December 25: A study conducted by the National Planning Commission (NPC) has concluded that foreign investment should not be made in the primary sector of agriculture that involves production of food.    
The study report on 'foreign investment potential in agriculture, 2022' released last Thursday suggested the government not to bring in foreign investment for food production. However, foreign investment can be brought for storage, processing and marketing.    
"There is no need to bring in foreign direct investment in the primary sector of agriculture. Banks of Nepal have adequately floated loan in this sector and the government has also given continuity to the discount on taxes. There are also other policy benefits," the report mentioned, arguing that as the companies working in the primary sector of agriculture are not listed in Nepal Stock Exchange, such companies are in need of search for foreign investment.    
 In such situation, it is not logical to float foreign investment in the agriculture sector. However, it can be obtained for processing, storage and marketing to add value to the agricultural products, the report added. Foreign direct investment is essential for cold storage, canning, processing, mill etc. With this, a separate regulation is necessary on foreign direct investment in these sectors, the report further said.    
The regulation to be framed to govern FDI in secondary sectors of agriculture should clearly mention the area where the investment is permitted, according to the study report. Similarly, how the investors would enjoy the rights as ownership of foreign land here needs to addressed clearly, added the report. The rights and benefits of farmers should also be incorporated in the regulation.    
In the recent years, the contribution of the agriculture sector to the GDP has declined in Nepal. Although 66 percent of population is said to be dependent on agriculture, the production in this sector is not up to the mark.    
Two years back, the government had decided to allow foreign investment in agriculture, but the Supreme Court had issued an interlocutory order asking the government to not implement the decision. The case is sub judice at Supreme Court. -- RSS