KATHMANDU: The Nepal Automobile Importers and Manufacturers Association (NAIMA) has given a mixed reaction to the government’s budget for the fiscal year 2025/26.
In a statement issued on Friday, NAIMA welcomed several positive measures but also highlighted missed opportunities for the automobile sector.
The association welcomed the decision to keep tax rates on electric vehicles (EVs) unchanged. It said this move sends a strong message of policy stability, which is crucial for long-term planning and investment.
Referring to past instances of sudden tax hikes, NAIMA thanked the government for maintaining the current structure. It believes stable tax policies will build confidence among entrepreneurs who have been affected by frequent changes in recent years.
According to NAIMA, the stability in EV tax rates support national energy goals, encourage the use of domestic electricity and help reduce pollution.
The association criticized the lack of reform in the high tax structure applied to internal combustion engine (ICE) vehicles.
It has also welcomed the provision of levying just 1% customs duty on equipment used to manufacture and assemble EV charging machines. “It will help promote domestic industries involved in producing such equipment,” it added.
NAIMA also hailed the government’s plan to establish vehicle fitness centers across the country, stating that it would would improve road safety and ensure better technical inspections. NAIMA also sees potential for public-private partnerships to run these centers efficiently.
Concerns Over Missed Areas
Despite these positives, NAIMA said that the budget has failed to address several key issues for the automobile industry.
The association criticized the lack of reform in the high tax structure applied to internal combustion engine (ICE) vehicles. It said that high taxes have made ICE vehicles unaffordable for many. “Modern ICE vehicles are now more fuel-efficient and environmentally friendly, and remain well-suited to Nepal’s terrain and rural road conditions,” it added.
NAIMA also expressed disappointment over lack of incentives for hybrid or plug-in hybrid vehicles which are important transitional options in electric mobility.
The association also said the budget failed to introduce tax benefits or investment-friendly policies to support local production and assembly. “This contradicts the spirit of the government’s ‘Make in Nepal’ initiative outlined in national development plans,” it added.
