Nepal’s Digital Crossroads: Innovation vs. Regulatory Control
Executive Summary
Nepal’s digital future stands at a precarious crossroads, defined by a profound and increasingly untenable policy incoherence. On one hand, the government has articulated an ambitious vision for economic transformation, encapsulated in the “Digital Nepal Framework” and the “IT Decade”, which aim to position the nation as a global information and communication technology (ICT) hub, create 1.5 million jobs, and generate over USD 22 billion in service exports. This forward-looking agenda seeks to harness the power of technology for inclusive growth, improved governance, and global competitiveness. On the other hand, this innovation imperative is being systematically undermined by a parallel and contradictory regulatory impulse toward centralized control, surveillance, and the suppression of online expression.
This report analyzes the critical friction between these two opposing forces. It uses the government’s attempts to regulate social media, culminating in the catastrophic 2025 ban and the subsequent “Gen Z Uprising,” as a central case study illustrating the severe socio-political and economic consequences of this policy paradox. The analysis reveals that Nepal’s regulatory approach is not an isolated phenomenon but rather a conscious emulation of the “digital authoritarian” models seen in regional powers like India and China, prioritizing state control over the principles of an open, rights-respecting internet.
A comparative analysis with the digital policy frameworks of India, the European Union (EU), and the United States (US) further illuminates the strategic path Nepal is choosing. While India provides a template for state-led digitalization paired with stringent intermediary controls, the EU offers a rights-based alternative centered on accountability and transparency, and the US represents a market-driven model historically grounded in broad platform immunity. Nepal’s current trajectory aligns closely with the Indian model, a choice that carries significant risks for its democratic fabric and economic aspirations.
The core finding of this report is that Nepal’s regulatory actions constitute a form of economic self-sabotage. The pursuit of an authoritarian digital governance model creates a high-risk environment that is fundamentally incompatible with the goals of the “IT Decade.” It deters the foreign investment, diaspora engagement, and global talent that are essential for building a thriving tech ecosystem. Furthermore, the state’s actions reveal a significant institutional capacity gap, where a lack of technical expertise within the public administration leads to the use of blunt instruments of control rather than nuanced, effective, and “smart” regulation.
To resolve this damaging contradiction, this report offers a set of strategic recommendations for the Government of Nepal, its technology industry, and its civil society partners. Key recommendations include the withdrawal of the draconian Social Media Bill, 2025, the establishment of an independent, multi-stakeholder Digital Commission to oversee policy, a shift towards a co-regulatory model based on international best practices, and sustained investment in nationwide digital literacy. Ultimately, Nepal must choose. The path of regulatory overreach offers the illusion of control but leads to conflict, isolation, and economic stagnation. Only a balanced approach that champions innovation while safeguarding fundamental digital rights can build the bridge between technology and public administration necessary to realize a prosperous and democratic digital future.
Section 1: The Dual Mandate of Digital Nepal
Nepal’s engagement with the digital age is characterized by a fundamental and deeply rooted paradox. The nation’s policymakers have publicly embraced a narrative of digital transformation as the primary engine for socio-economic development. Simultaneously, they have constructed a legal and regulatory apparatus that appears designed to control, and at times suppress, the very digital sphere they seek to cultivate. This dual mandate—to foster innovation while enforcing control—has created a volatile policy environment where ambitious national strategies collide with restrictive governance, setting the stage for a defining struggle over the nation’s future.
1.1 The Digital Lifeline
For a significant portion of Nepal’s population, digital platforms are not a luxury or a mere form of entertainment; they constitute a fundamental infrastructure for daily life. The integration of social media and digital communication tools into the fabric of Nepali society is extensive and multifaceted, serving as a lifeline for commerce, communication, information, and civic engagement. The sheer scale of this integration underscores the high stakes of any state intervention in the digital sphere.
As of 2025, data reveals a society deeply enmeshed in the digital world. Approximately 80% of all internet traffic in Nepal flows through social media platforms, indicating their central role in the country’s online experience. The user base for these platforms is vast, with 14.3 million active users on Facebook, 3.9 million on Instagram, and 2 million on LinkedIn. These are not passive users; for many, these platforms are indispensable tools. They are the marketplace for small entrepreneurs, the primary channel for the vital tourism industry to reach global audiences, and the main source of news and information for millions of citizens.
This dependence is not limited to the public. Ironically, the Nepali state itself has become reliant on the very platforms it seeks to control. Government agencies frequently use Facebook and X (formerly Twitter) for official announcements, public service information, and citizen outreach. This creates a glaring contradiction where the state apparatus leverages the reach and efficiency of global platforms for its own governance objectives while simultaneously working to enact laws that could force these platforms out of the country or fundamentally alter their operation. This reliance highlights a critical vulnerability and a lack of strategic foresight: the state’s regulatory actions threaten to sever a key channel of its own communication, demonstrating a disconnect between its administrative practices and its policy ambitions.
1.2 A Fork in the Road: The Innovation vs. Control Paradox
The central tension in Nepal’s digital policy is best understood as a fork in the road, with two divergent paths being pursued simultaneously. One path is paved with the language of progress, innovation, and economic ambition. The other is marked by a clear impulse toward state control, security, and regulatory restriction. This paradox is not a subtle nuance but a stark contradiction evident in the government’s flagship policies and its legislative agenda.
The innovation path is most clearly articulated in grand national strategies. The government’s declaration of 2024-2034 as the “IT Decade” is a bold statement of intent, envisioning a future where Nepal transforms into a regional ICT hub. This vision is supported by the “Digital Nepal Framework” (DNF), a comprehensive blueprint for leveraging technology to modernize the economy and improve public services. These initiatives speak to a desire to emulate global success stories, fostering a vibrant startup culture, attracting foreign investment, and creating high-value jobs for its young population.
