Nepal receives twice as much FDI (Rs 61.78 billion).

With investments promised in the service sector, Nepal's commitment to foreign direct investment more than doubled to Rs61.78 billion in the most recent fiscal year, which concluded in mid-July.

The spike is mostly attributed by officials to April's third investment meeting in Nepal. Despite the expectation of billions of rupees in investment promises from top Nepali officials, the response from foreign investors, especially the private sector in Nepal, was chilly.

402 projects have promises for the most recent fiscal year.

China accounted for over half of these pledges.

China committed Rs23.91 billion in foreign direct investment (FDI) for 275 projects, according to the Department of Industry. This represents 44.33 percent of the total commitments that Nepal has received.

India continues to be the second-largest pledger behind China. Twenty-six percent of the total pledges made have been made by investors from the southern neighbor, who have committed Rs3.05 billion for 22 projects.

Luo Zhaohui, the chairman of the China International Development Cooperation Agency (CIDCA), stated that the Chinese government would continue to place a high value on direct and indirect investment in Nepal in order to implement the Trans-Himalaya dimensional connectivity, which is the top priority for nations, during the third Nepal Investment Summit held in April in the nation's capital, Kathmandu.

China is eyeing Nepal too, according to Nara Bahadur Thapa, a former executive director of the central bank of Nepal Rastra Bank, because it is a rapidly expanding economy with plenty of investable capital.

However, sources claim that because of China and India's intense competition, both countries would often make lofty claims that have never come to pass.

Insiders claim that as the government changes, so do the priorities.

In 2017, Thapa stated, "Nepal would have benefited greatly, particularly in the hydropower sector, if there had been no border disputes between China and India."

India's post-dispute approach was evident. If there was a Chinese component, it would not purchase electricity from Nepal, Thapa stated.

Chinese contractors complete the majority of Nepal's projects. Research demonstrates that Chinese bids are sometimes so low—sometimes even below the minimum bid amounts—that they win contracts but have difficulty completing the work later.

For instance, Chinese contractors placed a bid for the Gautam Buddha International Airport in Bhairahawa that was over Rs. 1 billion less than the minimum required. On the other hand, the four-year project was finished in eight years.

The cement industry is not without its problems. Chinese capital is present in the majority of Nepal's cement industries. Insiders claim that the producers are having difficulty getting their goods exported to India.

India's economy is expanding, and it is generating more commodities for export on its own. Nepal is still an important market, Thapa stated.

In spite of this, India has constructed numerous hydroelectric dams in Nepal in order to export power.

"A thorough examination is necessary to comprehend the ways in which geopolitics will influence Nepal's current and future undertakings," Thapa stated.

When Nepal's multi-party democratic system was reinstated in the 1990s, multinational corporations made their initial foray into the country's market from India. However, major international corporations have not shown much interest in Nepal since.

The figures for the actual FDI in the most recent fiscal year have not yet been made public by the government. But according to Nepal Rastra Bank, the actual FDI for the first 11 months, which ended in mid-June, was Rs8.16 billion.

A substantial FDI commitment of Rs12.96 billion for 16 projects was given to Nepal by South Korea in addition to India and China. It's interesting to note that the Cayman Islands, a British overseas entity in the Caribbean Sea, have promised to invest Rs13.10 billion on a single project located in Nepal.

The Cayman Islands committed to invest FDI in Nepal for the first time.

An Industry Department official stated, "The commitment has come for a hydropower project," without providing any other details.

The UK did not commit any foreign direct investment to Nepal during the previous fiscal year.

In a similar vein, the US committed $1.75 billion in foreign direct investment (FDI) to 19 projects in Nepal during the previous fiscal year.

During the Trade and Investment Framework Agreement meeting, the US has been bringing up the topic of appropriate intellectual property rights law in an attempt to draw in investment, but the government has not been successful in doing so.

Australia committed Rs3.04 billion in foreign direct investment (FDI) for three projects in Nepal during the previous fiscal year, while the United Kingdom of Great Britain and Northern Ireland committed Rs1.49 billion for four projects.

Thapa stated, "Nepal has not improved its status to attract FDI due to political instability." The main thing deterring investors is the glacial pace at which the government operates.

"Foreign investment will not come unless the Foreign Investment and Technology Transfer Act's pre-approval provision is removed," he declared. The registration procedure is likewise somewhat difficult.

386 projects from small-, 15 from medium-, and 6 from large-scale sectors obtained FDI pledges for Nepal in the most recent fiscal year.

With 197.48 percent of the total FDI commitment, the tourism sector has been the largest contributor. The service sector comes in second with 133.33 percent, manufacturing comes in at 46.11 percent, communication and information technology accounts for 11.3 percent, agriculture accounts for 8.2 percent, and infrastructure accounts for 6.1 percent.

The agency suggested 2,229 business visas for investors, 1,222 for representatives, and 1,007 for dependents during the previous fiscal year.

In the previous fiscal year, investors returned Rs10.07 billion, and the department received Rs3.03 million in service fee income.

Through an automated process, the department was able to obtain the Rs8.11 billion FDI commitment.