India tops Nepal FDI at 32.8%, China rises: NRB report 2025
Synopsis
India holds nearly a third of Nepal's entire FDI stock — but the bigger story is how little of what's approved actually arrives. With only 29.6% of three decades' worth of committed investment materialised, Nepal's FDI challenge isn't just about attracting capital; it's about making commitments real. China's energy-sector surge adds a geopolitical dimension India cannot ignore.
Key Takeaways
India accounted for 32.8 per cent of Nepal's total FDI stock as of mid-July 2025 , worth NPR 111.63 billion .
Nepal's total FDI stock grew 2.1 per cent in 2024/25 , reaching NPR 340 billion .
China ranked second at 9.3 per cent (NPR 31.43 billion), with 79.1 per cent of its stock in the energy sector.
Nepal has realised only 29.6 per cent of FDI approved over the past three decades (1995/96–2024/25).
India's FDI is spread across manufacturing (39%), energy (31.9%), and financial services (21.3%).
The Nepal Rastra Bank has identified closing the approval-realisation gap as a priority policy objective.
India retained its position as the largest source of Foreign Direct Investment (FDI) in Nepal as of mid-July 2025, accounting for 32.8 per cent of the country's total FDI stock, according to data published by Nepal Rastra Bank (NRB), Nepal's central bank. The findings come from the Foreign Direct Investment in Nepal 2024/25: A Survey Report, released on Thursday, 3 September 2025.
FDI Stock by Country
Nepal's total FDI stock rose 2.1 per cent in fiscal year 2024/25, reaching NPR 340 billion by mid-July 2025. India's share stood at NPR 111.63 billion, comfortably ahead of the second-largest investor, China, which held 9.3 per cent of total FDI stock at NPR 31.43 billion. Ireland ranked third at 7.3 per cent, followed by Australia at 6.5 per cent and Singapore at 5.4 per cent.
Where India and China Are Investing
According to the NRB report, the bulk of India's FDI stock in Nepal is concentrated 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). China's investment profile is far more concentrated — 79.1 per cent of its total FDI stock is in the electricity, gas, steam, and air-conditioning sector, with manufacturing accounting for an additional 34.8 per cent. The sectoral divergence reflects differing strategic priorities: India's spread across manufacturing and finance versus China's near-singular focus on energy infrastructure.
The Approval-Realisation Gap
A persistent structural challenge emerges from the data. Nepal has realised only about 29.6 per cent of the FDI approved over the past three decades — from fiscal year 1995/96 through 2024/25. The NRB report flags narrowing this gap as a key policy priority. The report attributes the shortfall to multiple factors. 'FDI approval represents the intended or committed investment, which may not necessarily materialise in full,' the report noted, adding that 'there are often significant time lags between approval and the actual inflow of capital.' Investments in sectors with longer gestation periods may also be realised incrementally over several years, further widening the discrepancy.
China's Rising Footprint
While India's lead remains substantial, the report acknowledges that Chinese FDI in Nepal has been growing steadily in recent years. Historically, India has been Nepal's dominant investor, but the gap has narrowed as Beijing has channelled capital primarily into Nepal's energy sector. However, as with the broader FDI picture, many Chinese commitments have also not translated into actual investment, according to the report.
What the Numbers Mean for Nepal
The 2.1 per cent growth in total FDI stock — modest by regional standards — underscores Nepal's ongoing challenge of converting foreign interest into on-the-ground capital. With only roughly three-in-ten approved projects materialising over three decades, the NRB's call for policy action to bridge the commitment-realisation divide is likely to shape Nepal's investment environment in the near term. The next annual survey will be a key indicator of whether the trend is reversing.
Point of View
At 79.1% of its FDI stock, is less a diversified economic relationship and more a deliberate infrastructure play. For India, the spread across manufacturing, energy, and finance looks healthier on paper, but the 29.6% realisation rate over three decades suggests that Indian commitments, too, have often remained on paper. The NRB report's framing of the approval-realisation gap as a 'policy priority' is diplomatic language for a structural failure that no single investor country — not India, not China — has helped Nepal fix.
NationPress
4 Sept 2026
Frequently Asked Questions
Which country is the largest source of FDI in Nepal?
India is the largest source of FDI in Nepal, accounting for 32.8 per cent of total FDI stock worth NPR 111.63 billion as of mid-July 2025, according to the Nepal Rastra Bank's annual survey report for 2024/25.
How much has Nepal's total FDI stock grown in 2024/25?
Nepal's total FDI stock grew 2.1 per cent in fiscal year 2024/25, reaching NPR 340 billion by mid-July 2025, per the Nepal Rastra Bank report.
What sectors does Indian FDI in Nepal focus on?
The majority of India's FDI stock in Nepal is concentrated in 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 NRB survey.
Why has Nepal realised so little of its approved FDI?
Nepal has realised only about 29.6 per cent of FDI approved over the past three decades, according to NRB data. The bank attributes this to time lags between approval and capital inflow, the incremental nature of investment in long-gestation sectors, and the fact that approved amounts represent intended rather than guaranteed investment.
How significant is China's FDI in Nepal compared to India?
China is Nepal's second-largest FDI source at 9.3 per cent of total stock (NPR 31.43 billion), far behind India's 32.8 per cent. However, Chinese investment has grown steadily and is heavily concentrated in the energy sector, which accounts for 79.1 per cent of China's total FDI stock in Nepal.
