Nepal Rebuilds Supply Chain

Nepal's Automotive crisis as a catalyst for transformation rebuilding supply chains, restoring trust,and driving sustainable economic resilience

- Niharika Singh

The night of September 9, 2025, will be remembered as one of the most disruptive moments in Kathmandu's commercial history. What began as a Gen Z protest rapidly spiraled into coordinated violence across Kathmandu's Thapathali auto corridor, where flames reduced the showrooms of Tata Motors, CG Motors, Mahindra, Suzuki, and Hyundai to charred metal. More than 70 lives were lost, hundreds of vehicles destroyed, and business losses alone are estimated at Rs 80 billion, wiping out nearly 15,000 direct jobs and shaking confidence in Nepal's urban supply chains.

The government has now responded with a dual relief-and-austerity plan. Firms affected by the riots will receive 50% exemptions on customs and excise duties for replacement machinery, along with concessional loans at base rate + 0.5%. A payroll protection scheme offers the same loan rate with a 2% government subsidy for six months to prevent layoffs. But the other side of the response is painful: all local and provincial projects above Rs 1 million have been frozen, new spending halted, and government recruitment and allowances sharply capped to save funds for reconstruction.

When the Chain Snapped

Thapathali, located in the heart of Kathmandu, has long been synonymous with automotive commerce. Its multi-storey showrooms and service centers are not just retail spaces; they are the visible ends of a vast logistical chain stretching from manufacturing plants in India, China, and Japan to Nepali consumers. When these facilities were destroyed, the entire chain faltered. Imports halted as distributors froze shipments. Customs clearances slowed as uncertainty clouded demand forecasts. Insurance assessments and financing stalled, paralysing a sector that thrives on rotation, liquidity, and predictable flow.