Investment Opportunity in Nepal: A Lucrative Destination for Foreigners

Foreign Investment

Nestled between India and China, Nepal is a landlocked emerging market presenting an array of investment possibilities for international investors. Recent substantial economic and political reforms have paved the way for this attractive investment environment. Strategically positioned with rich natural resources and inexpensive labor, Nepal offers a myriad of business prospects.

A key area for foreign investment is the manufacturing sector, particularly the handicraft industry. Boasting a vibrant cultural history, Nepalese handicrafts have gained worldwide recognition. Over 1.5 million people are employed in this sector, which contributes over 7% to the national GDP.

Uniquely positioned in comparison to its regional neighbors, Nepal's artisans create eco-friendly, handmade products that hold considerable value in international markets. Renowned for intricate designs, exceptional quality, and genuine craftsmanship, Nepalese handicrafts are highly demanded worldwide. This sector holds immense potential as the world leans towards sustainable and eco-friendly products.

Nepalese handicrafts experience significant exports to over 70 countries globally, with the USA, Japan, and Germany being primary importers. The Trade and Export Promotion Centre reports that the export value rose by 20% during 2020-21.

Besides handicrafts, other thriving sectors present worthwhile investment ventures for foreigners. With a booming tourism industry regarded as a government priority, Nepal's breathtaking natural landscapes, diverse culture, and adventure tourism appeal to international tourists. Over 1.2 million visitors arrived in 2019, with numbers expected to rise.

Another promising sector is agriculture; fertile land and ample water resources offer a conducive environment. Accounting for more than a third of GDP and employing a staggering 70% of the population, agricultural prospects include opportunities for value addition and exports.

In summary, Nepal provides several lucrative sectors for foreign investors seeking new business enterprises. Its strategic location combined with natural resources and low labor costs render it an attractive investment destination. Foreign investors can leverage Nepal's handicraft industry's unique opportunities while tapping into its blossoming tourism and agricultural sectors.

Foreign direct investment reached USD 323 million in the 2020/21 fiscal year, a 29% increase from the preceding year. The bulk of this investment originated from India, followed by China, the United States, and the United Kingdom.

Key tourist hotspots in Nepal include Kathmandu and Pokhara. These cities harbor a wealth of hospitality and tourism investment prospects, such as the development of hotels and resorts prioritized by the Nepal Investment Board. Additionally, adventure tourism development like trekking, mountaineering, and Himalayan rafting show tremendous potential.

Moreover, the Nepal Investment Guide emphasizes investment possibilities in the manufacturing sector. With a burgeoning labor force and government initiatives for growth promotion, sub-sectors like textiles, leather products, pharmaceuticals, and processed foods offer attractive opportunities.

Lastly, the potential for hydropower sector investments is abundant. Nepal boasts an estimated capacity to generate 83,000 MW of hydroelectric power; however, only a minor portion is currently exploited. The government has introduced policies and incentives that encourage this sector's expansion. Examples include tax breaks, duty-free imports of equipment and materials, and favorable power purchase arrangements.

In summary, Nepal offers a multitude of investment prospects across various industries. The nation boasts a youthful, burgeoning population, a favorable climate for investment, and a government dedicated to encouraging foreign investments. Owing to its distinct cultural and natural riches, Nepal has the capacity to emerge as a significant tourist hotspot and a desirable destination for international investors in the upcoming years.


1. "Nepal Investment Guide 2021" by Nepal Investment Board - This guide offers comprehensive data on Nepal's investment opportunities, covering crucial sectors, policies, and investor incentives.

2. "Nepal Economic Update 2021: Jumpstarting the Economy" by the World Bank - This report presents an analysis of Nepal's economic landscape and emphasizes the nation's economic rebound and growth potential.

3. "Handicrafts Sector Study" by the Federation of Handicraft Associations of Nepal (FHAN) - This research delves into Nepal's handicraft sector, discussing its market potential, hurdles, and growth prospects.

4. "Nepal Tourism Statistics 2019" by the Nepal Tourism Board - This publication reveals statistics and insights regarding Nepal's tourism sector, including visitor counts, spending patterns, and evolving trends.

5. "Agricultural Development Strategy, Vision 2030" by the Ministry of Agriculture and Livestock Development - This strategic document outlines Nepal's aspirations for its agricultural industry and pinpoints crucial investment and development areas.

6. "Hydropower Development Policy 2012" by the Ministry of Energy, Water Resources and Irrigation - This policy paper details the government's stance on incentives for hydroelectricity sector development in Nepal.