Nepal’s Department of Industry cleared 94 foreign direct investment projects valued at Rs 5.11 billion in one month, yet overall quarterly commitments fell sharply as small-scale and automatic-route approvals dominate the landscape.

Nepal’s Department of Industry approved 94 foreign direct investment (FDI) projects with combined commitments of Rs 5.11 billion (approximately USD 33.6 million at current rates) between mid-September and mid-October, according to its latest monthly report. The figure covers the Nepali month of Ashoj in the first quarter of fiscal year 2026/27.

Of these, 88 projects worth Rs 4.84 billion were cleared through the automatic route, while six projects valued at Rs 266 million went through the regular approval process. Officials expect the approved ventures to generate 1,167 jobs.

Quarterly Picture Shows Sharp Drop in Value

In the first three months of the current fiscal year, the department approved FDI commitments totalling Rs 16.23 billion across 422 projects. This marks a steep decline from Rs 35.13 billion recorded in the corresponding period of the previous fiscal year, even as the number of projects rose. Of the quarterly total, 410 projects worth Rs 14.59 billion used the automatic route and 12 projects worth Rs 1.65 billion followed the regular route. These initiatives are projected to create 5,129 jobs.

All 94 projects approved in the latest month were classified as small enterprises. Across the first quarter, 417 of the 422 projects were small-scale, with only two medium-scale and three large-scale ventures. This pattern continues a longer-term trend in which project numbers have risen while average investment size has fallen.

Tourism Leads in Value, ICT in Volume

Sectoral breakdowns for the first quarter reveal a clear divergence between the number of projects and the capital they attract. Information and communication technology accounted for the largest share of projects – 252, or about 60 per cent of the total – yet drew only Rs 928.4 million in commitments.

Tourism ranked second by project count with 108 ventures (26 per cent of the total) but led in investment value, attracting Rs 6.08 billion, or 37 per cent of overall commitments. The energy sector secured Rs 4 billion, representing 25 per cent of total commitments, through just two projects. Services received Rs 3.58 billion across 33 projects, manufacturing Rs 1.61 billion from 25 projects, and agriculture and forestry Rs 40 million from two projects. No projects were registered in mining or infrastructure during the period.

Automatic Route Gains Further Ground

The heavy reliance on the automatic route reflects policy changes designed to simplify entry for foreign investors. Nepal expanded the automatic route in early 2026, increasing the number of eligible sectors and removing previous investment ceilings for many categories. The system allows qualifying proposals to receive approval through an online process without traditional case-by-case scrutiny.

This facilitation has encouraged a higher volume of smaller proposals, particularly in ICT and tourism-related activities. At the same time, the data highlight the continued challenge of attracting large-scale capital inflows. Previous fiscal years showed a similar pattern: more projects approved but lower total commitment values and declining average investment per project.

Additional Approvals and Outflows

Beyond new project approvals, the department cleared 10 share purchase or subscription agreements worth Rs 1.69 billion and 20 technology transfer agreements during the month. Since the start of the fiscal year, it has approved 22 share agreements valued at Rs 2.51 billion and 32 technology transfer agreements.

Visa recommendations continued as well. In the latest month the department recommended business visas for 59 investors, 37 representatives and 66 dependents. Cumulative figures for the first three months stood at 144 investors, 99 representatives and 152 dependents.

Repatriation figures provide another window into existing foreign investment activity. Royalty repatriation during the month totaled (Nepali) Rs 294.59 million, USD 398,378 and INR 21.75 million. Cumulative royalty repatriation for the quarter reached (Nepali) Rs 916.6 million, USD 1.19 million and INR 25.72 million. Dividend repatriation amounted to (Nepali) Rs 196.42 million in the month, with additional service fee outflows recorded in Indian rupees.

Broader Context for International Readers

These figures illustrate both the opportunities and constraints facing Nepal’s investment climate. The Himalayan nation has sought to improve its attractiveness through legal reforms, digitalisation of approvals and targeted promotion of sectors such as tourism, hydropower and information technology. Recent years have also seen growing electricity exports to India, generating valuable foreign exchange even as the country recovers from natural disasters.

Yet the gap between the rising number of approved projects and the falling value of commitments points to structural issues. Large investors still often navigate longer processes or face broader challenges related to infrastructure, policy consistency and market size. The dominance of small-scale ventures suggests that while entry has become easier for many, converting approvals into substantial, job-rich operations remains uneven.

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