Export industry sector is a major driving force for the Nepalese economy. As the national investment capacity is low, significant expansion of the export industry depends on the attraction of foreign investment bringing in technology, marketing expertise and capital. Nepal after being a member of WTO, must lift its capacity in economic fronts to sustain and move forward through the highly competitive world economic market. Promotion of export based industries and diversification of export market are the major factors which can contribute significantlyto the development of economic activities and thus to the overall upliftment of the living standard of the people. Government of Nepal (GoN) has adopted the concept of Special Economic Zone (SEZ) to attract foreign and national investors to invest and establish industrial and business units, which will contribute in increasedpromotion of export .
SEZ refers to a totally commercial area specially established for the promotion of foreign trade. A Special Economic Zone is a geographical region that has economic laws more liberal than a country’s typical economic laws. Usually the goal is flourishment in foreign investment. Moreoever, SEZs are specifically delineated enclaves treated as foreign territory for the purpose of industrial, service and trade operations, with relaxation in customs duties and a more liberal regime in respect of other levies, foreign investments and other transactions.