The Nepal government has introduced its ‘Seventh Customs Reform and Modernisation Plan (2083-2088)’, a five-year strategic initiative aimed at transforming the nation’s customs administration into a fully digital, secure, and internationally compliant system. The plan, set to be implemented from the upcoming fiscal year 2083-84 to 2087-88, envisions a completely paperless, contactless, and faceless customs service.
The comprehensive plan, which seeks to reduce trade costs and time, promote legitimate trade, and enhance border security while controlling revenue leakage, is estimated to cost Rs 7.0056 billion. However, the breakdown provided in the plan allocates Rs 5.9112 billion for capital expenditure and Rs 1.9944 billion for operational and program expenses, which sums to Rs 7.9056 billion.
Funding for this ambitious undertaking will be supported by a $50 million policy loan from the Asian Development Bank (ADB), a regional development bank, approved on July 1, 2026. Additional resources will be mobilised from other development partners, including SASEC, the World Customs Organisation (WCO), the International Monetary Fund (IMF), and the World Bank.
Strategic Pillars and Technological Advancements
The Seventh Customs Reform Plan is built upon five strategic pillars: trade facilitation, revenue management, control and social protection, customs operations and innovation, and institutional development. It outlines 10 strategies, 31 objectives, 80 activities, and 369 specific tasks to achieve its goals.
A key focus of the plan is the integration of modern technologies into Nepal’s customs administration. This includes the use of artificial intelligence (AI), machine learning, and data warehousing to automate risk analysis systems. The plan also calls for the establishment of an anti-commercial fraud unit and intensified use of non-destructive inspection equipment to combat trade-based money laundering and other illicit activities.
Ambitious Targets for 2088 BS
The plan sets several key performance indicators to be achieved by the year 2088 BS:
- Increasing the implementation level of the World Trade Organisation (WTO), the intergovernmental body that regulates international trade, Trade Facilitation Agreement (TFA) from the current 39.1 percent to 90 percent or above.
- Reducing the rate of physical inspection based on value from 37.3 percent to less than 20 percent.
- Cutting the average time taken for import and export clearance by 10 percent.
- Expanding the number of integrated agencies within the system from 14 to 28.
- Increasing the number of modern customs laboratories from 11 to 14.
For implementation and monitoring, a steering committee chaired by Yam Lal Bhusal, the Director General of the Customs Department, Nepal’s customs administration body (appointed July 6, 2026), and a coordination and implementation unit led by Deputy Director General Prem Prasad Acharya (appointed July 6, 2026) have been established. These bodies will conduct semi-annual and annual reviews.
Background and Future Outlook
Nepal has a long history of customs administration, dating back to the Lichchhavi period, with the Customs Department established in 2023 BS. The nation has been implementing phased customs reform action plans since 2060 BS. The current initiative follows the Sixth Customs Reform and Modernisation Plan (2078-2083), which was launched on August 17, 2021, and focused on trade facilitation, realistic revenue collection, social protection, automated customs systems, and organisational capacity building.
The new plan aims to create a “production-oriented economy” by prioritising the review of customs rates and further trade facilitation. the Customs Department is actively collecting concrete suggestions from the private sector through a sub-committee under the Revenue Advisory Committee. These suggestions are expected to be incorporated into the upcoming budget to ensure the plan’s effective implementation.
While the plan promises significant improvements, concerns have been raised regarding the need for swift and effective mechanisms to address business grievances and prevent the misuse of reform initiatives.
