The Nepalese region is and has always been an area based on agriculture, a practice reliant on water. Terra cotta has been used to port water for cattle, crops and houses since the time of the early Gopalas, also known as cow herders, and the Newar inhabitants around two thousand years ago. Today, its use plays a vital role in hill and farming communities as well as significant additions to temples and other cultural sites around the Kathmandu Valley. While terra cotta use has been declining in cities as people prefer modern products, terra cotta artisans have also refined their craft producing more practical pieces to be used as fashionable utensils and other kitchen and house wares. Only a few years ago the terra cotta industry had been slipping, unable to compete on the international market. With the advent of newer technologies the industry is expanding as one of the bright lights of Nepal's economic scene.

The three cities of Patan, Bhaktapur and Kathmandu were once separate kingdoms that thrived on their artistic values and the competition between each other. Terra cotta in the kingdoms was in great use during this time for the building of temples, houses, and resting places as well as for decorative purposes. Each kingdom developed centers for artistic and religious focus known as Durbar Squares which have been declared as UNESCO World Heritage Sites. Traditional building throughout the Durbar Squares and the kingdoms was done using terra cotta bricks and tiles. More recently, efforts have been underway to restore the heritage sites of these cities, generating an increase in the local market.

Kathmandu is yet to establish a plan for builders to use traditional styles of building in heritage areas. For the time being, the city has simply been taking down modern building surrounding heritage sites in order to preserve their atmospheres. As this is not the most desirable solution to the modernization issue for each party involved, Mayor Keshab Shtapit reports that he is attempting to put a plan in action.

Bhaktapur has also implemented a plan to revert to traditional styles again focusing on its core area around the Durbar Square. "The plan is to revert to traditional styles to boost tourism," said Mayor of Bhaktapur, Mr. Prem Suwal. Terra cotta bricks (daachi eeta) are being sold to builders at twenty-five percent cost, and terra cotta tiles for free to builders in the core heritage area. More than a reported US$ 33,000 has been spent each year for the past three on renovations that include temples, shrines and resting-places, the brbick streets and courtyards as well as the restoration of ponds and traditional water supplies such as wells and waterspouts.

The kingdom of Patan is now part of the larger Lalitpur Sub-Metropolitan City. The Buddhist Mahaboudha Temple was built in the kingdom of Patan in the sixteenth century entirely out of terra cotta and displays some of the most impressive forms of the art within the Kathmandu Valley. The municipality is planning to declare the area surrounding its Durbar Square and including Mahaboudha as "ancient" in order to receive greater support for the preservation of its heritage. An inner area has been designated around the Durbar Square in which people are obligated to build according to traditional methods. Though builders are not yet required by law to use traditional methods, those who build in modern styles within the core area face a municipal fine. Terra cotta bricks are essential for building this way but were too expensive at one time and difficult to obtain. However, the mayor of Lalitpur, Mr. Buddhi Raj Bajracharya has implemented a program that provides "free, traditional terra cotta bricks to builders." As the reputed foremost producer of terra cotta in Nepal with numerous factories that produce terra cotta bricks, the program there has shown an impressive increase in traditional building. Newer technologies have been implemented in machinery and molds resulting in a drastic drop of production and labor costs for terra cotta. This has been one of the deciding factors in the implementation of the city's preservation program and cause for its success for which it has obtain international support from visiting diplomats.

The exportation of terra cotta has doubled from the middle of 2001 with the implementation of new technologies according to the president of HAN, Kalyan K. Tamrakar. Nepal cannot contend with India and China for ceramics although its exportation is up 31% to $US 95,630 according to Handicraft Association of Nepal statistics. However, due to Nepal's unique and high quality craftsmanship, terra cotta is making encouraging progress. HAN is giving support to the Thimi Sahakari Sansthan Organization for the establishment of a furnace for terra cotta glazing and ceramics with hopes that this will further the development of the industry. As further developments towards the betterment of the terra cotta industry take place, its future looks to be one that will continue to grow stronger on both the local and international stage.