My personal opinion:

The politicians should wear national dress in formal ceremonies... such as when being sworn in.  This not only emphasizes the somberness of the moment, but also points to the unity of all our Nepali cultures. 

In regional events, if they want, they can wear regional dresses... such as dhoti or bakkhu or ghaagar, etc.

Other than that, suit and tie should be ok for day to day or semi-formal occasions.  One has to look smart.