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Current Status of FDI in Nepal 2026
02
May
Current status of FDI in Nepal 2026 reflects a landscape of significant policy liberalization alongside persistent implementation challenges. While foreign direct investment commitments have surged following major regulatory reforms—most notably the February 2026 expansion of the automatic route to 102 sectors and removal of the NPR 500 million investment ceiling—actual capital inflows continue to lag behind approved commitments. For investors, policymakers, and analysts, understanding this divergence between approved FDI and realized FDI is essential for accurate market assessment.
This tutorial is designed to guide stakeholders through the complete Nepal FDI status 2026 framework. From net inflow statistics and sectoral distribution to country-wise investment patterns and recent legislative reforms, every dimension is explained in plain detail. All facts presented herein are drawn from the Nepal Rastra Bank (NRB) Survey Report 2024/25, the Department of Industry (DOI) statistics, the Foreign Investment and Technology Transfer Act 2075 (2019), and the February 2026 Nepal Gazette Notification .
What Is the Current Status of FDI in Nepal 2026?
Current status of FDI in Nepal 2026 is characterized by a commitment-inflow gap: while approved FDI commitments have increased substantially, actual capital inflows remain modest due to political uncertainty, infrastructure deficits, and implementation delays . According to the Department of Industry, Nepal received FDI commitments worth NPR 39.25 billion across 476 projects in the first six months of FY 2025/26 (until mid-January 2026), marking a 52.11% increase from the same period in the previous fiscal year .
However, net FDI inflows stood at only NPR 7.47 billion in the first five months of FY 2025/26 (until mid-December 2025), reflecting a significant gap between committed and actualized investment . This disparity is a defining feature of Nepal's FDI landscape and is attributed to bureaucratic hurdles, political instability, and global risk aversion.
FDI Inflow Trends: Historical and Current
Nepal's FDI inflows have fluctuated significantly over the past decade. The following table summarizes net FDI inflows from FY 2015/16 to FY 2024/25 :
| Fiscal Year | Net FDI Inflow (USD Million) | Trend |
|---|---|---|
| 2015/16 | 149.83 | Baseline |
| 2016/17 | 103.87 | Decline |
| 2017/18 | 100.50 | Slight decline |
| 2018/19 | 149.83 | Recovery |
| 2019/20 | 108.88 | COVID-19 impact |
| 2020/21 | ~150 | Recovery |
| 2021/22 | ~150 | Stable |
| 2022/23 | 59.73 | Sharp decline |
| 2023/24 | ~86 | Partial recovery |
| 2024/25 | 86.15 | Modest growth |
The sharp decline to USD 59.73 million in FY 2022/23 reflected global investor caution amid Nepal's political instability and post-pandemic economic disruption. While FY 2024/25 saw modest recovery to USD 86.15 million, this remains far below Nepal's potential and the USD 20 billion annual target economists estimate is needed to achieve middle-income status .
FDI Stock and Country-wise Distribution
As of mid-July 2024, Nepal's total FDI stock reached NPR 333 billion (approximately USD 2.5 billion), representing accumulated foreign investment across all sectors .
Top FDI Source Countries (by Stock)
| Rank | Country | Share of Total FDI Stock | Key Sectors |
|---|---|---|---|
| 1 | India | 32.3% | Manufacturing (38.6%), electricity (33.6%), financial services (18.6%) |
| 2 | China | 10.2% | Electricity (85.9%), manufacturing (33.9%) |
| 3 | Singapore | 8.3% | Diversified services |
| 4 | Ireland | 6.9% | Financial services |
| 5 | South Korea | 6.1% | Manufacturing, technology |
Paid-Up Capital by Country:
| Country | Paid-Up Capital (NPR Billion) |
|---|---|
| India | 55.6 |
| China | 29.8 |
| South Korea | 17.4 |
| Ireland | 10.7 |
Sector-wise FDI Distribution
FDI in Nepal is concentrated in a few priority sectors, with services and tourism leading recent commitments :
FY 2024/25 Sector-wise Commitments
| Sector | Commitment (NPR Billion) | Projects | Key Activities |
|---|---|---|---|
| Agro and Forestry | 21.88 | 13 | Large-scale agricultural processing |
| Tourism | 10.54 | 145 | Hotels, resorts, adventure tourism |
| Services | 3.48 | 32 | Business services, logistics |
| Manufacturing | 2.03 | 24 | Textiles, electronics, FMCG |
| ICT | 1.07 | 257 | Software, BPO, data centers |
| Energy | 0.18 | 1 | Hydropower, renewables |
Historical Sector Trends (FY 2021/22–2024/25):
| Sector | Trend |
|---|---|
| Services | Consistently led, peaking at USD 234.3M in FY 2023/24 |
| Tourism | Steady growth to USD 180.04M in FY 2024/25 |
| Manufacturing | Volatile with spikes and declines |
| Energy/Infrastructure | Sharp decline in FY 2024/25 after previous highs |
| ICT | Gradual growth, 257 projects in FY 2025/26 |
Provincial Distribution of FDI
FDI stock is heavily concentrated in Nepal's economic and administrative center :
| Province | Share of FDI Stock |
|---|---|
| Bagmati (Kathmandu Valley) | 62% |
| Koshi | 13.5% |
| Gandaki | 13.1% |
| Madhes | 6.1% |
| Sudurpashchim | 4.2% |
| Lumbini | 1% |
| Karnali | 1% |
This concentration reflects infrastructure availability, market access, and administrative proximity, but also highlights significant regional inequality in investment distribution.