However, running parallel to this optimistic vision is a darker, more restrictive legislative trend. The tabling of the Social Media Operation, Usage, and Regulation Bill, 2081, and the circulation of the draft Information Technology and Cybersecurity Bill, 2080, represent the path of control. These legal instruments are widely criticized by domestic and international rights groups for containing vague language, granting excessive power to the state, and posing a direct threat to fundamental rights of free speech and privacy. Rather than enabling the open and dynamic environment necessary for innovation to flourish, these bills seek to impose a rigid, top-down regulatory regime that prioritizes state authority over individual liberty and economic dynamism. This creates a policy landscape where the government’s right hand, responsible for economic development, is actively working against its left hand, which is drafting the laws that will govern the digital economy.
This policy incoherence may be rooted in a fundamental misunderstanding of the nation’s own digital landscape, a problem exacerbated by a significant “data divide” blind spot. Official metrics from the Nepal Telecommunications Authority (NTA) paint a picture of near-universal connectivity, with a reported 99.38% internet penetration rate. Such a figure would suggest a robust, mature digital infrastructure, justifying ambitious policies like the “IT Decade.” However, this statistic is deeply misleading. A more granular analysis from the Nepal Living Standard Survey (NLSS) reveals a starkly different reality: only 39.7% of households have internet access. The disparity is even more pronounced geographically, with 79.3% of households in the affluent Kathmandu Valley having access, compared to a mere 14% in the remote Karnali province.
The discrepancy likely arises from differing methodologies: the NTA’s figure probably reflects the number of active mobile SIM cards, while the NLSS measures more stable and meaningful household-level access. This is not merely a technicality; it is a critical policy insight. It demonstrates that for a vast majority of Nepalis, particularly in rural and impoverished areas, the “internet” is not a high-speed broadband connection but a precarious, mobile-first experience mediated almost entirely through social media applications.
Policymakers, potentially guided by the inflated NTA figure, may be crafting ambitious digital economy plans on the faulty assumption of a strong and equitable digital foundation. This blind spot also explains the devastating social impact of measures like a social media ban. Such a ban does not simply remove a source of entertainment; for a large segment of the population, it severs their primary, and often only, connection to the digital world, crippling communication, commerce, and access to information in a single stroke.
Section 2: The Innovation Imperative: Architecting a Digital Economy
In stark contrast to its restrictive regulatory posture, the Government of Nepal has invested significant political capital in crafting a compelling vision for a digitally-powered future. This vision is not merely aspirational; it is codified in a series of ambitious national frameworks, multi-year plans, and supportive policies aimed at fundamentally re-architecting the Nepali economy. These initiatives represent a clear recognition that the country’s future prosperity is inextricably linked to its ability to build a competitive and innovative digital ecosystem. However, a critical analysis of these plans reveals both their immense potential and the significant hurdles—many of them self-imposed—that stand in the way of their realization.
2.1 The Vision: The Digital Nepal Framework (DNF)
The cornerstone of Nepal’s digital ambitions is the Digital Nepal Framework (DNF), first adopted in 2019. The DNF is a comprehensive and wide-ranging national roadmap designed to guide the country’s transformation into a mature digital economy. It is conceptualized as a “1–8–80 model,” signifying one nation, eight priority sectors, and eighty distinct digital initiatives. This structure provides a clear and organized blueprint for a whole-of-government approach to digitalization.
The eight priority sectors identified in the framework are: Digital Foundation (covering infrastructure, broadband, cybersecurity, and e-governance), Agriculture, Health, Education, Energy, Tourism, Finance, and Urban Infrastructure. The selection of these sectors demonstrates an understanding that digital transformation must be cross-cutting, impacting everything from food security to public health and financial inclusion. The overarching mission is to leverage digital tools to accelerate socio-economic growth, align national development with the Sustainable Development Goals (SDGs), and transition Nepal from a labor-based to a knowledge-based economy.
The eighty initiatives outlined within this framework are specific and targeted. They include foundational projects like the expansion of nationwide fiber optic networks and the adoption of 5G technology, as well as sector-specific applications such as developing smart classrooms and online learning platforms in education, implementing telemedicine and electronic health records in healthcare, creating digital payment gateways in finance, and deploying smart grids and digital metering in the energy sector. The DNF, in its design, represents a sophisticated and well-considered strategy for national development.
2.2 The Engine: The “IT Decade”
If the DNF provides the architectural blueprint, the “IT Decade” is intended to be the powerful engine that drives its construction. Announced as a flagship government program, this ten-year plan aims to operationalize the DNF’s vision by setting aggressive, quantifiable targets for the growth of the ICT sector.
The goals of the IT Decade are exceptionally ambitious. The government aims to increase ICT service exports to Rs 3 trillion (approximately USD 22.5 billion) over the ten-year period. This represents a monumental leap from the country’s current export levels and signals an intent to compete on the global stage. To support this growth, the plan targets the creation of 500,000 direct and 1,000,000 indirect jobs within the IT sector, providing a crucial pathway to employment for Nepal’s young and growing population.
To fuel this engine, the government has allocated significant, though still modest, financial resources. The budget for the fiscal year 2081/82 (2024/25) earmarked Rs 7.25 billion for ICT projects. These funds are directed towards concrete initiatives such as the establishment of dedicated IT parks in the Kathmandu Valley and other provinces, the promotion and preferential use of locally developed software in government agencies, and the continued expansion of broadband internet infrastructure. The IT Decade is a clear statement that the government views the ICT sector not as a peripheral industry, but as a central pillar of its future economic strategy.
