Why “Made in Nepal” has not yet delivered lower prices, and what policy must change
Anup Khatri Chettri Co-founder, Gayatri Interdisciplinary Research Institute (GIRI) Co-founder, Catalyst Club (Think Tank) www.girinstitute.org | www.catalystxclub.com September 2026
Nepal has achieved something significant. For the first time, a domestically designed and manufactured electric scooter, the Yatri P2, is emerging from a factory in Gajuri, Dhading. The chassis is fabricated in Nepal. Engineering, software, testing and system integration are carried out by Nepali teams. Finance Minister Dr Swarnim Wagle visited the facility and described the effort as a historic achievement. Yet when the prices were announced, the public reaction was subdued.
The Yatri P2 starts at Rs 3,29,900 for the 3.0 kWh version, rises to Rs 3,99,900 for the 3.7 kWh version, and reaches Rs 4,99,900 for the 5.2 kWh pack. An optional 1.8 kWh range extender costs an additional Rs 90,600. Fully configured models can therefore cross Rs 5–6 lakh. These figures sit close to, and in several cases above, established imported models such as the Ather 450X. The earlier Yatri Project One motorcycle already occupied a premium price bracket. The P2 was expected to bring a genuine “Made in Nepal” product into the mass market. Instead, it remains expensive. The central question is straightforward: why does a locally produced scooter still cost like an imported one?
The structural reasons
Several hard facts explain the gap. Critical high-value components, motors, controllers, advanced battery cells and vehicle control units, continue to be imported, largely from China. Design and final assembly occur in Nepal, yet the underlying cost structure remains heavily dependent on foreign supply chains. Production volume is still modest, with initial capacity targeted at roughly 8,000 to 10,000 units a year. Without scale, the usual economies of manufacturing do not appear. Building a service network, providing warranties and managing distribution across a thin market add further cost. Most importantly, the current tax and incentive framework has not yet created a decisive cost advantage for progressive localisation.
What Nepal has already implemented
The government has taken real steps. In the Fiscal Year 2083/84 budget, effective from 29 May 2026, the earlier motor-power (kilowatt) based tax system was replaced by a flat 20 percent customs duty on CIF value together with a progressive Clean Infrastructure Investment Fee. The fee ranges from 2.5 percent for vehicles with CIF value up to Rs 20 lakh to as high as 110–130 percent for those above Rs 50 lakh. A 5 percent road development fee and 13 percent VAT continue to apply. Revenue from the Clean Infrastructure Investment Fee is earmarked for charging infrastructure, battery management and domestic EV assembly support. Vehicles produced or assembled inside Nepal pay this fee at the registration stage on the basis of production cost rather than at the customs point, a deliberate attempt to give local makers a fairer starting position.
Additional incentives exist. Companies establishing EV assembly plants or battery manufacturing units are eligible for a five-year income tax holiday under the Industrial Enterprise Act. Industries that manufacture or assemble EV charging machines receive full VAT exemption on imported inputs (with Department of Industry recommendation) and only 1 percent customs duty on machinery and related materials. Special duty concessions apply to parts used by registered electric-rickshaw manufacturers. The National Transport Policy 2083 places electric public transport, charging hubs and green corridors at the centre of future mobility planning. NationallyDetermined Contribution targets aim for 90–95 percent of private vehicle sales to be electric by 2030.
Where policy still falls short
Despite these measures, several critical gaps remain. The tax design still treats most high-value components for electric scooters as ordinary imports. There is no strong, quantified duty reduction linked to measurable local value addition, for example a clear schedule of the form “X percent Nepali content yields Y percent duty cut.” As a result, even a genuine locally designed product carries a cost structure that is not decisively cheaper than a well-optimised import.
Competition remains thin. Only one serious player is currently scaling two-wheeler production. Without multiple competing assemblers, price pressure stays weak. Past experience with conventional vehicle assembly shows that duty concessions on completely knocked-down parts have often failed to translate into meaningfully lower consumer prices; the advantage was absorbed rather than passed on. The same risk exists for electric vehicles if incentives remain soft or poorly monitored.
Policy predictability is another concern. Frequent changes in tax methodology and fluctuations in loan-to-value rules for electric vehicles create uncertainty for investors considering multi-year manufacturing commitments.
In short, Nepal has protected short-term revenue and signalled long-term ambition, yet it has not yet engineered the aggressive, localisation-linked tax differentiation and competitive density required to make domestic electric scooters genuinely affordable at scale.
A practical way forward
Nepal does not need sudden revenue giveaways. It needs precise, graduated policy of the kind successfully applied in India through production-linked incentives and phased localisation, in Vietnam through aggressive assembly incentives, and in parts of Europe through temporary tax differentiation paired with infrastructure mandates.
Clear, time-bound duty reductions on kits and critical components should be tied to rising local content milestones covering chassis, wiring, seats, battery pack assembly and eventually motors. Stronger incentives should attract several players so that competition, not monopoly, drives prices down. Multi-year policy windows should give investors confidence. Revenue from the Clean Infrastructure Investment Fee should continue to support charging networks and skills development so that demand and supply grow together.
Electric scooters are not merely cleaner transport. In a hydropower-rich country they represent a strategic industrial opportunity: converting surplus electricity into mobility, reducing the petroleum import bill, creating manufacturing and service jobs, and building an exportable capability for the wider region.
The Yatri P2 demonstrates that Nepali engineers can design and build for Nepali conditions. What it now requires is a policy environment that rewards scale, competition and progressive localisation, so that the next generation of Made-in-Nepal scooters is not only a source of national pride but also genuinely cheaper and more competitive.
The tools already exist inside the current budget framework. The hydropower advantage is real. The missing ingredient is the sustained political and administrative will to treat electric two-wheelers as a long-term national industrial project rather than a convenient short-term revenue line. If Nepal gets this right, the electric scooter can become one of the country’s genuine economic success stories. If it does not, “Made in Nepal” will remain a proud label attached to products that ordinary citizens still struggle to afford.
The author is Co-founder of the Gayatri Interdisciplinary Research Institute (GIRI) and Co-founder of Catalyst Club, a policy think tank. Views expressed are personal.
