Kathmandu: India remained the largest source of Foreign Direct Investment (FDI) in Nepal, although investment from China has also been rising in recent years, according to data released by Nepal Rastra Bank (NRB), the country’s central bank.
India accounted for 32.8 per cent of Nepal’s total FDI stock as of mid-July 2025, followed by China with 9.3 per cent, Ireland with 7.3 per cent, Australia with 6.5 per cent and Singapore with 5.4 per cent, according to a report titled Foreign Direct Investment (FDI) in Nepal 2024/25: A Survey Report, released by Nepal Rastra Bank on Thursday.
Total FDI stock increased by 2.1 per cent in fiscal year 2024/25, reaching NPR 340 billion as of mid-July 2025. Of the total FDI stock, India’s FDI stock in Nepal stood at NPR 111.63 billion, according to the report. FDI stock is the total accumulated value of foreign direct investment (including equity capital, reinvested earnings, and net loans) in a country at a specific point in time
Historically, India has remained the largest contributor of FDI to Nepal, although Chinese FDI has also been growing in recent years. However, many FDI commitments have not translated into actual investment.
“The majority of India’s FDI stock has remained in three sectors – manufacturing (39 per cent), electricity, gas, steam, and air conditioning (31.9 per cent), and financial and insurance services (21.3 per cent),” according to the report.
China’s FDI stock stood at NPR 31.43 billion as of mid-July 2025. Chinese FDI stock is mostly concentrated in the electricity, gas, steam, and air-conditioning sector, which accounts for 79.1 per cent of its total FDI stock, followed by the manufacturing sector at 34.8 per cent.
Although the number of FDI-approved projects has steadily increased over the years, the report says the realisation of approved investment has remained significantly lower.
Nepal has realised only about 29.6 per cent of the FDI approved over the past three decades, highlighting a persistent gap between investment commitments and actual capital inflows.
According to the latest NRB data, between fiscal years 1995/96 and 2024/25, the country received actual net FDI inflows equivalent to just 29.6 per cent of the total FDI approved during the period.
The report identifies narrowing the gap between approved and realised investment as an important policy priority.
The divergence between approved commitments and actual investment is attributed to several factors.
“Firstly, FDI approval represents the intended or committed investment, which may not necessarily materialise in full,” the report said. “Secondly, there are often significant time lags between approval and the actual inflow of capital.”
The report also noted that investments in sectors with longer gestation periods may be realised incrementally over multiple years, contributing to the discrepancy between approved FDI and actual net inflows.
(IANS)
