Nepal received foreign direct investment (FDI) commitments totaling nearly Rs 58bn over the first nine months of fiscal year 2024-25.
According to the Department of Industry (DoI), Nepal received FDI commitments worth Rs 57.97bn for 480 projects during the review period.
Recent reforms in Nepal’s business and investment laws appear to have made a positive impact, with FDI commitments over the past two months—between mid-February and mid-April—alone reaching Rs 31.10bn. Nepal received investment commitments of Rs 17.79bn for 40 projects in Falgun (mid-February to mid-March) and Rs 13.31bn for 53 projects in Chaitra(mid-March to mid-April), shows the monthly report of the DoI.
If these commitments materialize, the 480 projects will generate direct employment for 12,435 people. Of these projects, 468 are categorized as small industries, eight as medium industries and four as large industries. All 53 investment proposals received in Chaitra were for small industries.
The tourism sector attracted the highest number of investment commitments over the past nine months. According to the Department of Industry, a total of 189 proposals were received in this sector. The ICT sector was next with 185 proposals, followed by services (63), manufacturing (34) and agriculture (7). The DoI received one proposal each in the energy and industrial sectors.
In terms of committed amount, 60 percent of total FDI proposals were in the services sector, which attracted over Rs 34.92bn. Tourism followed with Rs 18.38bn, manufacturing with Rs 2.74bn, ICT with Rs 1.11bn and agriculture with Rs 761m.
Although the commitments look optimistic, actual FDI inflows have historically remained low in Nepal. According to Nepal Rastra Bank (NRB), only 36 percent of approved FDI commitments from 1995-96 to 2022-23 translate into actual investments.
In 2022-23, the total FDI stock rose by 11.8 percent to Rs 295.5bn, but net FDI inflow stood at just Rs 6bn. In 2023-24, only Rs 8.4bn, or 13.59 percent, of the Rs 61.78bn in committed investment was realized.
Experts say inadequate physical infrastructure—including roads, reliable energy supply, and industrial zones—are a major barrier to attracting FDI in Nepal.
While electricity supply has improved in recent years, industrialists say it remains inconsistent, forcing them to rely on generators. Restrictions on profit repatriation and rigid labor laws have also discouraged investment in the past.
However, government officials claim that recent legal reforms have begun to address these long-standing challenges.
