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Nepal to allow foreign investment in agriculture

Nepal to allow foreign investment in agriculture

© Jcomp, Freepik

 

On January 4, 2021, the Government of Nepal announced it would allow foreign investment in agriculture. The country’s Ministry of Industry, Commerce and Supplies utilised a provision in the 2019 Foreign Investment and Technology Transfer Act that amended the prohibition on foreign direct investment in primary agricultural activities including, but not limited to, poultry, aquaculture, livestock, dairy, apiculture, and horticulture. The amendment allows FDI in primary agriculture, so long as 75% of the food products are exported. Nepalese government officials indicate the country could potentially export US$5 billion annually in agricultural products, reduce its trade deficit, and enable agricultural modernisation.

The decision was criticised by Nepal’s private sector, who accused the government of acting in favour of multinational corporations. Conversely, the government contends that FDI would enable agricultural modernisation, increase production, and support export development opportunities.  Due to concerns on the validity of the order following a writ petition, Nepal’s Supreme Court placed a temporary hold on the order on January 20, 2021, which remains in effect pending a final decision.  Nepal continues to rely on FDI in other economic sectors, despite calls for building a self-reliant economy in the wake of the Covid-19 pandemic, which, in 2020, mildly reduced Nepal’s trade deficit but exposed vulnerable supply chains, especially in agriculture.