active instrument of economic transformation. He argued that global trade tensions, geopolitical rivalry, fragmented supply chains and climate shocks require Nepal to pursue a more assertive and commercially focused foreign policy. Khanal also linked good governance, transparency and institutional credibility to Nepal’s ability to attract investment and sustain economic growth.
Khanal said the government is targeting a $100 billion economy within the next decade, with growth driven by infrastructure, technology, clean energy and private enterprise. He highlighted plans to strengthen cross-border transport corridors, railways and expressways, expand hydropower capacity to 28,500 MW by 2035, develop green hydrogen, promote high-value agricultural exports and use aviation to overcome landlocked constraints. He also pointed to Nepal’s growing digital sector, saying IT service exports have approached $1 billion and that the government is establishing a sovereign AI compute centre while offering tax incentives for IT exports and sweat equity.
The foreign minister also proposed a new “sovereign capital architecture” aimed at reducing Nepal’s dependence on traditional aid. He said the government is exploring mechanisms such as future-flow securitization of remittance corridors, partnerships with sovereign wealth funds in countries such as Qatar and Kuwait, and commercial investment in hydropower, data campuses and special economic zones. He further emphasized the role of the Nepali diaspora as a source of capital, technology and expertise, citing plans for a Diaspora Knowledge Network, foreign-currency IPOs and tax agreements to facilitate investment.
Climate diplomacy formed another major pillar of the address. Referring to the August disaster as a “Himalayan Tsunami,” Khanal said Nepal should seek grant-based loss-and-damage finance, debt-for-climate swaps, carbon-market opportunities and green technology transfers, rather than relying primarily on debt for climate recovery. He concluded that Nepal’s diplomatic missions should operate as commercial intelligence and investment hubs under a unified “Team Nepal” approach, integrating economic priorities, private-sector networks and Nepal’s cultural soft power into foreign policy.
