Nepal Sees NPR 35 Billion in FDI Commitments in First Quarter, But Actual Investment Still Trails Behind

In the first three months of the current fiscal year 2082/83, Nepal has received foreign direct investment (FDI) commitments amounting to NPR 35.13 billion, according to data released by the Department of Industry (DoI). Between mid-July and mid-October, a total of 311 projects were approved with foreign investment pledges, signaling a steady interest from international investors despite ongoing economic challenges. The month of Ashoj alone witnessed commitments of NPR 4.94 billion through 54 new projects.

Among the total commitments, seven large-scale, four medium, and 300 small-scale enterprises were approved for investment. Officials from the DoI noted that Nepal continues to attract the highest number of small-scale ventures, showing the growing interest of small foreign entrepreneurs rather than large multinational companies.

The tourism sector has emerged as the top recipient of FDI pledges this quarter. A total of 103 tourism-related projects received commitments worth NPR 1.46 billion, reflecting investors’ optimism in the post-pandemic revival of Nepal’s tourism industry. Many of these projects are focused on hotels, adventure tourism, eco-lodges, and hospitality-related services.

Similarly, the manufacturing sector drew commitments of NPR 2.11 billion across 15 projects. These are mostly concentrated in light manufacturing and construction materials. The agriculture sector, which holds significant potential for export-oriented agribusiness, saw just 11 projects worth NPR 40 million, indicating that FDI interest in agriculture remains minimal. The service sector followed with 19 projects and NPR 180 million in commitments, mainly focused on education, logistics, and consulting services. Meanwhile, the information technology (IT) sector saw a strong presence with 162 projects totaling NPR 153.7 million, suggesting the rise of Nepal as a hub for small-scale tech startups and outsourcing firms.

Since the establishment of Nepal’s FDI framework, a total of 7,550 projects have been approved, representing NPR 686.55 billion in cumulative commitments. However, the persistent challenge lies in the conversion of commitments into actual investment. In the previous fiscal year 2081/82, while commitments worth NPR 65 billion were made, only NPR 12.01 billion was actually realized—less than 20 percent of the pledged amount. This ongoing gap highlights the difficulties foreign investors face in implementing their approved projects.

Analysts say the disparity between commitments and realized investment reflects systemic weaknesses in Nepal’s investment climate. These include bureaucratic hurdles, policy instability, cumbersome approval procedures, and frequent political disruptions. Although investor sentiment appears cautiously positive, most foreign investors remain hesitant to fully execute their commitments due to regulatory uncertainty and weak institutional capacity.

The rise in FDI pledges during the first quarter nonetheless signals a degree of renewed investor confidence, particularly in sectors like tourism and information technology, where Nepal has natural advantages. Small and medium-scale investments in software, eco-tourism, and services are increasingly replacing large capital-intensive ventures. This trend reflects the global shift toward more agile, tech-driven, and service-oriented investments.

Experts caution, however, that Nepal’s investment growth remains more symbolic than substantive unless the government addresses key structural challenges. They emphasize the need for streamlined investment procedures, stable policy frameworks, improved infrastructure, and predictable taxation. Without these reforms, the country risks seeing high volumes of commitments without actual inflows, repeating the same cycle year after year.

In conclusion, the first-quarter FDI figures show that while NPR 35 billion in commitments may appear encouraging, the real test lies in implementation. The tourism and IT sectors continue to attract attention, but for Nepal to truly harness the benefits of foreign investment, it must move beyond commitments and ensure faster, transparent, and business-friendly project execution. Until then, the gap between promised investment and realized capital will remain a defining feature of Nepal’s FDI landscape.