Imagine someone from Australia, India, or the U.S. sending a bag full of money to Nepal, not as a donation, but to start a business, open a hotel, or build a factory.

That’s Foreign Direct Investment (FDI) in action.

FDI means foreigners are investing in Nepal’s industries. They’re not just sending aid or loans. They're saying, “Hey, we see potential here, and we want to be part of it.”

Now and then, FDI becomes the hot topic of the moment. And this year? It's absolutely buzzing.

We’ve seen headlines like:

 “FDI Commitments Double in a Year!”
 “Automatic Route Revolutionizes Investment Process!”
 “Nepal Becomes a Hotspot for Foreign Investors!”

Sounds exciting, right?

But here’s the thing: once you start digging into the actual government data; the raw numbers behind all that hype, you’ll realize the story is a lot more nuanced, and honestly, much more intriguing.

So buckle up.

In this deep dive, we’re breaking down everything that happened with FDI in Nepal over the past two fiscal years (2080/81 and 2081/82). We’ll separate fact from fiction, decode the automatic vs. approval route debate, call out misleading headlines, and uncover what the data really tells us about the future of foreign investment in Nepal.

Let’s get into it.

FDI, Explained 

FDI stands for Foreign Direct Investment. It’s when people or companies from outside Nepal invest inside Nepal.

But don’t picture someone walking across the border with a suitcase full of cash.

They might:

• Open a new company in Nepal,
• Partner with a local business,
• Buy a share in an existing Nepali company,
• Or bring in new technology and skills.

Why should you care? Because FDI in Nepal brings in jobs, knowledge, money, and global connections. It helps Nepal grow faster, kind of like watering a plant with mineral water instead of tap water.

Last Year vs. This Year: What the Numbers Actually Say

Let’s get into the meat of this article: the data.

Check out the full report published by the Department of Industries.

So what does this tell us?

The money has nearly doubled, and the number of projects has jumped significantly, no doubt, a sign that foreign interest in Nepal is on the rise.

But here’s the plot twist: despite all that growth, the number of jobs committed has actually gone down by over 10%.

Wait, what?

That’s right. More projects, more money, but fewer jobs.

This could suggest a shift in the nature of foreign investments:

• Possibly more capital-intensive sectors like tech or services, which need less manpower
• Or smaller-scale projects that don’t require large teams
• Or even just inflated commitments that look good on paper but don’t translate into actual employment

So is it time to celebrate?

Not so fast. Because while the media’s favorite explanation for the jump in FDI commitment has been “automatic route has opened up the floodgates”,  this is not backed by the numbers.

Let’s dig deeper.

Automatic Route vs. Approval Route: What’s Really Driving the Surge?

Nepal allows foreign direct investment (FDI) through several routes, each with its own rules and processes. Let’s break them down first, in simple terms:

Total FDI approvals (Automatic Route + Approval Route): 480

Total committed FDI: Rs. 57.98 Billion

So, Is the Automatic Route Behind the FDI Boom?

Not quite.

While the Automatic Route did see a significant jump in the number of approvals, with 224 projects approved from Shrawan to Chaitra, the total value of these projects only amounted to Rs. 2.89 Billion, which is just 5% of the total committed FDI this fiscal year.

Meanwhile, the traditional Approval Route, though slower and bureaucratic, brought in Rs. 55.08 Billion, making up a staggering 95% of all FDI commitments.

Let’s put this in perspective:

• Automatic Route is easier, faster, and more digital, but it's still limited to specific sectors and investment amounts (more on that below).
• Approval Route is clunky and old-school, but it’s where the big money is coming in.

Why the confusion?

Mainstream news media like the Kathmandu Post claimed that “FDI surged because of the Automatic Route” and even quoted figures like “97% of investment is through Automatic Route.”

That’s simply not true. The data from the Department of Industry clearly shows that Automatic Route accounts for only 5% of the total commitments, despite accounting for almost 47% of total project approvals.

So yes, the Automatic Route is an exciting development. But it’s not yet the engine of FDI growth in Nepal, at least not in terms of investment size.

We’ll explore why that might be the case and how the Automatic Route can still evolve in the next sections.

What’s the Deal with the Automatic Route?

In Bhadra 2080, the government finally rolled out Nepal’s version of the "Automatic Route" for FDI. Think of it as a fast lane:

• No in-person meetings
• No negotiation
• Submit an online application with documents
• Get approved (if eligible)

But there's a big catch. It's not for everyone.

Eligibility Criteria

Only sectors with investment up to Rs. 50 Crore (Rs. 500 Million)

And only specific industries qualify, such as:

Energy-Based Industries

• Solar, wind, biomass energy generation
• Energy feasibility studies

Agriculture & Forestry

• Fruit and vegetable processing
• Herbal and tea processing
• Cold storage for local produce
• Tissue culture for plant production

Infrastructure

• Water treatment plants
• Warehouses
• Film studios

Tourism

• Hotels, resorts, restaurants
• Waterparks
• Sports & conference tourism

Information Technology

• IT parks, BPOs, cloud computing
• Software development
• Web portals, data centers (No minimum investment requirement here!)