2.3 The Enablers: Supporting Policies and Infrastructure
Beyond grand frameworks and ten-year plans, the government has taken some concrete steps to create a more enabling environment for technology and innovation. These measures span policy reform, infrastructure development, and the rollout of e-governance services, indicating a multi-pronged approach to building the digital ecosystem.
On the policy front, significant reforms have been introduced to attract investment and facilitate business operations. A new ordinance issued in January 2025 permits up to 100% Foreign Direct Investment (FDI) in the ICT sector, a critical move to bring in much-needed capital and expertise. The same ordinance allows Nepali IT firms to establish subsidiaries and branch offices abroad, enabling them to better integrate into global markets. Domestically, amendments to the Industrial Enterprises Act now formally recognize “startups” as a distinct legal category, a foundational step toward creating a more supportive regulatory environment for new ventures.
Infrastructure development has also seen tangible progress. Nepal Telecom has successfully expanded its fiber internet service to all 77 districts of the country, a major milestone in improving connectivity, particularly outside the main urban centers. Plans are also underway to introduce satellite-based internet services to reach the most remote and geographically challenging areas, further closing the connectivity gap. In the realm of public services, e-governance tools like the Nagarik App are being formalized and integrated into legal frameworks like the Good Governance Act, aiming to provide citizens with a single, streamlined portal for accessing government services.
While these innovation-focused policies are promising, their success hinges on a factor that is often overlooked in official strategy documents: the engagement of the Nepali diaspora. The government’s growth model appears to be implicitly, and increasingly explicitly, dependent on this global network of highly skilled and often affluent Non-Resident Nepalis (NRNs). Policy reforms are specifically designed to enable NRNs to invest in and launch businesses in the domestic ICT sector. This strategy is actively supported by international partners; the World Bank, for instance, has organized high-level events to connect the Nepali diaspora in the United States directly with the domestic IT industry, with the explicit goal of mobilizing investments, talent, and market visibility. This approach is a logical and pragmatic way to overcome significant domestic constraints, such as limited access to venture capital and a shortage of senior-level technical and managerial talent. The diaspora represents a vital bridge to global markets and a source of patient capital and invaluable expertise.
However, this diaspora-dependent model is acutely sensitive to perceptions of political stability, regulatory predictability, and the rule of law. A skilled professional or investor from the diaspora considering a return to or investment in Nepal is evaluating more than just FDI regulations. They are assessing the entire political and social climate. Therefore, the government’s concurrent pursuit of a restrictive regulatory agenda creates a direct and severe threat to its own innovation strategy. Actions such as the 2025 social media ban, the passage of laws with vaguely defined terms like “misleading information” that can be weaponized against dissent, and the general trend toward a more controlled digital space create profound regulatory risk. This risk acts as a powerful deterrent to the very diaspora community the government is trying to attract. An individual who has built a career in an environment that values open expression and a stable legal framework will be deeply hesitant to invest their capital and talent in a country where the digital commons are becoming increasingly unpredictable and authoritarian. The policy to attract diaspora investment is thus in direct and irreconcilable conflict with the policy of digital control.
Section 3: The Regulatory Impulse: Instruments of Digital Governance
While one arm of the Nepali state is drafting blueprints for a vibrant digital economy, the other is sharpening the instruments of control. The country’s approach to digital governance is increasingly defined by a reliance on broad, punitive legal frameworks that prioritize state authority and national security narratives over the protection of fundamental rights and the promotion of an open digital environment. This regulatory impulse is not new but has been intensifying, evolving from the repurposing of outdated laws to the creation of new, more powerful tools of digital control.
3.1 The Old Guard: The Electronic Transactions Act (ETA) 2063
For over a decade, the primary legal instrument used to police online content in Nepal has been the Electronic Transactions Act (ETA) of 2008. This piece of legislation is a prime example of how a law designed for one purpose can be repurposed to serve a completely different, and more problematic, agenda.
The ETA was originally enacted to create a legal foundation for the burgeoning digital economy by authenticating and regularizing electronic records, digital signatures, and online commercial transactions. Its focus was on facilitating e-commerce, not on regulating speech.
However, the act contained a provision, Section 47, that would become the state’s most favored tool for prosecuting online expression. This section criminalizes the publication of materials in electronic form that are deemed “indecent” or that spread “hate or jealousy” or jeopardize “harmonious relations among various castes, tribes, communities”. The language of Section 47 is exceptionally broad and vague, providing authorities with wide discretionary power to interpret its meaning. This ambiguity has been systematically exploited to target journalists, activists, and ordinary citizens for expressing critical or dissenting views online.
The penalties for violating Section 47 are severe, including up to five years of imprisonment and/or a fine of NPR 100,000 (approximately USD 750), a significant sum in a country with a low average income. The chilling effect of such a law is profound, discouraging legitimate expression for fear of arbitrary prosecution. The ETA’s authority was most dramatically demonstrated in 2023, when the government used its provisions to enact a nationwide ban on the popular social media platform TikTok, citing its alleged disruption of “social harmony”. The use of an e-commerce law to ban a major communication platform exemplifies the government’s willingness to stretch existing legal frameworks to their limits to achieve its control-oriented objectives.
