Nepal’s foreign investment pledges from India down 51 per cent due to red tape

KATHMANDU, Sep 9, 2020, The Kathmandu Post. Foreign investment commitment from India declined 51.42 percent in the last fiscal year 2019-20, compared to the previous fiscal year, largely due to bureaucratic red tape that has dented investors’ confidence, according to Indian business officials, The Kathmandu Post reported.

According to the Department of Industry, the country received foreign investment commitments worth Rs3.24 billion in the last fiscal year from India, down from Rs6.67 billion in the previous fiscal year.

There were 16 foreign direct investment proposals from India in the last fiscal year, with pledges mainly targeting hotels with restaurants, manufacturing industry, construction industry and software development. This is a sharp decrease in the number of investment commitment proposals in 2018-19 which stood at 50.

Speaking at the webinar interaction conducted by the Nepal-India Chamber of Commerce and Industry on Monday, Saibal Ghosh, vice president of the chamber and coordinator of the Indian Industry Forum Committee, said that Indian investment in Nepal was encouraging in the 1990s, but it has slowed down in subsequent years.

“Indian investors are facing troubles sending dividends and service-related payments from Nepal to India due to the lack of effective coordination between the Department of Industry and Nepal Rastra Bank,” he said.

Ghosh said that it is very problematic to pay for consultancy services, machinery maintenance as well as other services that are not available in Nepal, especially when their costs exceed Rs100,000 as they also require FDI approvals. “And it is not practical to take such service from India or any other foreign countries.”

He said that the existing laws and regulations related to intellectual property in Nepal are more than half a century old. “Even though Nepal is a member of the World Trade Organization and the World Intellectual Property Protection Organization, it is very important to amend the laws and regulations according to the change of time,” he said.

“In the current condition, it has become very difficult for any well-known company from India and the rest of the world to register its brand and trademark in Nepal,” he added.

The department said that some investors have also been requesting the government to remove the threshold of foreign investment, which currently stands at Rs50 million.

The department’s data shows that the country received a foreign investment commitment worth Rs25.79 billion in the fiscal year 2019-20, with 177 companies willing to invest in Nepal.