Foreign investment law in Nepal is governed by the Foreign Investment and Technology Transfer Act, 2075 (2019) (FITTA) — the primary legislation regulating foreign direct investment (FDI), technology transfer, joint ventures, lease investment, and branch offices. The Department of Industry (DOI) approves investments up to NPR 6 billion, while the Investment Board Nepal (IBN) handles larger projects. The minimum FDI threshold is NPR 20 million (~USD 150,000), reduced from NPR 50 million in 2022. Nepal introduced an automatic approval route in 2023 for investments up to NPR 500 million in energy, infrastructure, tourism, and IT — processing approximately 97% of FDI commitments. Profit repatriation is guaranteed through Nepal Rastra Bank (NRB) channels. Nepal allows 100% foreign ownership in most permitted sectors.
| Foreign Investment Nepal — Quick Facts | Details |
|---|---|
| Primary law | Foreign Investment and Technology Transfer Act, 2075 (2019) |
| Regulations | FITTA Regulations, 2078 (2021) |
| Approving authority (under NPR 6B) | Department of Industry (DOI) |
| Approving authority (above NPR 6B) | Investment Board Nepal (IBN) |
| Minimum investment | NPR 20 million (~USD 150,000); no minimum for IT sector on automatic route |
| Automatic approval | Energy, infrastructure, tourism, IT — up to NPR 500 million |
| Approval timeline (official) | 7 days (DOI) / 15 days (IBN) |
| Approval timeline (practical) | 1–2 months including company registration and NRB approval |
| Foreign ownership | 100% allowed in most sectors; caps apply to some (e.g., ride-sharing 70%) |
| NRN investment | NRNs classified as foreign investors — same process applies |
| Profit repatriation | Guaranteed through Nepal Rastra Bank channels |
| Restricted sectors | Primary agriculture, cottage industries, personal services, arms, real estate |
Foreign investment law in Nepal is governed by FITTA 2075 (2019). Minimum FDI threshold: NPR 20 million (~USD 150,000). The DOI approves investments under NPR 6 billion; IBN handles larger projects. Automatic approval is available for energy, IT, tourism, and infrastructure up to NPR 500 million. Restricted sectors include primary agriculture, cottage industries, and personal services. Profit repatriation is guaranteed through NRB.
| Law / Regulation | Key Provisions |
|---|---|
| FITTA, 2075 (2019) | Primary FDI law — defines investment types, approval process, negative list, investor rights, technology transfer |
| FITTA Regulations, 2078 (2021) | Implementing procedures for approval, documentation, and compliance |
| Companies Act, 2063 (2006) | Company incorporation at Office of Company Registrar (OCR) — required after FDI approval |
| Industrial Enterprises Act, 2076 (2020) | Defines "industry" — FDI only allowed in activities classified as industries under this Act |
| Nepal Rastra Bank Act + Directives | Foreign exchange regulations, currency remittance, investment recording, repatriation |
| Income Tax Act, 2058 (2002) | Tax obligations for FDI companies — corporate tax, VAT, withholding tax on dividends |
| Securities Act (SEBON) | Regulates venture capital funds and secondary market investment by foreign investors |
| Form | FITTA Section | Details |
|---|---|---|
| Equity investment | Section 3 | Share capital in a Nepal-incorporated company — most common form |
| Joint venture | Section 4 | Partnership with existing Nepali industry — JV agreement required |
| Asset / share purchase | Section 5 | Acquiring shares or assets of an existing Nepali company |
| Lease investment | Section 6 | Airlines, ships, machinery, construction equipment — new in FITTA 2075 |
| Technology transfer | Section 7 | IP licensing, franchising, management services, advisory services |
| Branch office | Section 8 | Foreign company establishing or expanding a branch in Nepal |
| Venture capital fund | Sections 9–10 | Institutional investors via SEBON-registered fund — requires Securities Board approval |
| Reinvestment of profits | Section 3 | Dividends earned from FDI reinvested in the same industry |
| Category | Minimum Investment | Approval Route |
|---|---|---|
| General (most sectors) | NPR 20 million (~USD 150,000) | Standard DOI approval |
| Information Technology | No minimum (removed late 2023) | Automatic route |
| Energy / hydropower | NPR 20 million | Automatic (up to NPR 500M) |
| Infrastructure | NPR 20 million | Automatic (up to NPR 500M) |
| Tourism | NPR 20 million | Automatic (up to NPR 500M) |
| Technology transfer | No minimum | Standard DOI approval |
| Large projects (above NPR 6B) | NPR 20 million | Investment Board Nepal |
The minimum threshold was reduced from NPR 50 million to NPR 20 million in 2022 to encourage smaller-scale foreign investment, particularly from startups and SMEs. The IT sector exemption reflects Nepal's strategy to build a technology industry.