This reliance on the ETA reveals a strong element of legislative path dependency in Nepal’s approach to digital regulation. The act, created for the nascent e-commerce era of the early 2000s, was ill-suited for the complexities of the social media age. Yet, its vaguely worded clauses, particularly Section 47, offered a convenient legal pretext for authorities to prosecute online speech they found objectionable. Over more than a decade, this practice created a deep-seated institutional habit within the bureaucracy, law enforcement, and the judiciary of using the ETA as a primary tool for speech policing. This history has profoundly shaped the mindset of policymakers. Consequently, the new Social Media Bill of 2025 should not be seen as a radical departure, but rather as a logical and extreme culmination of this established practice. It takes the punitive spirit and vague standards of ETA Section 47 and elevates them into a comprehensive, pre-emptive regulatory regime, complete with licensing requirements and direct state-mandated content removal powers. The “bureaucratic perspective” that critics have noted in the drafting of the new bill is a direct product of the state’s long and comfortable experience wielding the ETA as an instrument of control. This indicates that reforming Nepal’s digital policy requires more than just amending new legislation; it necessitates a fundamental break from the legal precedents and institutional culture forged by the misuse of this outdated act.
3.2 The New Frontier: The Social Media Bill, 2025
The Social Media Bill, 2025, represents a significant escalation in the state’s efforts to regulate the digital sphere. Moving beyond the reactive use of the ETA, this bill seeks to establish a proactive and highly interventionist system of control over all social media platforms operating in the country. If enacted, it would fundamentally reshape the relationship between the state, online platforms, and users.
The core provisions of the bill are built around a mandatory licensing regime. Under the proposed law, any company, firm, or institution wishing to operate a social media platform in Nepal must first obtain a license from the government’s Department of Information Technology. This requirement is coupled with a mandate for platforms to establish a physical presence in the country by opening local offices and appointing resident grievance officers who would be accountable to Nepali authorities. This “data localization” and “entity localization” approach is designed to bring global technology companies directly under the jurisdiction and coercive power of the Nepali state.
The bill grants the government sweeping and vaguely defined powers over content. Authorities would be empowered to deny or revoke licenses for platforms deemed harmful to “peace, national unity, or sovereignty”. It also allows the Department of Information Technology to monitor content on social media and issue directives to platforms for the removal of any material found to be in violation of the act or other prevailing laws, including content that is “misleading” or “indecent”. Non-compliance would trigger severe penalties. Companies failing to register could face fines of up to NPR 2.5 million (approximately USD 18,750), while failure to remove flagged content could result in fines of up to NPR 1.5 million. The bill also targets individuals, with potential fines of up to USD 3,600 for non-compliance, a crippling amount in a country where the average annual income is just over USD 1,400.
3.3 The Architecture of Control: Broader Regulatory Ecosystem
The Social Media Bill does not exist in a vacuum. It is the most prominent component of a broader, emerging architecture of digital control that signals a clear strategic direction for the Nepali state. Several other policies and initiatives, both proposed and in development, reinforce this trend toward centralized surveillance and censorship.
A key element of this architecture is the proposed national internet gateway. This initiative would centralize all incoming and outgoing internet traffic through a single, state-controlled chokepoint. While the government may present this as a measure for cybersecurity or network management, civil society organizations and digital rights advocates have raised alarms, fearing it could function as a “Great Firewall” akin to that of China. Such a gateway would provide the state with an unprecedented technical capacity for mass surveillance, content filtering, and the implementation of nationwide internet shutdowns.
This move toward infrastructural control is complemented by other measures. Reports have emerged of the government procuring sophisticated spyware and other surveillance technologies, raising concerns about the state’s capacity for targeted monitoring of its citizens. The draft IT and Cybersecurity Bill contains provisions that, like the Social Media Bill, are criticized for their potential to restrict free expression and privacy. Similarly, the proposed Media Council Bill has drawn fire for creating a new regulatory body for online media that would be led by a government-appointed chairperson, threatening its independence and potentially turning it into another tool for political control over the press. Together, these initiatives paint a coherent picture of a state systematically building the legal and technical infrastructure required for a highly controlled and monitored digital environment.
Section 4: The Fulcrum of Conflict: Social Media, Civil Society, and the State
The simmering tension between Nepal’s innovation ambitions and its regulatory impulses reached a boiling point in September 2025. The government’s decision to implement a sweeping ban on major social media platforms did not result in quiet compliance but instead ignited a socio-political firestorm. This crisis serves as the definitive case study of the real-world consequences of Nepal’s contradictory digital policies, revealing the deep societal reliance on digital platforms, the power of a digitally native generation, and the profound miscalculations of a state attempting to impose 20th-century control on a 21st-century network.
4.1 The Spark: The 2025 Social Media Ban
On September 4, 2025, following a decision by the Supreme Court to uphold the government’s authority under the newly enacted Social Media Bill, the state implemented a blanket ban on 26 of the country’s most popular social media and communication platforms. The list included global giants like Facebook, Instagram, WhatsApp, YouTube, and Discord, effectively severing the primary digital arteries of the nation.
The government’s official justification for this drastic measure was framed in the language of accountability and national sovereignty. Officials argued that the ban was a necessary step to force international tech platforms to comply with Nepali laws, establish a physical presence in the country, and contribute to the national tax base. The move was presented as a push for “digital sovereignty,” asserting the state’s right to regulate the digital services operating within its borders. However, the implementation of the ban betrayed either a significant lack of technical understanding or a deliberate and sweeping overreach. The banned list was a haphazard collection that lumped together major social networks with messaging services like WhatsApp and Signal, and even included several obscure applications, suggesting a “spray and pray” approach to censorship rather than a targeted regulatory action.
4.2 The Uprising: The Gen Z Protests
The government’s action was met not with acquiescence but with immediate and furious resistance, primarily led by Nepal’s youth. For “Gen Z”—those born between 1997 and 2012—the ban was not an abstract policy debate but a direct assault on their way of life, their means of communication, their access to information, and their economic opportunities.
