KATHMANDU, Dec 18: At a time when calls are growing to increase investment in agriculture, foreign investors have also shown interest in the sector. By December of the current fiscal year 2025/26, foreign investors have committed to invest around Rs 21.88 billion in agriculture-based industries.
Among total foreign investment commitments made this year, the agriculture sector has received the highest share. According to the Department of Industry (DoI), a total foreign investment commitment of Rs 38.59 billion was recorded in the first five months of the current fiscal year. In the month of Mangsir (mid-November to mid-December) alone, foreign investment commitments worth around Rs 1.91 billion were received across 56 different industries.
The DoI stated that 438 foreign investment-related projects were approved in the five-month period. After agriculture, the tourism sector has attracted the second-highest amount of investment commitments, with Rs 10.12 billion pledged in tourism-related industries.
Similarly, the service sector has received commitments worth Rs 3.38 billion, the manufacturing sector Rs 1.97 billion, and the information technology sector Rs 990 million. Although the investment volume is relatively low, the information and communication technology (ICT) sector accounts for the highest number of projects.
What is missing in budget for agriculture?
Of the 438 foreign investment projects approved, nearly half—236 projects—are related to the ICT sector. Likewise, investment proposals have been received for 135 projects in the tourism sector.
Despite the large number of projects, total investment in the ICT sector stands at around Rs 990 million. Based on project size, among the 438 approved industries, 423 are small-scale, eight are medium-scale, and seven are large-scale industries.
Despite policy-level facilitation by the government, foreign direct investment has not increased as expected. Foreign investors have been seeking approval mainly in service, tourism, information technology, agriculture and forest-based industries, and manufacturing sectors. To invest in small to large industries, foreign investors register companies at the Office of the Company Registrar and obtain approval from the Department of Industry.
Nepal holds significant investment potential in sectors such as infrastructure, electricity, tourism, agriculture, and information technology. Although approvals are granted by the Investment Board and the Department of Industry, foreign investment flows into the country through Nepal Rastra Bank.
The government’s foreign investment policy aims to mobilize foreign capital, technology, skills, and knowledge in priority sectors by recognizing the leading role of the private sector in achieving sustainable and broad-based economic growth and employment generation. Stakeholders say investment would increase further if procedural hurdles, high land prices, weak Doing Business indicators, high labor wages, and double taxation issues were addressed.
The government has a plan to create an investment-friendly environment and develop Nepal as an attractive investment destination. The Department of Industry has formulated plans to boost domestic production and productivity by utilizing local resources and skills alongside foreign capital, modern technology, and expertise.
However, the government’s goal of reducing the trade deficit and maintaining trade balance by promoting import substitution and expanding access to industrial goods and services has yet to be realized. To encourage domestic and foreign investment, the government has recently introduced investment-friendly legislation.
These include amendments to the Financial Procedures and Fiscal Responsibility Act, the Privatization Act, laws related to improving the economic and business environment and boosting investment, and laws related to good governance and public service delivery.
Following the government’s decision to provide concessions on penalties payable during company liquidation, investor interest has increased. The process of repatriating foreign investment or earned income has also been gradually simplified.