Major FDI Reforms in 2025–2026
The current status of FDI in Nepal 2026 has been significantly shaped by recent policy reforms:
February 2026 Automatic Route Expansion
On 16 February 2026, the Ministry of Industry, Commerce and Supplies issued a Nepal Gazette notification that fundamentally liberalized Nepal's FDI framework :
| Reform | Previous Rule | New Rule (February 2026) |
|---|---|---|
| Sector Coverage | 60 industry areas | 102 industry areas |
| Investment Ceiling | NPR 500 million cap | No upper limit |
| IT Sector Minimum | NPR 20 million | No minimum for IT/digital |
| Approval Method | Manual DOI scrutiny | Online automatic certification |
102 Sectors Under Automatic Route (Selected)
| Category | Number of Sub-sectors | Examples |
|---|---|---|
| Energy | 4 | Wind, solar, biogas, biomass |
| Agriculture & Forestry | 13 | Food processing, tea, coffee, rubber, timber |
| Infrastructure | 8 | Convention centers, export processing zones, cargo complexes |
| Tourism | 4 | Hotels, resorts, healing centers, water parks |
| IT & Technology | 9 | Software, data centers, BPO/KPO, cloud computing |
| Services | 23 | Hospitals, sports facilities, construction, logistics |
| Manufacturing | 41 | Textiles, electronics, cement, vehicles, FMCG |
Other Key Reforms
| Reform | Effective Date | Impact |
|---|---|---|
| NRB Prior Approval Removed | December 30, 2025 | Foreign equity no longer requires pre-injection NRB approval; post-inflow recording within 6 months |
| Minimum Investment Reduced | 2022 | From NPR 50 million to NPR 20 million for general sectors |
| One Stop Service Centre (OSSC) | Operational | Centralized DOI, OCR, NRB, and IRD services for foreign investors |
| FITTA Amendment 2025 | 2025 | Contract manufacturing liberalization for foreign-invested industries |
Challenges in FDI Realization
Despite liberalized policies, several structural challenges constrain actual FDI inflows in Nepal :
| Challenge | Description |
|---|---|
| Political Instability | 32 governments in 35 years; post-protest environment eroded investor confidence |
| Implementation Gap | Approved commitments rarely translate to actual capital inflows |
| Infrastructure Deficits | Poor roads, unreliable power, and landlocked geography increase costs |
| Bureaucratic Delays | Inter-agency coordination between DOI, IBN, NRB, and IRD creates bottlenecks |
| Corruption | CPI score of 34/100; "licence raj" during approval phase |
| Labor Market Constraints | 2,000+ youths leaving daily; skill shortages in technical fields |
| Repayment Risk | Hydropower projects face cross-border power trade uncertainties |
FDI Enterprise Performance
The NRB's 2023/24 survey of FDI enterprises revealed mixed operational performance :
| Metric | Value |
|---|---|
| Manufacturing Capacity Utilization | 47.5% |
| Profitability | 10.7% |
| Foreign Loans (Outstanding) | NPR 59.9 billion |
| Hydropower Foreign Loans | NPR 34.7 billion (58% of total) |
Frequently Asked Questions About FDI Status 2026
Q1: What is the current status of FDI in Nepal 2026?