The social media ban, which severed millions from their daily routines and business activities, was the catalyst that “pushed the youth over the edge”. What began as online protests against digital censorship rapidly snowballed into mass unrest on the streets of Kathmandu and other cities. The protests, organized and mobilized by a generation fluent in the tools of digital coordination, escalated into a full-blown political reckoning. The scale of the uprising was unprecedented, leading to violent clashes with security forces. The fallout was catastrophic: at least 51 people were killed, hundreds were injured, and government buildings in the capital were left in ruins.
The Counter-Narrative: “Discord Democracy” and Digital Resistance
The 2025 crisis also provided a powerful demonstration of the resilience of digital networks in the face of state censorship. The government’s attempt to impose a top-down information blockade failed spectacularly, not only in its objective but in a way that proved deeply counterproductive. Within hours of the ban being announced, Nepal’s Gen Z had effectively bypassed the restrictions. Leveraging their digital literacy, they quickly adopted Virtual Private Networks (VPNs) to mask their location and access the banned services, while also migrating to alternative platforms like TikTok that were not on the initial ban list. The government’s call for citizens to comply with the ban and avoid using VPNs was widely ignored.
More significantly, in the chaos that followed the street protests and the collapse of government authority, a new and unexpected center of power began to emerge from the very digital space the state had tried to suppress. With official institutions in disarray, citizens, led by the youth, turned to online platforms to organize and coordinate a path forward. A “Discord democracy” took shape, with servers on the gaming-centric communication platform becoming de facto forums for civic planning and governance. This ironic turn of events—where the tools of digital communication banned by the state became the primary instruments for navigating a state failure—highlighted a fundamental shift in the nature of power and governance in the digital age. It was a potent example of decentralized, digitally-native civic action directly challenging and, in the vacuum, replacing the centralized, hierarchical model of the state.
This entire episode revealed the government’s profound miscalculation of “network power.” The state’s strategy was predicated on a simplistic, industrial-era view of control: by shutting down the identifiable corporate platforms (the “pipes”), it believed it could stop the flow of information and dissent. This approach fundamentally misunderstood the nature of the modern internet, which is not a set of pipes but a resilient, decentralized “network” of users. The government failed to anticipate the speed and efficacy with which a digitally native population could re-route their communications through alternative channels. When the state attempted to sever the main nodes of the network (Facebook, YouTube), the network did not collapse; it simply reconfigured itself around new ones (Discord, TikTok, VPNs). The state was fighting a 20th-century battle against a 21st-century network, and its strategy was doomed from the start. This serves as a critical lesson for governments worldwide: in a society with a critical mass of digital literacy, blanket censorship is not only ineffective but can be dangerously counterproductive, serving to delegitimize the state and accelerate the formation of more resilient, and often harder to monitor, opposition networks.
The Watchdogs: The Role of Civil Society
Throughout the escalating conflict over digital policy, Nepal’s civil society has played a crucial role as a watchdog, advocate, and source of expert critique. Organizations dedicated to digital rights have been at the forefront of the opposition to the government’s regulatory agenda, providing a consistent and evidence-based counter-narrative to the state’s claims.
Groups like Digital Rights Nepal (DRN) have been particularly active, engaging in a multi-pronged strategy of policy research, public advocacy, and capacity building. DRN and its partners have conducted high-level discussions and workshops focusing on the problematic provisions of the Social Media Bill and the draft IT and Cybersecurity Bill, bringing together stakeholders to analyze their potential impact on fundamental rights. Their critiques have been sharp and specific, pointing to major flaws in the government’s approach.
These civil society critiques, often amplified by international organizations like the International Federation of Journalists (IFJ), have focused on several key areas. First, they have condemned the flawed and non-inclusive legislative process, arguing that the government has adopted a narrow, bureaucratic perspective and failed to consult with independent experts, academics, and the tech industry itself. Second, they have highlighted the bills’ lack of commitment to Nepal’s own constitutional guarantees of free speech and its obligations under international human rights treaties. Third, they have warned that the bills are designed not to protect but to restrict free expression, giving the impression that their primary purpose is to provide the state with more powerful tools to silence critics. Finally, they have argued that granting sweeping oversight powers to a government department is a recipe for political abuse and that an independent, empowered commission is needed to ensure fair and impartial regulation. This sustained advocacy from civil society has been vital in raising public awareness and providing the intellectual ammunition for the broader resistance to the government’s digital control agenda.
A Comparative Lens: Situating Nepal’s Digital Policy in a Global Context
Nepal’s struggle to balance innovation and regulation is not occurring in isolation. It is part of a global conversation about how societies should govern the digital sphere. By examining Nepal’s policy choices against three distinct international models—India’s state-controlled digitalization, the European Union’s rights-based framework, and the United States’ market-driven approach—it is possible to better understand the strategic path Nepal is on, the alternatives available, and the potential long-term consequences of its decisions.
The Regional Template: India’s Model of “Controlled Digitalization”
There are striking and undeniable parallels between Nepal’s emerging digital policy and the model established by its southern neighbor, India. This model can be characterized as “controlled digitalization,” a dual strategy that aggressively promotes state-led digital public infrastructure while simultaneously imposing stringent and often punitive regulations on private platforms and intermediaries. Critics have referred to this as a “digital authoritarian playbook,” and it appears to be the primary template from which Nepali policymakers are drawing inspiration.
On the innovation side, India’s flagship “Digital India” initiative, launched in 2015, aims to transform the country into a “digitally empowered society and a knowledge-based economy”. This massive undertaking focuses on building digital infrastructure as a core utility, delivering government services on demand, and promoting universal digital literacy. It has led to the creation of population-scale platforms like the Aadhaar digital identity system and the Unified Payments Interface (UPI), which have revolutionized governance and commerce.
