Imagine a Nepal where AI-powered traffic signals eliminate congestion, water flows reliably from every tap, garbage trucks respond only to sensor alerts and digital services simplify everyday life. Picture refurbished heritage buildings buzzing with clean-tech startups, led by young innovators shaping a greener future. This is the vision of a smart city—clean, efficient, inclusive and technology-driven. But how close is Nepal to turning this vision into reality?
As cities across the globe race to integrate technology with sustainable development, the smart city model has emerged as a blueprint for better urban living. It promises digitally connected communities, data-driven governance and eco-friendly infrastructure—all aimed at improving quality of life. Nepal has embraced this concept, but the gap between vision and reality remains wide.
Nepal’s Smart City Definition
Nepal officially entered the smart city discourse in 2016 when the National Planning Commission (NPC) released a concept paper defining smart cities as “sustainable, technology-driven urban centers delivering high-quality services with replicable models”. The vision aimed to transform urban landscapes by improving governance, infrastructure, economic opportunities and citizen engagement. The paper also acknowledged Nepal’s challenges—aging infrastructure, limited resources and vulnerability to natural disasters.
Building on this foundation, the government adopted a formal framework in April 2024, introducing 83 indicators across four pillars: Smart Citizen, Smart Economy, Smart Governance and Smart Infrastructure. This marked a crucial step in institutionalizing the smart city agenda.
However, turning these indicators into concrete action remains a significant challenge.
Nepal’s Flagship Smart City Projects
Nepal’s ambition is reflected in its plans to develop 13 smart cities, including Lumbini, Nijgadh, Palungtar and Bharatpur, under a broader initiative encompassing 27 new town development projects. Within the Kathmandu Valley, four additional smart cities have been proposed: Divyeswari Land Integration Project, Kathmandu Northeast New Town, Kathmandu Ingenious (Southeast) and Kathmandu North (Green City). Master plans for these projects were prepared with support from Japanese firm Oriental Consultants, with investments ranging from Rs 20 million to Rs 120 million per city. Other international partners such as Helen and Co. (Finland) and Fulbright Consultancy (Nepal) have also supported these initiatives.
A standout example is Panchkhal, Nepal’s first smart city developed through a public-private partnership. With a Rs 2.5 billion investment from Nepal Infrastructure Bank (NIFRA), the project uses a land-pooling model that preserves local farmland and retains land ownership with local residents, ensuring strong community participation.
NPC’s strategies, such as including One-City-One Identity (OCOI) and Food Green City (FGC) concepts like rooftop hydroponics, reflect an integrated vision that seeks to balance growth with ecological sustainability. Yet, implementation continues to lag. Readiness assessments, such as the one conducted in Lalitpur Metropolitan City, evaluate progress using indicators like e-literacy, smart poles, CCTV coverage, digital payment systems, and online business registration. Despite these structured metrics, on-the-ground progress remains limited.
Learning from Global Leaders
Cities like Zurich, Oslo and Geneva, which are ranked top three in the IMD Smart City Index 2025, offer blueprints for smart urban success. Their high Human Development Index (HDI) scores (0.994, 0.982 and 0.973, respectively) underscore the connection between smart planning and human wellbeing.
In Zurich, over 80% of citizens use mobile apps for healthcare appointments, air quality updates and public issue reporting. Oslo and Geneva also show similar levels of digital engagement. Smart mobility options, like car sharing, bike rentals and parking apps, ease congestion, while digital ticketing simplifies transit. Safety is bolstered by accepted facial recognition tech, and high-speed public internet enables everything from e-voting to cultural access.
These cities don’t just use technology, they humanize it. Zurich keeps housing costs under 30% of income, maintains 75%+ satisfaction with public transport and ensures government transparency earns high public trust. These cities represent not just tech efficiency but also inclusive, sustainable governance.
How South Asia Approaches Smart Cities
Nepal’s challenges are not unique. Across South Asia, countries are pursuing varied paths to smart urban development which offer lessons and potential models for Nepal.
Maldives: Hulhumalé, which is developed by the Housing Development Corporation (HDC), exemplifies integrated digital transformation in a small nation. It features fiber-optic GPON network, smart utility management, multi-modal transit planning, green architecture and renewable energy, and open-access networks for enhanced connectivity. Collabourations with global tech firms like Huawei Lanka emphasize strategic international partnerships. Hulhumalé is a model of how a small island nation can leapfrog into smart urban living, blending digital innovation with environmental resilience.
Bangladesh: Bangladesh's Vision 2041 emphasizes ICT-powered services in transport, water, and waste; the $360 million Bangladesh Smart Cities Development Project (BSCDP), supported by AIIB; community-based climate adaptation; and China-backed smart city plans in Chattogram. By aligning infrastructure upgrades with sustainability and inclusivity, Bangladesh is scaling smart growth across urban centers.