| Step | Action | Timeline |
|---|---|---|
| 1 | Verify that the proposed business is not on the negative list (Schedule to FITTA) | Before applying |
| 2 | Prepare project proposal with: business plan, investment amount, sector details, company structure | 1–2 weeks |
| 3 | Submit application to DOI (under NPR 6B) or IBN (above NPR 6B) | Day 1 |
| 4 | DOI/IBN reviews application — may request additional information | 7 days (DOI) / 15 days (IBN) officially |
| 5 | FDI approval issued — preliminary approval certificate | 1–4 weeks in practice |
| 6 | Register company at Office of Company Registrar (OCR) — submit MOA, AOA, director appointments | 1–2 weeks |
| 7 | Register industry at Department of Industry | 1 week |
| 8 | Obtain PAN from Inland Revenue Department | 1–3 days |
| 9 | Open bank account and obtain NRB approval for foreign currency remittance | 1–2 weeks |
| 10 | Remit investment through banking channels — NRB records the investment | As per injection timeline |
| 11 | Obtain sector-specific licenses (insurance, banking, telecom, food, etc. — if applicable) | Varies |
Nepal introduced an automatic online approval system in 2023, significantly streamlining FDI for qualifying sectors. Under this route, foreign investors apply through an online portal and receive immediate preliminary approval without prior bureaucratic review. The automatic route covers:
| Qualifying Sector | Investment Limit | Special Conditions |
|---|---|---|
| Energy production (hydropower, solar) | Up to NPR 500 million | Environmental clearance required separately |
| Infrastructure development | Up to NPR 500 million | May require government land permits |
| Tourism (hotels, resorts, adventure) | Up to NPR 500 million | Tourism Board registration required |
| Information Technology | No minimum; up to NPR 500M auto-approval | Most liberalized sector — no minimum capital requirement |
In the first nine months of FY 2024/25, approximately 97% of FDI commitments came through this fast-track channel. For larger investments or sectors not covered by the automatic route, the standard manual review (DOI or IBN) applies.
Foreign investment is prohibited in sectors listed in the Schedule to FITTA. Before applying, investors must confirm their proposed business does not fall on this list:
| Restricted Sector | Examples |
|---|---|
| Primary agriculture | Poultry farming, fisheries, bee-keeping, fruits, vegetables, oil seeds, pulse seeds, dairy |
| Cottage and small industries | Traditional handicrafts, small-scale manufacturing below prescribed thresholds |
| Personal service businesses | Management consulting, accounting, engineering consulting, legal services, language training, music training, computer training |
| Arms and ammunition | All weapons manufacturing — fully restricted for FDI |
| Real estate (general) | Residential real estate speculation — industrial land may be accessible through special arrangements |
| Retail trade | Restricted below certain thresholds — wholesale/distribution may be permitted |
Industries not on the negative list are presumed open for FDI, though some sectors have ownership caps. For example, ride-sharing platforms allow up to 70% foreign ownership. "Contract manufacturing" was fully opened to FDI in 2024 reforms. Investors should verify current restrictions with the DOI before proceeding.
After receiving FDI approval, investors must inject capital into Nepal within prescribed timelines based on the approved amount:
| Approved Amount | Minimum to Inject in Year 1 |
|---|---|
| Up to NPR 500 million | 25% of approved amount |
| NPR 500M – NPR 2.5 billion | 15% of approved amount |
| NPR 2.5B – NPR 10 billion | 10% of approved amount |
| Above NPR 10 billion | 5% of approved amount |
Extensions may be granted in exceptional circumstances upon application to DOI or IBN. Failure to inject the minimum amount can result in cancellation of FDI approval.
| Right / Guarantee | Details |
|---|---|
| Profit repatriation | Dividends, capital gains, royalties, and technology transfer fees repatriable through NRB channels |
| Investment protection | No nationalization or expropriation without fair compensation under law |
| Dispute resolution | International arbitration available under bilateral investment treaties; domestic courts also available |
| Visa facilitation | Business visa and work permits for foreign investors and key personnel — through Single Point Service Center |
| Non-discrimination | Foreign investors treated on par with domestic investors (except for sector-specific restrictions) |
| IP protection | Intellectual property rights protected under Patent, Design and Trademark Act + Copyright Act |
| Tax incentives | Priority sectors (hydropower, manufacturing, export) may receive tax holidays and reduced rates |
Non-Resident Nepalis (NRNs) are classified as foreign investors under FITTA 2075. The same approval process, minimum thresholds, and sector restrictions apply. NRNs can invest through equity, joint ventures, technology transfer, or venture capital funds. Many NRNs invest in Nepal while managing operations through a Power of Attorney — authorizing a local representative for company registration, bank account operations, and regulatory compliance.