This ambitious push for digitalization, however, is coupled with an equally ambitious framework for control. The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, fundamentally reshaped the legal landscape for online platforms in India. These rules impose strict obligations on intermediaries, including tight timelines for content takedowns (36 hours upon government or court order), which critics argue can lead to over-compliance and the removal of legitimate speech. Most controversially, the rules include a “traceability” requirement, which mandates that messaging services be able to identify the “first originator” of a message when ordered by a court. This provision poses a direct threat to end-to-end encryption, a cornerstone of digital privacy and security. The Indian framework, much like Nepal’s proposed Social Media Bill, centralizes power in the hands of the state and prioritizes security and control over user rights and platform autonomy.
The Rights-Based Alternative: The European Union’s Regulatory Framework
The European Union offers a starkly different vision for digital governance, one that is explicitly grounded in the protection of fundamental rights, procedural fairness, and democratic oversight. The EU’s approach, embodied by the General Data Protection Regulation (GDPR) and the Digital Services Act (DSA), is not anti-regulation, but rather pro-“smart regulation,” creating a sophisticated, tiered system of accountability.
The GDPR, which came into force in 2018, established a global benchmark for data privacy.
It is built on seven core principles for the processing of personal data: lawfulness, fairness, and transparency; purpose limitation; data minimization; accuracy; storage limitation; integrity and confidentiality (security); and accountability. It grants individuals a suite of powerful rights, including the right to access, rectify, and erase their data, and imposes significant penalties on organizations that fail to comply.
The Digital Services Act, which became fully applicable in February 2024, complements the GDPR by focusing on content moderation and platform governance. The DSA’s key innovation is its tiered, risk-based approach. All online intermediaries have basic obligations, but the most stringent requirements are reserved for “Very Large Online Platforms” (VLOPs) and “Very Large Online Search Engines” (VLOSEs)—those with over 45 million active monthly users in the EU. These VLOPs are required to conduct systemic risk assessments, analyzing how their services could be used to disseminate illegal content or amplify societal harms like disinformation. They must then implement mitigation measures, which are subject to independent audits and oversight by the European Commission. The DSA also strengthens user rights by banning certain “dark patterns,” prohibiting targeted advertising to minors, and requiring platforms to provide clear, transparent content moderation policies and effective mechanisms for users to appeal decisions. This model contrasts sharply with Nepal’s, as it focuses on process and risk mitigation rather than direct government censorship, and it empowers users and independent bodies rather than concentrating power within a government ministry.
5.3 The Laissez-Faire Legacy: The United States and Section 230
The historical approach of the United States to internet regulation has been defined by a philosophy of minimal state intervention, designed to foster maximum innovation and protect free expression. The legal cornerstone of this model is Section 230 of the Communications Decency Act of 1996, a piece of legislation often credited with enabling the explosive growth of the modern internet.
Section 230 provides broad legal immunity to “interactive computer services” (a term that covers everything from social media giants to small online forums) from liability for content posted by third-party users. This “Good Samaritan” provision was designed to solve the “moderator’s dilemma“: without it, platforms that chose to moderate any content could be legally treated as the “publisher” of all content on their site, exposing them to endless lawsuits. By providing this liability shield, Section 230 encouraged platforms to voluntarily moderate harmful content without the fear of crippling litigation. This has resulted in a system where content moderation decisions are largely left to the discretion of private companies, guided by their terms of service and community standards, rather than by government mandate.
However, this long-standing consensus is now fracturing. Section 230 is under intense bipartisan attack in the US. Critics from one side argue that its broad immunity allows platforms to escape accountability for the spread of harmful and illicit content, such as child exploitation materials, terrorism propaganda, and dangerous misinformation. Critics from the other side argue that platforms use their moderation powers to engage in politically biased “censorship,” suppressing certain viewpoints. This has led to numerous legislative proposals aimed at reforming or repealing Section 230, such as creating carve-outs for specific types of illegal content or requiring greater transparency and “good faith” in moderation decisions. Alongside this legislative debate, US antitrust authorities have launched major lawsuits against tech giants like Google, Amazon, and Meta, challenging their market dominance. The US model, therefore, is in a state of flux, moving away from its laissez-faire roots toward a more interventionist stance, though the final shape of its future regulatory framework remains highly contested.
| Feature | Nepal (Proposed) | India | European Union | United States |
|---|---|---|---|---|
| Core Philosophy | State Control & National Sovereignty | State-led Digitalization & Intermediary Control | Fundamental Rights & Risk-Based Accountability | Market-Led Innovation & Free Expression (Under Review) |
| Intermediary Liability | Conditional Liability (License-based) | Conditional Liability (Compliance with IT Rules) | Tiered Accountability (DSA) & Limited Liability | Broad Immunity (Section 230) |
| Content Moderation | Government Directive & Pre-emptive Takedown | Government/Court Orders & Strict Timelines | Co-regulation, Systemic Risk Assessment, User Appeals | Platform Discretion (Terms of Service) |
| Data Privacy | Draft Bill (Conceptual Stage) | Comprehensive Law (Digital Personal Data Protection Act, 2023) | Comprehensive Law (GDPR) | Sector-Specific (e.g., HIPAA, COPPA); Evolving State Laws |
| Encryption Policy | Ambiguous/Hostile | Traceability Mandate (Threatens E2EE) | Protected as a Security Measure | Generally Protected (Subject to Law Enforcement Debates) |
| Enforcement Body | Government Department (MoCIT/DoIT) | Multiple Bodies (MeitY, Data Protection Board) | Digital Services Coordinators & European Commission | Courts, Federal Trade Commission (FTC), Dept. of Justice (DOJ) |
Section 6: Bridging the Chasm: An Analysis of Nepal’s Policy Coherence
When the innovation-focused policies of the Digital Nepal Framework and the IT Decade are juxtaposed with the control-oriented instruments of the Electronic Transactions Act and the Social Media Bill, the result is a deeply incoherent national strategy. This is not merely a matter of conflicting priorities but a fundamental contradiction that creates systemic risks for Nepal’s economic future, its governance capacity, and its geopolitical standing. The chasm between the state’s rhetoric and its actions is widening, and bridging it requires a clear-eyed assessment of the damage this incoherence is causing.
