Foreign Direct Investment in Nepal | FDI 2025 | Easy Process

Introduction: Foreign Direct Investment in Nepal

Foreign Direct Investment (FDI) in Nepal is governed by FITTA 2019, which requires preliminary approval from the DOI/IBN followed by final approval from the Nepal Rastra Bank. FDI refers to investments made by a company or individual in one country into business interests located in another country. It often involves acquiring ownership or controlling interest in a foreign company, starting a new business, or expanding an existing one.

Laws governing foreign investment in Nepal

The matters related to foreign investment is mainly dealt by the following laws:

1. Foreign Investment and Technology Transfer Act, 2019 (Foreign Investment Act” or “FITTA”);
2. Foreign Investment and Technology Transfer Regulations, 2021 (“Foreign Investment Regulations”);
3. Industrial Enterprises Act, 2020 (“Industrial Enterprises Act”);
4. Companies Act, 2006 (“Companies Act”); and
5. Public Private Partnership and Investvment Act, 2019 (“PPPIA”).

Governing authorities for foreign investment in Nepal

The governing authorities that provide approvals and regulate Foreign Direct Investment FDI are set out as follows:

Governing Authority	Approval
Department of Industry (DOI)	For foreign investments less than NPR 6 billion, the Department of Industry shall approve it.
Investment Board of Nepal (IBN)	For foreign investments of more than NPR 6 billion or hydropower projects with a capacity of more than 200 MW, the Investment Board of Nepal shall approve it.
Nepal Rastra Bank (Central Bank of Nepal)	After the approval, Nepal Rastra Bank shall give the final approval to bring in the foreign investment to Nepal.

FDI Negative List

The proposed business activity must fulfill following two conditions to obtain foreign investment approval:

1. The industry must not be listed in the “Negative List of Industries for Foreign Investment” provided in the Schedule of the Foreign Investment Act; and
2. The business must be classified as an “industry” under the Industrial Enterprise Act.

The Negative List comprises of the businesses/industries in which foreign investment is prohibited. Nepal Foreign Direct investment is not allowed in the following:

1. Poultry farming, fisheries, bee-keeping, fruits, vegetables, oil seeds, pulse seeds, milk industry and other sectors of primary agro-production;
2. Cottage and small industries;
3. Personal service business (hair cutting, tailoring, driving etc.);
4. Industries manufacturing arms, ammunition, bullets and shell, gunpowder or explosives, and nuclear, biological and chemical (N.B.C.) weapons; industries producing atomic energy and radio-active materials;
5. Real estate business (excluding construction industries), retail business, internal courier service, local catering service, moneychanger, remittance service;
6. Travel agency, guide involved in tourism, trekking and mountaineering guide, rural tourism including homestay;
7. Business of mass communication media (newspaper, radio, television and online news) and motion picture of national language;
8. Management, account, engineering, legal consultancy service and language training, music training, and computer training; and
9. Consultancy services having foreign investment of more than fifty-one percent.

FDI approval and registration process 

The process of obtaining FDI approval in Nepal is as follow:

1: Obtaining foreign investment approval from the DOI.

2: Company incorporation at the Office of the Registrar of Companies.

3. Tax Registration at the Inland Revenue Office.

4: Business Registration with the Local Ward Office.

5. Registration of Industry with the DOI.

6. Obtaining a Non-Blacklist Certificate from the Credit Information Bureau

7: Notification to Nepal Rastra Bank to infuse the investment amount

8: Depositing investment funds in a local bank and receiving an investment certificate

9. Recording the infused investment amount at the NRB.

Minimum capital requirement for FDI

The minimum investment required for obtaining foreign investment approval is NPR 20 million (approx. USD 155,000). However, the requirement of minimum amount of investment in the field of Information Technology is waived.

