FDI commitments down 53.8% in Q1

KATHMANDU: Foreign direct investment (FDI) commitments to Nepal fell by 53.8% in the first quarter of the fiscal year 2026/27 compared to the same period of the previous fiscal year.

According to the Department of Industry (DoI), Nepal received FDI commitments of Rs 16.23 billion between mid-July and mid-October of the current fiscal year. Such commitments stood at Rs 35.13 billion in the corresponding period of the previous fiscal year.

The number of projects, however, increased by 35.7% to 422 from 311 in the same period last fiscal year.

Employment commitments, on the other hand, declined sharply to 5,129 from 33,814, a drop of 84.8%.

Data show that although more foreign investment projects were registered during the quarter, their combined investment value and promised employment were substantially lower compared to the same period of the previous fiscal year.

The commitments were secured for 422 projects during the first quarter of the current fiscal year, compared to 311 projects in the corresponding period of 2025/26. The projects registered in the current fiscal year have pledged to create 5,129 jobs, significantly lower than the 33,814 jobs committed by projects which sought permission to bring FDI in the same period of 2025/26.

Sector-wise data show that information and communication technology (ICT) attracted the highest number of projects in the review quarter, accounting for 252 of the 422 projects registered during the quarter. However, their combined investment commitment stood at just Rs 928.37 million. This suggests that most ICT investments are relatively small in terms of capital.

Tourism ranked second in terms of the number of projects, with 108 projects attracting investment commitments worth Rs 6.08 billion. The sector thus accounted for the largest share of total committed investment, at around 37.5%.

The services sector attracted 33 projects with commitments worth Rs 3.58 billion, while manufacturing accounted for 25 projects with proposed investments of Rs 1.61 billion.

Energy attracted commitments worth Rs 4 billion for two projects, making it the second-largest sector in terms of investment value despite having a very small number of projects. Agro and forestry-based industries attracted two projects with commitments of Rs 40 million.

No FDI commitments were recorded in the mining and infrastructure categories during the quarter.

The latest monthly figures also suggest that investment commitments remained strong towards the end of the quarter. In Ashwin (mid-Sept to mid-Oct) alone, Nepal received FDI commitments worth Rs 5.1 billion for 94 projects. These projects have pledged to employ 1,167 people.

In comparison, Ashwin of the previous fiscal year recorded commitments worth Rs 2.04 billion for 75 projects.

However, only a small portion of committed FDI translates into actual investment. According to the Nepal Rastra Bank, foreign investment commitments reached approximately Rs 64.96 billion in 2024/25, while actual realized inflows stood at Rs 12.02 billion.