Kathmandu, January 2025– Nepal has shown significant progress in attracting foreign direct investment (FDI) commitments, with NPR 25.77 billion pledged in the first six months of the current fiscal year 2081/82. This marks a notable increase compared to NPR 22.33 billion during the same period last year, as per the Department of Industry.
A total of 354 projects were registered, with small-scale projects dominating the portfolio. Out of these, 345 were small projects, followed by five medium-sized and four large projects. This trend highlights growing opportunities for foreign investors in Nepal’s emerging markets.
The tourism sector emerged as the biggest attraction for foreign investors, garnering NPR 16.96 billion in commitments, accounting for 66% of the total FDI pledges. The service sector followed with NPR 5.15 billion (20%), while information technology and agriculture each secured NPR 740 million. Manufacturing attracted NPR 200 million.
One of the most significant developments has been the growing utilization of Nepal's "automatic route" for investment approvals, introduced last fiscal year. This system allows foreign investors to secure approval for investments up to NPR 500 million without visiting government offices, making the process more efficient. In just six months, 154 projects worth NPR 2.38 billion were approved through this route, simplifying entry for small-scale investors.
Economic analysts attribute this growth to streamlined regulatory reforms and policy adjustments that are making Nepal an increasingly attractive destination for global investors. The automatic route, in particular, is seen as a game-changer, enabling investors to bypass bureaucratic hurdles and focus on project execution.
However, challenges remain. While NPR 6.03 billion in direct foreign investments was realized during the first five months, capital outflows also increased to NPR 3.50 billion, up from NPR 2.87 billion during the same period last year. This trend suggests a need to address issues such as reinvestment opportunities and market stability to retain capital within the country.
Despite these challenges, the current trajectory reflects growing confidence among foreign investors in Nepal’s economic potential. With continued efforts to enhance transparency and ease of doing business, experts believe Nepal can further capitalize on its position as a hub for investment in South Asia.
Ecosphere News will continue monitoring Nepal’s progress in attracting foreign investment and providing updates on key developments.
