Sectoral Opportunity

Nepal is a country with immense potential for foreign investment, given its abundant natural resources and growing population. The country has opened up to foreign investment in several sectors, creating opportunities for investors. Here is an overview of sectoral opportunities in foreign investment in Nepal:

Nepal has a massive hydropower potential of 43,000 MW. Currently, the country has a hydropower installed capacity of 1,100 MW, with several large projects under construction. The government’s National Energy Crisis Reduction and Electricity Development Decade Plan aims to generate 15,000 MW of electricity by 2030. This provides a favorable environment for foreign investors to explore opportunities in the construction, operation, and maintenance of hydropower projects.

Prior to the COVID-19 pandemic, Nepal’s tourism industry was growing at an impressive rate, with a 17.5% increase in tourist arrivals in 2019. The sector contributed 7.5% to Nepal’s GDP in 2019. However, due to the pandemic, tourist arrivals declined by 79% in 2020. Despite this setback, the government is actively promoting tourism and has launched the Visit Nepal Year 2022 campaign to attract more tourists. This presents an opportunity for foreign investors to invest in hotels, resorts, and adventure tourism activities to tap into the growing industry once the pandemic situation improves. In fact, the World Bank has projected that the Nepalese tourism industry will recover and grow by 5.5% annually by 2025.

Agriculture is one of the primary sectors in Nepal, employing around 70% of the population and contributing around 29% to Nepal’s GDP. The country has significant potential for agricultural production, with fertile land and favorable climate conditions. The government has been promoting commercial agriculture and providing incentives for foreign investment in the sector.

Nepal has exotic uphills and indigenous knowledge of farmers that can be leveraged for producing exportable quality high-value commodities. Some high-value crops that have been identified as easy to sell and export include tea, ginger, large cardamom, medicinal and aromatic plants, lentils, mandarin orange, off-season vegetables, vegetable seeds, floriculture, poultry farming, and dairy industry 1.

In the Eastern part of Nepal, high-value crops such as cardamom, ginger, broom grass, tea, milk, fresh vegetables, chilies, kiwi fruit are produced by farmers 2. However, in Western Nepal, shifting from traditional crops like maize, wheat, millet, potato, dried beans to high-value commercial agriculture is slow due to lack of access to technology, knowledge and market. The most common high-value export-oriented cash crops in the west are apple, walnut, and olive oil.

Nepal’s manufacturing sector is growing, with textiles, carpet, and handicrafts being the major industries. The government is offering various incentives to promote foreign investment in this sector. The manufacturing sector accounts for around 7% of Nepal’s GDP. However, the sector faces challenges such as inadequate infrastructure, low productivity, and lack of skilled labor. Despite these challenges,