The current status of FDI in Nepal 2026 shows NPR 39.25 billion in commitments (up 52.11% YoY) but only NPR 7.47 billion in actual net inflows during the first half of FY 2025/26, reflecting a significant commitment-inflow gap .
Q2: What is Nepal's total FDI stock?
As of mid-July 2024, Nepal's FDI stock reached NPR 333 billion (~USD 2.5 billion), with India holding the largest share at 32.3% .
Q3: Which countries invest most in Nepal?
India (32.3%), China (10.2%), Singapore (8.3%), Ireland (6.9%), and South Korea (6.1%) are the top FDI source countries by stock .
Q4: What sectors attract the most FDI in Nepal?
Services, tourism, manufacturing, energy, and ICT are the leading sectors. Agro-forestry topped FY 2025/26 commitments with NPR 21.88 billion .
Q5: What is the automatic route for FDI in Nepal?
The automatic route allows eligible foreign investors to obtain FDI approval automatically through an online DOI portal without manual scrutiny. As of February 2026, it covers 102 sectors with no investment ceiling .
Q6: Is there a minimum investment for FDI in Nepal?
The general minimum is NPR 20 million (~USD 150,000). However, IT and digital sectors have no minimum threshold under the automatic route .
Q7: How long does FDI approval take in Nepal?
Automatic route approvals are granted within 7 working days. Standard route approvals take 15–30 days. Full establishment typically requires 3–6 weeks .
Q8: Can foreign investors repatriate profits from Nepal?
Yes. FITTA 2019 guarantees repatriation rights for profits, dividends, and capital gains in convertible foreign currency, subject to tax clearance and NRB recording .
Q9: What is Nepal's sovereign credit rating?
Nepal holds a BB- sovereign credit rating from Fitch Ratings, indicating moderate risk with a stable outlook .
Q10: What is the future outlook for FDI in Nepal?
Positive but cautious. The February 2026 reforms significantly improved the approval framework, but actual inflows depend on political stability, infrastructure development, and global economic conditions .
How CorporateNp Can Assist Foreign Investors
The current status of FDI in Nepal 2026 is found to offer substantial opportunities alongside notable risks. At CorporateNp, comprehensive FDI advisory and corporate services are provided to foreign investors navigating Nepal's evolving investment landscape.
From sectoral eligibility analysis and automatic route application to DOI/IBN approval procurement, company incorporation, tax structuring, and ongoing compliance management, every stage is handled by experienced professionals with deep knowledge of Nepal's FDI framework.
Contact CorporateNp today to capitalize on Nepal's liberalized FDI regime and structure your investment for optimal regulatory compliance and long-term success.
Disclaimer
The information presented in this blog is intended for general educational purposes only. It does not constitute legal, financial, or investment advice. The current status of FDI in Nepal 2026 is subject to rapid change due to political, economic, and regulatory developments. Readers are strongly advised to consult qualified legal and financial professionals and verify current statistics directly with the Department of Industry, Nepal Rastra Bank, and other official sources before making investment decisions. CorporateNp and its representatives shall not be held liable for any consequences arising from reliance on the information provided herein.
References
For further reading and verification, the following authoritative sources are referenced:
- Department of Industry, Nepal — FDI approval, automatic route sectors, and industry registration .
- Nepal Rastra Bank — FDI survey reports, net inflow statistics, and foreign exchange regulations .
- Investment Board Nepal — Large-scale project approval and monitoring.
- UNCTAD Investment Policy Monitor — February 2026 automatic route expansion analysis .
- Kathmandu Post: FDI Inflows Drop Nearly 40 Percent — FDI commitment statistics and political context
- Nepal Economic Forum: Foreign Aid and FDI in Nepal — Historical FDI trends, sector analysis, and country-wise data .
- Rising Nepal Daily: Nepal's FDI Stock Reaches Rs. 333B — NRB survey 2024/25, country-wise stock, and provincial distribution .
- CorporateNp: Foreign Direct Investment Approval Process — Step-by-step FDI approval guide with timelines and costs .
- Attorney Nepal: One Day FDI Approval Service — Expedited FDI approval services .
- OMM News: India Tops in FDI Stocks in Nepal — Country-wise FDI stock analysis .
