Nepal sees surge in FDI, approaching Rs 500 bn milestone

Kathmandu: Foreign Direct Investment (FDI) in Nepal has reached unprecedented levels, marking a significant milestone in the economic landscape of the country. As of mid-June, the current fiscal year (FY) 2023/24 has witnessed FDI inflows soar to Rs 44.40 billion, reflecting a substantial increase of Rs 10.82 billion compared to the same period last year.

The surge in FDI can be attributed to various factors, including the successful Nepal Investment Summit organized by the government earlier this year, which played a pivotal role in boosting investor confidence and attracting substantial foreign capital.

According to the Department of Industry (DoI), a total of 359 FDI proposals have been greenlit by mid-June, underscoring growing investor interest in Nepal’s burgeoning market. Notably, during the Nepali month of Jestha (mid-May to mid-June), FDI approvals amounted to Rs 3 billion alone.

The implementation of the automatic route for FDI has also streamlined the investment process, resulting in a commendable Rs 11.81 billion influx of FDI during the same period. The automatic route, introduced to facilitate foreign investments, has seen 90 proposals approved by mid-June, totaling Rs 8.27 billion.

Cumulatively, Nepal’s FDI tally has now approached Rs 500 billion, with the DoI reporting a total approval of Rs 594.36 billion by mid-June. This influx is expected to generate approximately 329,655 jobs across various sectors, reflecting the positive economic impact of foreign investments.

Small-scale industries have notably benefited from this surge, with 341 small, 14 medium-scale, and 4 large-scale industries receiving FDI approvals this fiscal year. In the recent mid-May to mid-June period, 51 small industries were approved for FDI, highlighting the diversified interest in Nepal’s economic potential.

The tourism sector has emerged as a frontrunner in attracting FDI, securing nearly half of this year’s total approvals. With 176 proposals approved, tourism accounts for 49% of the sanctioned FDI, followed by the service sector with 114 proposals (32%) and the productive sector with 40 proposals.

Further diversification in FDI flows includes 10 proposals in information technology, 8 in agriculture, 7 in infrastructure, 3 in mining, and 1 in energy, showcasing Nepal’s expanding economic sectors.