Nepal approves billions in foreign investment each year, but less than a third has ever arrived

In 2024/25, foreign-owned companies in Nepal sent home Rs 33.9bn (about $219m) in dividends, according to Nepal Rastra Bank, the central bank. In the same year, gross new foreign direct investment into the country was Rs 12bn, the bank's annual survey shows. The Department of Industry, which approves foreign investment proposals, had approved about Rs 64.5bn of commitments that year, The Annapurna Express reported.

Those three numbers capture a habit Nepal has never broken. Approvals are announced, reported and celebrated as a measure of investor confidence, but they are promises. What reaches the country is far smaller, and over three decades the central bank calculates that less than a third of approved investment has ever arrived. The question matters now because the 2026/27 budget proposed another round of measures to ease entry, and Investment Board Nepal, chaired by Prime Minister Balen Shah, approved fresh projects as recently as 9 October.

Pledges and receipts

The Department of Industry approved Rs 58.01bn (about $374m) of foreign investment commitments across 1,116 projects in fiscal year 2025/26, which ended in mid-July, according to The Annapurna Express and ShareSansar. It was the second annual fall in value, from Rs 69.83bn in 2023/24 and Rs 64.47bn in 2024/25, even as the number of projects doubled from 539 over two years. The 2025/26 approvals were expected to create about 28,423 jobs.

Source: Department of Industry, via The Annapurna Express and ShareSansar

A single proposal shaped the year. Onlinekhabar reported that approvals in the first month of 2025/26 included Rs 20.45bn for a plant to process cooked buffalo meat for export to China, which on its own accounts for more than a third of the full-year total. ShareSansar's sector figures show the effect: 18 agricultural projects took Rs 23.18bn, about 40% of the total. Tourism drew Rs 13.99bn across 227 projects, energy Rs 7.16bn across four and manufacturing Rs 3.91bn across 63. Information technology led by count, with 727 projects, but together they came to Rs 2.83bn.

The start of the new year shows how sensitive the headline is to one deal. Approvals in the first month of 2026/27 were Rs 3.77bn across 191 projects, Himal Press reported, which Onlinekhabar calculated was more than 84% below the same month a year earlier, when the buffalo meat project was included.

Money that actually arrived moved the other way. Nepal Rastra Bank recorded equity FDI inflows of Rs 28.49bn (about $184m) in 2025/26, up from Rs 12.02bn the year before, B360 reported. Inflows in any year relate to approvals from earlier years, so the two series cannot be matched project by project, but the gap in 2024/25, roughly Rs 12bn arriving against approvals of about Rs 65bn, is typical of the long record. The Annapurna Express reported that only 13% to 35% of approved commitments are eventually realised.

Three decades of shortfall

The central bank's survey, Foreign Direct Investment in Nepal 2024/25, released in September, puts the long-run figure precisely. Between 1995/96 and 2024/25, net FDI inflows amounted to about 29.6% of the investment approved over the period. The bank offers three explanations: an approval records an intention that may never be met in full, there are often long lags between approval and the arrival of money, and projects with long gestation periods bring in capital gradually.

The survey also identifies the constraints investors report: infrastructure bottlenecks, regulatory and procedural delays, and difficulty acquiring land. The same obstacles slow the state's own projects, as our explainer on capital spending in the 2026/27 budget sets out.

What has arrived is concentrated. The survey puts the stock of FDI at about Rs 340bn ($2.2bn) in mid-July 2025, up 2.1% in a year, from 60 countries. India holds 32.8%, followed by China at 9.3%, Ireland at 7.3%, Australia at 6.5% and Singapore at 5.4%. Manufacturing and electricity each account for 27.8% of the stock and finance and insurance for 26.3%. Bagmati province, which contains Kathmandu, holds 64%; Karnali less than 1%.

• India32.8%33%
• China9.3%9%
• Ireland7.3%7%
• Australia6.5%7%
• Singapore5.4%5%
• Other countries38.7%39%

Source: Nepal Rastra Bank, Foreign Direct Investment in Nepal 2024/25

The flows inside that stock are revealing. Reinvested earnings make up more than a third of it, which the bank reads as confidence among existing investors. But in 2024/25 foreign investors also withdrew Rs 4.7bn of capital, leaving net inflows of only about Rs 7.3bn, while dividends paid out came to Rs 33.9bn, led by manufacturing and then financial services.

Lowering the bar

Successive governments have concentrated on the cost of entry. In December 2024 Damodar Bhandari, who was minister for industry, commerce and supplies at the time, said at a summit in New Delhi that the minimum foreign investment had been cut from Rs 50m (about $323,000) to Rs 20m (about $129,000), with no minimum for IT, that proposals of up to Rs 500m could be approved automatically online, and that a one-stop service centre now brought 14 agencies together, B360 reported.

On 16 February 2026 a government notification under Section 42 of the Foreign Investment and Technology Transfer Act of 2019 widened the automatic route from 60 industry areas to 102 and removed the Rs 500m ceiling, according to the law firm Niti Partners. The additions include software, data processing, outsourcing, data centres, cloud services and technology and biotech parks. In 2025/26, 897 projects worth Rs 9.58bn went through it, against 219 projects worth Rs 48.41bn through the regular process, ShareSansar reported; in the first month of 2026/27, 187 of 191 approvals were automatic, according to Himal Press.

The 2026/27 budget, presented on 29 May by the finance minister, Swarnim Wagle, went further. The Annapurna Express reported that it proposed an "Investment Express" platform to bring company registration, tax, visas and financial services into a single digital process, along with investment protection and double taxation agreements with partner countries and simpler rules on share transfers, liquidation and profit repatriation.

Where large projects stand, and what to watch

The biggest proposals go to Investment Board Nepal, a body chaired by the prime minister. Of the 53 projects the board had approved and was taking forward, only two were in operation, Kantipur reported in May. At its 68th meeting on 9 October, Onlinekhabar reported, the board approved investment in two semi-reservoir hydropower schemes, the 58.9MW Nar Khola project at Rs 10.75bn and the 46.72MW Sani Bheri-3 at Rs 10.42bn, recorded that the 900MW Arun-3 plant is due to begin commercial generation by February 2028, and approved facilitation for the 900MW Upper Karnali project. Our report on the board's latest hydropower decisions has more detail.

The government's wider approach to business is examined in our earlier report. Three numbers will show whether the gap between promise and delivery is narrowing. The first is Nepal Rastra Bank's monthly inflow figure for 2026/27, which will show whether the jump to Rs 28.49bn in 2025/26 holds without large one-off deals. The second is the share of the Investment Board's 53 projects that reach construction or operation. The third is the realisation rate in next year's central bank survey: whether 29.6% begins to rise, which approvals alone cannot show.