February: The Supreme Court (SC) has ruled in favor of the legal provision to allow foreign investment in the agricultural sector. The path to bring in foreign investment in the agricultural sector has been opened after SC rejected the petition demanding the non-implementation of the amendment to the Foreign Investment and Technology Transfer Act, 2075 to bring in foreign investment in the agricultural sector.

Earlier, the need for foreign investment in the agricultural sector was raised several times, but the obstacles to foreign investment could not be removed. Especially industrialists and businessmen have been arguing that small farmers cannot compete with foreign investment in agriculture.

The government amended the Foreign Investment and Technology Transfer Act, 2075 to allow foreign investment in the agricultural sector with the objective of exporting 75 percent of the produce.

In the said act, the government amended the previous provision that foreign investment could not be brought in the fields of livestock, fishery, beekeeping, fruits, vegetables, oilseeds, pulses, dairy business, etc. A writ was filed in the SC against such a provision made by the government.

A few days ago, the full text of the decision of the SC’s division bench of justices Prakash Kumar Dhungana and Kumar Chudal dismissing the writ petition filed to prohibit foreign investment in the agriculture sector came out. In the text of the SC verdict, it is mentioned that there will be no negative impact on the domestic agricultural industry due to the opening of foreign investment, and there will be no loss or damage to the nation.

The SC opined that since foreign investment is opened on the condition that at least 75 percent of the production is exported, small farmers and domestic production will not be affected. Similarly, it is mentioned in the full text that the provision of foreign investment will remain in place for industries that export agricultural products produced in Nepal.

SC said that technology will be transferred through foreign investment, the modernization of agriculture will increase and as a result, the quantity and quality of agricultural products will also increase. It is also mentioned in the full text that this will help in the import substitution of agricultural produce and increase employment due to foreign technology.

As per the full text of SC, large investment is required for commercial farming and when foreign investment comes in, not only investment but also technology and skills will come in. The verdict states, “Since foreign investment in agriculture does not seem to affect small farmers and domestic producers, it is not appropriate to think that foreign investment will affect domestic investment.”