FDI commitments in two months amount to around Rs 13 billion

​​​​​ KATHMANDU, SEPTEMBER 19: In the first two months of the current fiscal year, Nepal received direct foreign investment (FDI) commitments totaling NPR 12.98 billion, which is 11.20% lower compared to the same period last fiscal year, when such commitments reached NPR 14.62 billion.

The Department of Industry reported that in the first month of Shrawan (mid-July to mid-August), NPR 9.15 billion was committed as FDI, while NPR 3.83 billion was pledged in the second month of Bhadra (mid-August to mid-September) for the fiscal year 2023/24. In the corresponding months of 2022/23, the figures were NPR 11.93 billion and NPR 2.69 billion, respectively. Over the entire previous fiscal year, foreign investors committed a total of NPR 54.87 billion, although only NPR 8.46 billion was actually invested.

Last Baisakh (mid-April to mid-May), during the third investment summit, the Department introduced a system to approve foreign investments through an automatic route. This allows both domestic and foreign investments in industries with a total capital of up to NPR 500 million. For industries based on information technology, no minimum ceiling is set.

While FDI commitments have increased, actual inflows remain low, as shown by data from Nepal Rastra Bank. Stakeholders point out that there is no policy requiring all committed foreign investments to be realized within the same period.

They also noted that the government allows foreign investors to bring in funds in phases (installments) when approving investments. Government officials further acknowledged that not all committed or approved funds are received at once.

Last fiscal year, gross FDI inflows into the country amounted to NPR 19.21 billion. However, with NPR 650.87 million in old investments flowing out of the country, the net FDI stood at NPR 18.56 billion.

As FDI began declining from the previous fiscal year, the government adopted more flexible policies. Last fiscal year, the minimum limit for FDI was lowered from NPR 500 million to NPR 200 million.

In the 2023/24 budget, it was mentioned that the minimum ceiling for FDI in sectors like information and technology would be reviewed and potentially removed. However, the Department stated that this has not yet been fully implemented. Currently, only the ceiling for foreign investment through the automatic route in the IT sector has been annulled.