Foreign direct investment (FDI) commitments to Nepal declined by nearly 11 percent in fiscal year 2025/26 despite a series of government reforms aimed at attracting overseas investors. According to the Department of Industry, FDI commitments totaled Rs 58.01 billion across 1,116 projects, down from Rs 64.96 billion in the previous fiscal year.
Business leaders attribute the decline to policy uncertainty, bureaucratic delays, political instability and weakened investor confidence following attacks on private businesses during the Gen Z protests, which reportedly caused losses of around Rs 80 billion.
The information and communication technology (ICT) sector accounted for the highest number of approved projects with 727, followed by tourism, services and manufacturing. However, the agriculture and forestry sector attracted the largest investment commitments at Rs 23.19 billion, ahead of tourism and energy.
While the automatic approval system facilitated approvals for 897 projects, large-scale investments continue to face lengthy administrative procedures, land acquisition issues, environmental clearances and infrastructure constraints.
Experts say Nepal retains strong investment potential in tourism, agriculture, energy, manufacturing and information technology. However, attracting greater foreign investment will require stable policies, faster decision-making, improved infrastructure, stronger investor protection and timely implementation of approved projects.
