Nepal is scheduled to lose its Least Developed Country (LDC) status on November 24, but has sought a three-year deferral from the UN, citing delays in transition. While it is likely to receive the deferral, given Nepal’s high credibility in the comity of nations, the deadline will come again. In 2024, it adopted the Smooth Transition Strategy (STS) to ensure sustainable graduation from LDC status by 2030, while recognising that remittances currently support consumption, reserves and imports, but have not yet engendered domestic investment or a surge in exports.

The appropriate move to further the STS could be a Nepal-India two-hand strategy: Economics and technology. Recent bilateral engagements appear to have eased aberrations in relations. Now is the most opportune time to jointly strive to move Nepal out of its low-investment, remittance-led growth, onto a higher, sustainable economic paradigm.

LDC status brought preferential tariffs, market access and concessional financing. Withdrawal would affect labour-intensive, high-growth export sectors such as garments, synthetic textiles and carpets. The WTO expects a ~9 per cent increase in tariffs, while the UN’s International Trade........

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