6.1 The Economic Self-Sabotage Hypothesis
The most immediate and tangible consequence of Nepal’s contradictory digital policy is a form of economic self-sabotage. The ambitious goals of the “IT Decade”—to export Rs 3 trillion in services, attract foreign investment, and become a global ICT hub—are predicated on creating a stable, predictable, and globally integrated digital ecosystem.
Global technology talent and capital are highly mobile and inherently risk-averse. Investors, whether they are large multinational corporations considering FDI or members of the Nepali diaspora looking to fund a startup, require regulatory predictability and the assurance of the rule of law. The Nepali government’s current approach provides neither. The threat of arbitrary platform bans, as seen in 2025, creates massive operational uncertainty. The use of vaguely worded laws—criminalizing “misleading” content or acts against “national unity”—creates a chilling effect that discourages the open discourse and experimentation vital for a thriving tech scene. The proposal for a national internet gateway signals a potential move toward digital isolationism, which is anathema to an industry built on global connectivity.
These actions directly undermine the diaspora-dependent growth model that appears to be a cornerstone of the IT Decade. A skilled Nepali software engineer working in Silicon Valley will not be enticed to return to a country where their primary communication tools can be shut down overnight and where online expression carries the risk of prosecution. A diaspora investor will not pour capital into a market where the government has demonstrated a willingness to cripple entire sectors of the digital economy by fiat. In this context, the regulatory impulse does not just run counter to the innovation imperative; it actively strangles it.
6.2 The Governance Gap: Institutional Incapacity and the Limits of Bureaucratic Control
The attempt to build a bridge between the fast-moving world of technology and the deliberative processes of public administration has, in Nepal’s case, exposed a significant “governance gap.” The state’s actions reveal a profound lack of institutional capacity and technical expertise within the government apparatus, leading to a default reliance on the blunt instrument of bureaucratic control rather than the scalpel of smart regulation.
The legislative process for the Social Media Bill is a case in point. Critics have consistently pointed to the lack of broad and meaningful consultation with technical experts, the private sector, and independent civil society organizations. The resulting legislation reflects a narrow, bureaucratic worldview that sees a complex socio-technical problem as something to be solved by creating a new government department and issuing top-down directives. The clumsy implementation of the 2025 ban, with its confusing list of targeted platforms, further underscored this lack of technical fluency within the government.
This governance gap is also evident in the state’s continued reliance on the outdated Electronic Transactions Act as its primary tool for speech policing. Instead of developing a new, nuanced legal framework fit for the social media age, the state has simply fallen back on a law that is familiar and provides broad discretionary power. This indicates an institutional inability or unwillingness to engage with the complexities of digital governance in a sophisticated, rights-respecting manner. The bridge between tech and public administration cannot be built when one side lacks the architectural knowledge to design a sound structure.
The default to command-and-control is not a sign of strength but a symptom of institutional weakness and a critical knowledge deficit.
6.3 Geopolitical Alignment and the “Digital Sovereignty” Trap
Nepal’s digital policy choices are not being made in a geopolitical vacuum. By consciously modeling its regulatory framework on the “digital authoritarian playbooks of China and India,” the Nepali state is making a clear and significant geopolitical alignment. It is choosing to align with a vision of the internet that prioritizes state-centric “digital sovereignty” over the principles of a global, open, and interoperable network.
This pursuit of digital sovereignty is a trap. While presented as a means of asserting national control and protecting citizens, it often serves as a pretext for consolidating state power, suppressing dissent, and shielding the government from domestic and international scrutiny. The proposed national internet gateway is the most potent physical manifestation of this ideology. If implemented, it would give the state the technical means to enforce a digital border, transforming the open internet into a state-controlled intranet.
This trajectory has profound implications for Nepal’s foreign relations and its place in the world. It distances the country from democratic nations that champion an open internet and a rights-based approach to digital governance, such as those in the European Union. It also creates friction with the United States, whose technology companies are often the primary targets of such regulatory regimes. More importantly, it threatens to cut Nepal off from the global digital economy it purports to want to join. A country that erects digital walls and embraces a model of authoritarian control cannot simultaneously be a trusted and dynamic hub for global ICT services. The pursuit of this model of digital sovereignty is, therefore, directly at odds with the economic integration and global competitiveness that the Digital Nepal Framework and IT Decade are meant to achieve.
Section 7: Strategic Recommendations for a Balanced Digital Future
To navigate away from its current self-defeating trajectory, Nepal requires a fundamental course correction. This cannot be achieved through minor policy tweaks but demands a strategic pivot away from control and toward a balanced model of “smart regulation” that fosters innovation while protecting fundamental rights. This will require concerted action from the government, proactive leadership from the technology industry, and sustained pressure from civil society and international partners.
7.1 For the Government of Nepal: A Pivot to “Smart Regulation”
The primary responsibility for resolving the policy paradox lies with the state. A genuine commitment to the goals of the IT Decade requires an equally genuine commitment to creating the open, predictable, and rights-respecting environment in which a digital economy can thrive.