List of Documents Required for FDI

The documents required for obtaining foreign investment approval are set out as follows:

1. Project Report outlining the Project Background, market aspect, technical aspect, financial aspect, details of such funds etc.
2. Bio-Data/ Company Profile of the Foreign Investor
3. Copy of Certificate of Registration and other Registration Documents (Memorandum of Association, Articles of Association, etc.) of the Foreign Investor.
4. Corporate Resolution of the Foreign Investor to Invest in Nepal.
5. Financial Credibility Certificate issued by any bank of the country of the Residence/Registration of the Foreign Investor.
6. Documents stating the Source of Investment and Time Schedule of Investment
7. Power of Attorney authorizing an Individual to complete the approval and Registration Process at the relevant entities.
8. Passport of Foreign Investor in case of Foreign Investor is a person and passport of directors of foreign investor in case of Entities.
9. Commitment Letter By Investor stating that Foreign Investor shall not repatriate investment till one year.
10. Joint Venture Agreement (this will not be required if the Local Company will be a fully owned subsidiary or if the foreign Investor is an Individual)

Sector specific approvals

After incorporation, the company may further need to obtain approval or licenses from regulatory authorities depending upon the nature of the industry or business such as :

1. Approval from the Insurance Board for insurance business,
2. NRB Approval for bank and financial institutions
3. Department of Electricity Development for electricity projects
4. Department of Tourism for tourism related business
5. Department of Food Technology and Quality Control for food industry and so on.

Applicable Government Charges and Fees FDI in Nepal

1. Approval of Foreign Investment: Guarantee amount of NPR 20,000 is to be deposited at the DOI which is a refundable.
2. Company Registration: Company Registration fee depends on the authorized capital of the company. https://onespherelaw.com/government-fee-for-company-registration-in-nepal/
3. Industry Registration: Industry registration is free.
4. Capital Currency Exchange: No fees are charged for currency exchange against foreign investment.
5. Visa Fees: Visa fees are determined by the immigration Act.

Conclusion

Foreign Direct Investment in Nepal are generally approved by the Department of Industry and takes around 15-25 days for the whole process of construct. They also require a certain minimum amount to be invested in Nepal. For more information, consult with our experienced legal experts for seamless immigration assistance in Nepal. Foreign direct investment in Nepal requires expert legal assistance to overcome regulatory hurdles. A competent law firm is an invaluable ally for investors seeking success in the Nepalese market.

FAQ’s:

What Are the Key Sectors for FDI in Nepal?

Nepal’s economy is diverse, and several sectors are ripe for investment:

1. Hydropower: With over 6,000 rivers, Nepal has vast potential for hydropower generation.
2. Tourism: Home to Mount Everest and rich cultural heritage, Nepal attracts millions of tourists annually.
3. Agriculture: Investment opportunities exist in modernizing farming practices and agro-industries.
4. Infrastructure: Roads, airports, and housing require substantial development.
5. IT and Technology: The tech industry is growing, especially in software development and outsourcing.

What Laws Govern FDI in Nepal?

FDI in Nepal is primarily governed by the Foreign Investment and Technology Transfer Act (FITTA) 2019. Key aspects include:

• Investors must register their investments with the Department of Industry (DoI).
• Minimum investment thresholds are set to encourage large-scale investments.
• Repatriation of profits is allowed under certain conditions.
• Various sectors are open to foreign investment, with exceptions like arms and ammunition.

What Are the Benefits of Investing in Nepal?

Investing in Nepal offers several advantages:

• High Return on Investment (ROI): Due to underdeveloped sectors and low competition.
• Tax Incentives: Nepal offers tax holidays and concessions in priority sectors.
• Government Support: Policies are evolving to make FDI more attractive.

Additionally, Nepal is a member of trade agreements like the South Asian Free Trade Area (SAFTA), which provides preferential access to regional markets.

What Is the Process of Registering FDI in Nepal?

The registration process for FDI involves several steps:

1. Submit an application to the Department of Industry (DOI).
2. Obtain a letter of approval from the DoI.
3. Open a bank account in Nepal and transfer the committed capital.
4. Register the company at the Office of the Company Registrar.
5. Obtain necessary permits and start operations.

What are the corporate income tax rates in Nepal?

Can a foreign investor seek loans for project financing through Nepali banks and financial institutions?

What are the Key Potential areas for investment within the Agriculture Sector in Nepal?

What is the sectorial opportunity in energy?

                   

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