Manufacturing

• Animal feed, packaging, textiles
• Electrical goods, soap, toothpaste
• Glassware, bicycles, scooters

Services

• Mechanical workshops
• Hospitals, clinics
• Sports & veterinary services
• International courier

So yes, it's promising. But with such a narrow scope and tight investment cap, it’s not yet a game-changer for total FDI volume.

To read more, head to the Foreign Investment and Technology Transfer (First amendment) Regulations (2077)

What Happens After Approval? Visas and Money Flowing Out

Getting FDI approval is just the beginning. What happens after that tells us how active and committed foreign investors really are.

Let’s look at two important post-investment indicators: visa recommendations and repatriation of earnings.

Business Visas: Who’s Coming to Nepal?

After receiving FDI approval, investors and their teams often apply for business-related visas. The number of recommendations issued gives us a rough idea of real-world investor engagement.

Visa Recommendations

We’re seeing more foreign investors and teams on the ground, especially in FY 2081/82. This suggests that many of these investments are not just paper commitments, there’s real interest in being physically present and active in Nepal.

NT Visas (Non-Tourist Visas)

Not much change here. But the fact that TTA visa numbers are flat may indicate limited growth in know-how or licensing-based investments, something Nepal might want to improve on.

Repatriation: How Much Money Is Going Out?

Now here’s something most people don’t look at: how much of the FDI returns are actually being sent back abroad?

There are two major channels for this: royalty payments and dividends.

Royalty Payments

Royalty payments are slightly down this year. This could mean either:

• Fewer technology- or brand-heavy ventures
• OR more local retention of intellectual property and processes

Either way, it’s a stat worth keeping an eye on.

Dividend Repatriation

Despite a dip in royalty payments, dividend repatriation has gone up, which could be a good sign. It may reflect better profitability or a maturing pool of earlier FDI projects now yielding returns.

Why This Matters

Many discussions around “FDI in Nepal” stop at the commitment level.

But these numbers tell us:

• Foreign investors are actively present in Nepal
• They’re making money, and sending it back home
• Repatriation processes are working, which boosts investor confidence

So, if Nepal wants to sustain its FDI growth, this backend (visas, dividends, royalty flows) needs to be streamlined and supported too.

Is IT Becoming a Loophole for Nepali Visas?

Now here’s a twist in the tale. The Information Technology (ICT) sector saw a curious spike this year.

That’s a 20X jump in the number of ICT projects in just one year!

But here’s the catch: the average investment per project is surprisingly small, often just a few lakhs to a couple of crores. That’s way below what you’d expect from large-scale foreign investments.

So what’s going on?

Well, there’s growing speculation that the IT sector may be turning into a loophole for visa access. Here’s why:

• Under the Automatic Route, there’s no minimum investment threshold for ICT projects. You could invest Rs. 5 lakhs, register a company, and still qualify.
• In contrast, all other sectors require a minimum investment of Rs. 2 crore (approx. USD 150,000) per foreign investor to be eligible.
• As a result, the IT sector has become the easiest gateway to qualify for business visas, even with micro-level investments.

Now, this isn’t to suggest that every ICT investment is suspicious. Nepal’s tech scene is growing, and foreign interest is welcome, especially in outsourcing, SaaS, and AI services.

But the scale and speed of the spike, combined with the low ticket sizes and zero threshold policy, should prompt policymakers to ask:

Is this genuine tech investment, or a regulatory gap being quietly exploited?

Maybe it’s time to dig a little deeper. Because if the goal of FDI is to boost Nepal’s economy, create jobs, and build innovation capacity, then quality should matter just as much as quantity.

Which Sectors Are Getting the Most FDI?

Let’s take a sector-wise look at commitments this year (FY 2081/82- Up to Chaitra 2081):

So, clearly:

• Services and Tourism are the big magnets for foreign money.
• Manufacturing has a decent showing.
• ICT is growing rapidly in number, not value.
• Energy and Infrastructure? Almost invisible.

What Can We Learn from All This?

Yes, FDI is growing. Almost doubling in one year is a big deal.

No, it’s not because of the Automatic Route. At least, not yet.

We still rely heavily on the bureaucratic Approval Route.

ICT is rising, but not for reasons we fully understand.

Approval route needs simplification. Automatic Route needs expansion.

Strategic sectors like energy and infrastructure are lagging, and need urgent promotion.

Final Thoughts: Where Do We Go From Here?

Nepal is at a crossroads when it comes to foreign investment.

The data shows promise, yes. But it also shows cracks.

To truly harness the power of FDI in Nepal, we need:

• Smarter policies (with less red tape)
• Stricter monitoring of low-value FDI in sensitive sectors
• Expansion of the Automatic Route to more sectors
• Digital transparency in the approval process

FDI isn’t just about money, it’s about trust. And building that trust requires more than a flashy headline. It needs credible, consistent, and fair systems that make Nepal a genuinely attractive place to invest.

And hey, if we can double FDI in one year despite all the challenges, just imagine what we could do with the right reforms in place.

Additional Resources

• Company Registration in Digital Nepal Becomes Fully Online and Paperless (Explore the process of company registration in Nepal)
• Explore 15 Easy Start-Up Ideas with High Reward & Low Skill Needs! 
• The Complete & Full Guide on Starting a Business in Nepal