- Legislative Reform: The first and most critical step is to immediately withdraw the Social Media Bill, 2025. Its provisions are fundamentally incompatible with a democratic and innovative society. In its place, the government should initiate a new, transparent, and genuinely multi-stakeholder legislative process. This process must include experts from the technology sector, legal scholars, civil society organizations, and international human rights bodies. The resulting legislation should be grounded in the principles of necessity and proportionality, narrowly defining punishable offenses and avoiding vague terms that can be abused. Concurrently, Section 47 of the Electronic Transactions Act must be amended to bring it in line with international standards on freedom of expression.
- Institutional Innovation: The current model of vesting regulatory power within a government ministry is flawed, as it is susceptible to political pressure and lacks the necessary independence and expertise. Nepal should establish an independent, multi-stakeholder Digital Commission. As advocated by civil society, this body should be composed of recognized experts from technology, law, economics, academia, and human rights, appointed through a transparent process for fixed terms. This commission would be responsible for overseeing digital policy, conducting research, advising the government, and acting as an impartial enforcement body, thus de-politicizing digital governance.
- Adopt a Co-Regulatory Model: The government should abandon its top-down, command-and-control approach in favor of a co-regulatory framework inspired by models like the EU’s Digital Services Act. In this model, the primary responsibility for content moderation and risk mitigation lies with the platforms themselves, operating within clear legal guardrails. The independent Digital Commission would provide oversight, set standards, audit compliance, and enforce penalties, rather than engaging in direct, case-by-case censorship. This approach respects platform autonomy while ensuring public accountability.
7.2 For Nepal’s Technology Industry: Proactive Ecosystem Stewardship
Nepal’s burgeoning technology industry cannot afford to be a passive bystander. It has a vested interest in promoting a stable and innovation-friendly policy environment and must take a proactive role in shaping its own future.
- Unified Advocacy: Individual companies have limited influence, but a collective voice can be powerful. The tech industry should form a strong, unified industry association to engage with the government. This body can serve as a single point of contact for policymakers, providing expert technical input, advocating for predictable regulations, and presenting a clear business case for why an open internet is essential for achieving the goals of the IT Decade.
- Develop Self-Regulatory Standards: To build public trust and demonstrate its commitment to responsible practices, the industry should proactively develop and adopt self-regulatory codes of conduct. These standards could cover areas such as content moderation transparency, user data protection, and grievance redressal mechanisms. By demonstrating that the industry can regulate itself effectively, it can make a stronger case against the need for heavy-handed state intervention.
- Invest in Digital Literacy: The private sector should partner with civil society organizations and educational institutions to fund and implement large-scale digital literacy campaigns. This was a rare positive element noted in the Social Media Bill, and the industry should not wait for a government mandate to act on it. A more informed and digitally literate user base is more resilient to misinformation and less susceptible to online harms, reducing the perceived need for state censorship and creating a healthier digital ecosystem for all.
7.3 For Civil Society and International Partners: Defending the Digital Commons
Civil society organizations have been the most consistent and courageous defenders of digital rights in Nepal. They, along with international partners, must continue to apply pressure and provide support to steer the country toward a more democratic digital future.
- Strategic Litigation: Civil society must continue to use the legal system to challenge restrictive laws and government actions. Lawsuits that leverage the strong free expression guarantees in Nepal’s constitution can be a powerful tool for striking down unconstitutional provisions and establishing rights-protecting legal precedents.
- Global Advocacy: Local civil society groups should deepen their collaboration with international human rights and press freedom organizations, such as the IFJ and others. Bringing global attention to the situation in Nepal can generate diplomatic pressure from democratic nations and international bodies, creating external incentives for the government to moderate its position.
- Capacity Building: International development partners and donor agencies should prioritize and invest in programs aimed at bridging the institutional knowledge gap within the Nepali state. Targeted capacity-building initiatives for parliamentarians, judges, law enforcement officials, and civil servants on the principles of digital governance, internet architecture, and international human rights law can help foster a more nuanced and informed approach to policymaking, providing a constructive alternative to the current reliance on control.
Conclusion: Charting a Sustainable Path for Digital Nepal
Nepal stands at a defining moment in its national development. The vision articulated in the Digital Nepal Framework and the IT Decade is not merely an economic strategy; it is a promise of a more prosperous, connected, and modern future for its citizens. It is a promise of high-value jobs for its youth, of efficient and transparent services for its people, and of a respected place for the nation in the global digital economy. Yet, this promise is being jeopardized by a deep-seated policy contradiction that places the state’s desire for control in direct opposition to its goals for innovation.
The 2025 social media crisis was not an anomaly but the logical outcome of this contradiction. It was a clear and costly warning that a governance model based on censorship and control is unsustainable in a society that has embraced the digital world as its lifeline. The path of regulatory overreach, which emulates the digital authoritarianism of regional powers, may offer the illusion of stability and control, but its true destination is economic stagnation, social conflict, and growing international isolation. It is a path that will deter investment, trigger brain drain, and ultimately ensure that the ambitious goals of the IT Decade remain tragically out of reach.
There is an alternative path.
It is a more challenging and complex route, one that requires political courage, institutional humility, and a genuine commitment to democratic principles. It is the path of “smart regulation,” where the state acts not as a censor but as a steward of the digital commons. This path involves building a bridge between technology and public administration through partnership, not coercion. It requires crafting laws in open consultation with society and industry, establishing independent institutions free from political interference, and trusting citizens with the freedom to connect, create, and express themselves.
This is the only viable route to achieving the prosperous and dynamic future Nepal envisions for itself. The choice is stark: to build digital walls or to build digital bridges. The former leads to a closed, fearful, and impoverished future. The latter, while more difficult to construct, leads to an open, innovative, and prosperous Digital Nepal. The time to choose that path is now.
