Kathmandu— Foreign direct investment (FDI) commitments to Nepal experienced a significant decrease in the initial month of fiscal year 2026/27, which ran from July 17 to August 16, 2026. The Department of Industry reported that investors committed Rs. 3.77 billion for 191 projects during this period, representing an 84 percent drop compared to the Rs. 23.37 billion pledged in the same timeframe last fiscal year. This decline signals a potential slowdown in foreign investment within the country and raises questions about economic growth prospects. The majority of commitments came through automatic routes for small-scale industries.

Dramatic Drop in FDI Pledges

The substantial decrease in FDI commitments during the first month of fiscal year 2026/27 is a marked contrast to the previous year’s figures. The Rs. 3.77 billion pledged represents a decline of Rs. 19.60 billion from the Rs. 23.37 billion recorded in the corresponding period of fiscal year 2025/26. Total FDI commitments for fiscal year 2025/26 reached approximately Rs. 58 billion, highlighting the severity of the recent downturn.

Sectoral Distribution of Investment

While the number of projects was dominated by the information and communication technology (ICT) sector – with 128 industries registered representing 67 percent of all new registrations – the tourism sector attracted the highest investment value at Rs. 1.63 billion. Manufacturing followed with Rs. 843 million in commitments, while ICT accounted for Rs. 569 million and service sector Rs. 682 million. Agro-based and energy sectors received minimal commitments of just Rs. 20 million each. A total of 187 small-scale industries were registered during the review period, alongside two medium-scale and one large-scale industry.

Employment Projections

The FDI-approved industries committed to creating 1,773 jobs within Nepal. This indicates that despite the overall decrease in investment volume, there is still a focus on generating employment opportunities through foreign-backed projects. The majority of these positions are expected to be created across the various sectors receiving investment, with ICT and tourism likely contributing significantly.

The significant decline in FDI commitments warrants close monitoring as the fiscal year progresses, particularly regarding its potential impact on Nepal’s economic growth and job creation.

(With inputs from RN)

Originally published on abcnews.com.np.