India: India’s Smart Cities Mission, which was launched in 2015, aimed to transform 100 cities with integrated tech and planning. As of early 2025, over 7,500 projects worth $20 billion are completed, with 18 cities meeting full targets. Its layered strategy includes retrofitting old areas, redeveloping degraded zones, greenfield urban expansion and pan-city smart solutions (transport, energy, water). India emphasizes compact, scalable “lighthouse” projects with sustainable infrastructure and digital integration. It promotes inclusive urban living through affordable housing and safety measures, especially for vulnerable groups. Each selected city forms a Special Purpose Vehicle (SPV) as a limited company jointly owned 50:50 by the State/UT government and the Urban Local Body (ULB). The SPV is responsible for planning, implementation and monitoring of projects. The initiative is driven by strong coordination among local, state and central governments, supported by regular reviews and capacity-building workshops. This model balances top-down governance with local implementation autonomy, leveraging technology and citizen engagement to improve urban living standards. The emphasis on replicable, area-based development and real-time monitoring has been key to its relative success and offers valuable lessons for economies like Nepal, too.
Where Nepal Stands
Nepal’s smart city ambitions face significant financial, institutional and infrastructural challenges. With an estimated Rs 10 trillion needed for infrastructure investment over the next decade, the current annual spending of only Rs 200-300 billion falls drastically short. Since 2015, no smart city has been completed; improvements remain rudimentary, including black-topped roads, solar lights, and basic sewage systems, which do not meet a comprehensive smart city framework. Kathmandu Valley’s severe pollution, traffic congestion and overpopulation exacerbate urban management challenges. Furthermore, a critical shortage of ICT-skilled human capital limits technology adoption and innovation.
Many cities still lack detailed project reports-a foundational step before infrastructure can be laid. This reflects a broader pattern in Nepal’s urban development: lofty goals declared without aligning bureaucratic capacity, timelines or technical execution. Even the four DPRs completed under the Kathmandu Valley Development Authority with international consultants have seen little progress toward actual implementation. With some infrastructure in place—486 km of roads (135 km blacktopped), 292 km of sewerage systems, 530 solar lights and 55 government buildings, the fragmented rollout still makes it hard to classify any area as a functional smart city. The approach seems more like adding modern features to an old city layout, rather than planning and building the city with a clear, unified smart city vision.
Nepal in the Smart City Race
Nepal trails not only global leaders but regional peers. Globally, smart cities are evolving into integrated ecosystems driven by AI, IoT, and real-time data- e.g., Singapore’s Smart Nation integrates digital ID, e-health, and autonomous mobility. Cities like Amsterdam and Helsinki are advancing net-zero targets, open data platforms and citizen co-creation. While global cities are using predictive analytics for traffic and public health, Nepal lacks basic GIS-based urban planning or reliable municipal e-services. Moreover, Nepal’s smart city plans often overlook environmental vulnerabilities. The global shift is toward citizen-centric, climate-resilient and data-driven governance, while Nepal remains stuck in pilot-phase projects and bureaucratic inertia. Without structural reforms and a leap in investment and capacity, Nepal’s smart city aspirations risk becoming mere slogans in a fast-digitizing world.
Smart Lessons or Smart Illusions?
Nepal’s struggle with smart city development lies not in a lack of ambition but in its inability to translate vision into grounded, context-aware action. Despite policy papers and pilot initiatives, progress has largely remained symbolic, limited to isolated infrastructure upgrades with little integration, sustainability or citizen-centric planning. The challenge is not in dreaming smart, but in building smart with strategic clarity and local relevance.
Nepal does not need to start from scratch. Valuable lessons lie next door. India’s Smart Cities Mission shows that institutional innovation can drive execution. By forming SPVs co-owned by state and local governments, India created agile, accountable structures that bypassed traditional bureaucratic bottlenecks. Nepal, which is still reliant on centralized ministries and rigid project pipelines, must decentralize governance. Municipalities should be equipped with not just responsibility but real authority, technical expertise and funding autonomy to plan and implement solutions tailored to their contexts. Similarly, Bangladesh has effectively tapped into global partnerships to bridge financial and technical gaps. Nepal must actively pursue multilateral collabourations, not only for infrastructure funding, but to absorb best practices in project design, data systems, and governance. Relying solely on internal capacities has constrained scale and innovation.
A major strategic shift Nepal must undertake is to prioritize area-based development over speculative greenfield cities. Retrofitting existing urban cores, redeveloping underutilized spaces and strategically expanding outward aligns more closely with current demographic, economic and environmental realities. Phased expansion without coherent integration has only led to more congestion and fragmented services. Moreover, Nepal must stop equating smartness with hardware-roads, streetlights, and buildings-and start focusing on the digital intelligence that binds systems together. Integrated data platforms, open APIs and real-time dashboards are foundational for evidence-based decision-making, transparency and civic engagement. This demands a national open-data policy and substantial investment in ICT human capital.
Public-private partnerships, such as Panchkhal’s promising start, should be scaled through clear legal frameworks, risk-sharing models and institutional support. But these must be more than financial tools, they must drive innovation, accountability and inclusivity. Lastly, sustainability cannot remain a buzzword. Urban development must embed environmental intelligence-green infrastructure, climate-resilient planning, and circular resource use-to ensure cities are not just connected but also livable.
Without confronting its systemic weaknesses and committing to meaningful reform, Nepal risks turning its smart city ambitions into little more than costly illusions, failing both its citizens and its future.
(Bhatta and Shrestha are analysts at Business Brainz, a research and insight firm empowering B2B sales and marketing teams globally from Nepal.)
(This opinion article was originally publihsed in July 2025 issue of New Business Age Magazine.)
