National AI Policy Development

Nepal has recently taken significant steps towards establishing a framework for artificial intelligence (AI) governance, recognizing both the transformative potential and challenges this technology presents. The country has moved from initial discussions to drafting comprehensive policies specifically targeting AI development, use, and regulation within its borders.

National AI Policy

Nepal introduced its first National AI Policy in early 2025, marking a significant milestone in the country’s approach to emerging technologies. This policy aims to leverage artificial intelligence to boost national development while establishing necessary guardrails for ethical and responsible implementation. The Ministry of Communications and Information Technology (MoCIT) released the draft of the National AI Policy 2081 (on February 5, 2025, inviting public feedback within a seven-day window.

The policy represents Nepal’s recognition of the global AI revolution and attempts to position the country to benefit from these technological advancements while mitigating potential risks. It emerged after several years of preliminary discussions, including a notable multistakeholder dialogue on AI governance held in November 2023, which was described as the “first of its kind” in Nepal. This consultative process involved government representatives, civil society members, academia, and technology industry stakeholders to ensure comprehensive input on the policy framework.

Core Objectives and Focus Areas

The National AI Policy focuses on several key areas designed to create a balanced approach to AI development. These include:

1. Economic Development: The policy aims to integrate AI technologies into sectors like agriculture, healthcare, and manufacturing to increase productivity, reduce costs, and create new employment opportunities that contribute to overall economic growth1.
2. Public Service Enhancement: A significant focus is placed on leveraging AI to improve government service delivery, particularly in healthcare, disaster resource management, and streamlining administrative processes for citizens.
3. Innovation and Research: The policy establishes frameworks to foster AI innovation through supporting research and encouraging startups, with specific mechanisms for global partnerships and collaborations between universities and research institutions.
4. Digital Transformation: Accelerating Nepal’s digital transformation is a central goal, with AI adoption positioned as a means to enhance global competitiveness and improve technological access for citizens.
5. Ethical Frameworks: The policy mandates strict data protection standards, algorithmic transparency, and accountability mechanisms to ensure AI systems respect privacy rights and avoid perpetuating biases or discrimination.

Key Institutional Frameworks Proposed

The National AI Policy proposes establishing several specialized institutions to implement and oversee AI development and regulation in Nepal. These institutions represent a comprehensive governance structure designed to address the multifaceted challenges presented by AI technologies.

AI Regulatory Council

The AI Regulatory Council is designed to be the apex body for AI governance in Nepal. As outlined in the draft policy, this council will be chaired by the Minister of Communications and Information Technology and will develop the legal framework and ethical guidelines for AI development and deployment. The council will comprise 14 members, including high-ranking officials such as:

• The Governor of Nepal Rastra Bank
• The Chief Secretary of the Prime Minister’s Office
• Secretaries from key ministries including Communications, Finance, Industry, Education, and Science and Technology
• Representatives from the National Planning Commission, e-Governance Board, and Nepal Telecommunications Authority
• Two private sector representatives and three independent AI experts

The council’s primary responsibilities include ensuring impartiality, transparency, and accountability in AI development and usage, establishing ethical guidelines and standards for AI governance, and protecting intellectual property and human rights in AI-related activities.

National AI Center

The National AI Center is positioned as the main executive body for AI regulation and development in Nepal. According to the policy draft, this center will be responsible for managing AI growth, usage, and research, ensuring alignment with global best practices. It will serve as the primary coordinating body for all AI-related initiatives throughout the country.

AI Excellence Centers

The policy envisions the establishment of AI Excellence Centers at universities and research institutions across Nepal. These centers will focus on fostering innovation, conducting research, and developing human resource capabilities in AI technologies. They represent an important element in building Nepal’s domestic AI capacity and expertise.

AI Incubation Hub

The draft policy also proposes an AI Incubation Hub to support AI startups and entrepreneurship within Nepal. This initiative aims to create an environment conducive to technological innovation and commercialization of AI solutions developed within the country.

Supporting Digital Infrastructure and Legislation

Nepal’s approach to AI governance is situated within a broader framework of digital policies and legislation that form the foundation for technology regulation in the country.

Digital Infrastructure Development

To facilitate AI development and implementation, the government has outlined plans to expand digital infrastructure across Nepal. This includes the deployment of high-speed internet services through technologies such as 5G and fiber optics, as well as establishing state-of-the-art data centers and cloud infrastructure throughout the country. These infrastructure developments are essential prerequisites for widespread AI adoption and innovation.

Existing Digital Legislation

While specific AI legislation is still emerging, Nepal has several existing laws that form the broader regulatory context for digital technologies:

1. Electronic Transaction Act 2063 (2008): This act regulates electronic transactions and cybercrime in Nepal. While not AI-specific, it establishes regulatory bodies like the Office of Certificate Control and Certification Authorities, and defines various cybercrimes including hacking and intellectual property violations7. The Act prescribes penalties ranging from minimum fines of 50,000 NPR to maximum imprisonment of 3 years for digital offenses.
2. Cyber Security Policy 2080: Approved in August 2023, this policy aims to create a reliable, secure, and progressive cyber landscape within Nepal9. The policy sets ambitious targets to improve Nepal’s global cyber security index score from 44.99% to 60% within 5 years, 70% within 10 years, and 80% within 15 years9. Though not AI-specific, this policy is crucial for creating a secure digital environment in which AI systems can operate.
3. Digital Nepal Framework: This framework provides a roadmap for digital initiatives in Nepal, targeting nationwide digital connectivity. It serves as a blueprint for solving major societal challenges through digital technologies, which would include AI applications.

Challenges and Future Directions

Despite the promising developments in AI policy formulation, Nepal faces several significant challenges in effectively implementing AI regulation and fostering development in this sector.

Implementation Challenges

As a developing nation, Nepal confronts unique challenges in AI governance. The Electronic Transaction Act of 2063 (2008) illustrates one key challenge facing digital regulation in Nepal-the need for regular updates to address rapidly evolving technologies. This law requires amendments to address new technologies and payment systems, as lack of updates has created loopholes exploited by criminals. Similar challenges will likely affect AI regulation as the technology continues to evolve rapidly.

Accessibility and Inclusion

AI policy must underscored accessibility as a pivotal concern in the development and deployment of AI technologies. Accessibility ensures that AI systems are usable by individuals with diverse abilities, backgrounds, and resources, aligning with the principles of inclusivity and equity. Incorporating accessibility into AI governance frameworks is essential to address barriers, promote universal access

Collaborative Approach

The policy emphasizes collaboration between government bodies, private sector stakeholders, and international partners as crucial for effective implementation and continuous improvement of AI regulations. This collaborative ecosystem is designed to foster innovation while maintaining rigorous standards for ethical AI development and deployment.

Conclusion

Nepal’s AI regulatory landscape is in a formative stage, with the National AI Policy 2081 (2025) representing the country’s first comprehensive attempt to govern artificial intelligence technologies. The proposed institutional framework-including the AI Regulatory Council, National AI Center, and AI Excellence Centers-demonstrates an ambitious approach to balancing innovation with ethical considerations and public benefit.

While these developments show promising direction, successful implementation will depend on addressing challenges related to infrastructure development, technical capacity, and ensuring inclusive access to AI technologies. As Nepal continues to develop and refine its approach to AI governance, the integration with existing digital legislation and policies will be crucial for creating a coherent regulatory environment that enables responsible AI development while protecting public interests.