India Leads Nepal’s FDI Despite China’s Big Promises
In a surprising twist for Nepal’s economy, India remains the undisputed king of actual foreign direct investment (FDI), even as China grabs headlines with massive commitments. A fresh report from Nepal Rastra Bank (NRB), the country’s central bank, shows that India’s FDI stock dwarfs others, highlighting why real investments matter more than just pledges.
The Survey Report on Foreign Direct Investment in Nepal (2023-24) reveals the total FDI stock hit Rs 333 billion by the end of fiscal year 2023-24. This includes 50.7% in paid-up capital, 36.7% in reserves, and 12.6% in loans. Breaking it down by country, India tops the list with a whopping 32.3% share. China follows at 10.2%, then Singapore with 8.3%, Ireland at 6.9%, and South Korea with 6.1%.
This comes at a time when China has dominated FDI commitments for over a decade, according to Nepal’s Department of Industry. Up to mid-June in fiscal year 2024-25, Chinese pledges made up 44.77% of total commitments, while India’s stood at 19.55%. But experts say these promises from China aren’t turning into real money as quickly as expected.
"India’s strong FDI stock in Nepal shows that Chinese pledges haven’t fully materialized yet," says Prakash Kumar Shrestha, a former Executive Director at NRB. He points out that Indian investments have been steady since the early 1990s. A prime example is the massive 900 MW Arun 3 Hydropower Project in eastern Nepal, led by India’s state-owned SJVN Limited. This project is almost complete and stands as one of Nepal’s largest hydropower ventures.
SJVN isn’t stopping there. The company recently won bids for two more big ones: the 669 MW Lower Arun Hydropower Project and the 490 MW Arun-4 Hydropower Project. The latter will team up with Nepal Electricity Authority, boosting Nepal’s energy sector and deepening India-Nepal ties in hydropower investments.
Rajesh Kumar Agrawal, ex-President of the Confederation of Nepalese Industries (CNI), which represents big businesses in Nepal, agrees. He credits India’s lead to early movers like Unilever Nepal, Dabur Nepal, and Arati Strips Pvt. Ltd., which set up shop in the 1990s with Indian cash. "Chinese commitments have outpaced India’s lately, but it’ll take time for them to become actual FDI in Nepal," Agrawal tells us.
Why the gap between promises and reality? Not every FDI commitment turns into action, say the pros. Shrestha explains it boils down to things like Nepal’s investment climate, market opportunities, investor confidence, and even competition from other countries. As Nepal works to improve its business environment, these factors could help turn more pledges into projects that drive growth.
This India-Nepal FDI story underscores a key lesson for emerging economies: Long-term investments like those in hydropower and manufacturing build lasting economic strength. With China and others eyeing more opportunities, Nepal’s FDI landscape could shift soon—watch this space for updates on foreign investment trends in Nepal.
Stay informed on all the latest news, real-time breaking news updates, and follow all the important headlines in world News on Latest NewsX. Follow us on social media Facebook, Twitter(X), Gettr and subscribe our Youtube Channel.