| Legal Service | FDI Connection |
|---|---|
| Company registration | Mandatory after FDI approval — OCR registers the legal entity |
| Contract law | JV agreements, shareholder agreements, and technology transfer contracts governed by Nepal contract law |
| IP protection | Technology transfer includes IP licensing — foreign investors must register trademarks/patents in Nepal |
| E-commerce | Online businesses by foreign investors subject to Electronic Commerce Act 2081 |
| Tax obligations | FDI companies subject to corporate income tax, VAT (13%), customs, and withholding tax on dividend repatriation |
| Dispute resolution | Commercial disputes resolved through arbitration, mediation, or District Court |
| # | Key Point |
|---|---|
| 1 | FITTA 2075 is the primary FDI law — DOI approves under NPR 6B, IBN above NPR 6B |
| 2 | Minimum investment: NPR 20 million (~USD 150,000); no minimum for IT sector |
| 3 | Automatic approval route for energy, IT, tourism, infrastructure (up to NPR 500M) — 97% of FDI uses this channel |
| 4 | 8 forms of investment: equity, JV, share purchase, lease, tech transfer, branch, VC fund, reinvestment |
| 5 | Negative list restricts primary agriculture, cottage industries, personal services, arms, real estate |
| 6 | 100% foreign ownership allowed in most sectors; some have caps (ride-sharing 70%) |
| 7 | NRNs classified as foreign investors — same FITTA process applies |
| 8 | Profit repatriation guaranteed through NRB channels — dividends, capital gains, royalties |
| 9 | Practical timeline: 1–2 months for complete FDI approval + company setup |
The Foreign Investment and Technology Transfer Act, 2075 (2019) (FITTA) is the primary legislation governing FDI in Nepal. It replaced FITTA 1992 and covers equity investment, joint ventures, technology transfer, lease investment, and branch offices. The FITTA Regulations 2078 (2021) provide implementing procedures.
The minimum FDI threshold is NPR 20 million (~USD 150,000) for share capital investments. For technology transfer agreements, there is no minimum requirement. The IT sector has no minimum investment amount when using the automatic approval route.
Sectors on the negative list (restricted for FDI):
The approval process:
Yes. Non-Resident Nepalis are classified as foreign investors under FITTA and must follow the same FDI approval process. NRNs can invest through equity, joint ventures, or technology transfer. The same minimum threshold (NPR 20 million) applies.
Nepal introduced an automatic online approval system for FDI in energy, infrastructure, tourism, and IT sectors for investments up to NPR 500 million. This eliminates prior bureaucratic approval for standard projects. About 97% of FDI commitments in FY 2024/25 came through this fast-track channel.
Official timelines: 7 days for DOI (under NPR 6B) and 15 days for IBN (above NPR 6B). In practice, the entire process including company registration and NRB approval takes 1–2 months. The automatic route for qualifying sectors is significantly faster.
Yes. FITTA 2075 guarantees the right to repatriate profits, dividends, and capital gains through Nepal Rastra Bank channels. The amount must be recorded and approved by NRB. There are no restrictions on the amount that can be repatriated, provided proper tax obligations have been met.
FITTA recognizes 8 forms: equity investment, joint ventures, asset/share purchase of existing companies, lease investment (airlines, machinery), technology transfer (IP licensing, franchising), branch offices, venture capital funds, and reinvestment of profits. Each has specific procedures and requirements.
Yes, in most permitted sectors. FITTA allows 100% foreign ownership except in sectors where ownership caps apply (e.g., ride-sharing platforms limited to 70% foreign ownership). Some sectors require joint ventures with Nepali partners. Check the specific sector regulations before investing.
Technology transfer is a form of foreign investment that includes: licensing of foreign intellectual property, franchising, management services, advisory services, and market services. It is governed by Section 7 of FITTA. Technology transfer agreements must be approved by DOI and are subject to IP protection laws.
FDI companies are subject to: income tax (standard corporate rate), VAT (13%), customs duties on imports, and withholding tax on dividend repatriation. Special tax incentives may apply for investments in priority sectors like hydropower, agriculture, and manufacturing.
Foreign real estate ownership is generally restricted. However, industrial land for manufacturing purposes may be accessible through special arrangements. Foreign investors can lease land for business operations. Property law restrictions apply to all foreign nationals.
If the DOI or IBN denies approval, the investor receives written reasons. The investor can: address the deficiencies and reapply, restructure the investment to comply with regulations, or appeal the decision. Common reasons for denial include investing in restricted sectors, incomplete documentation, or failing to meet minimum thresholds.
After FDI approval, the foreign investor must register a company at the Office of Company Registrar under the Companies Act. This involves: name reservation, submitting MOA and AOA, appointing directors, and share allotment. A PAN card must also be obtained.
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