August 28, 2025 - BY Admin

FDI Process in Nepal

Foreign Direct Investment (FDI) in Nepal allows foreign nationals and companies to invest in eligible sectors under the Foreign Investment and Technology Transfer Act. The process involves approval from the Department of Industry or Investment Board Nepal, company registration, industry registration, and compliance with repatriation and reporting requirements under Nepali law.

Step-By-Step FDI Process in Nepal

Step 1: Determine sector eligibility and minimum investment requirement
Step 2: Prepare project report and required documents
Step 3: Submit FDI application to Department of Industry or Investment Board Nepal
Step 4: Obtain FDI approval certificate
Step 5: Register company at Office of Company Registrar
Step 6: Complete industry registration and open bank account for fund transfer

What Is Foreign Direct Investment (FDI) in Nepal?

Foreign Direct Investment (FDI) in Nepal refers to investment made by foreign individuals, companies, or entities in Nepali enterprises under the Foreign Investment and Technology Transfer Act, 2019. FDI enables foreign investors to establish businesses, transfer technology, and participate in Nepal's economic development through equity participation, joint ventures, or technology collaboration.

The Government of Nepal permits FDI to promote industrial growth, create employment, and attract foreign capital and expertise. Foreign investors can invest in manufacturing, services, tourism, energy, and technology sectors subject to minimum capital requirements and sector-specific regulations.

FDI is regulated by the Department of Industry under the Ministry of Industry, Commerce and Supplies, and the Investment Board Nepal for large-scale projects. Investors must obtain prior approval before commencing business operations and comply with repatriation, reporting, and tax obligations under Nepali law.

Where to Apply for FDI Approval in Nepal?

Foreign investors must apply for FDI approval at the Department of Industry (DOI) located in Kathmandu or the Investment Board Nepal (IBN) depending on the investment size and sector. The Department of Industry processes applications for investments below NPR 6 billion, while the Investment Board Nepal handles mega projects exceeding NPR 6 billion.

The Department of Industry operates under the Ministry of Industry, Commerce and Supplies and maintains offices in all seven provinces. Investors can submit applications online through the DOI portal or in person at the central office in Tripureshwor, Kathmandu. The application must include a detailed project report, investor identification, and proposed capital structure.

The Investment Board Nepal is the designated authority for large infrastructure, energy, and industrial projects requiring significant foreign capital. IBN provides single-window facilitation for project approval, land acquisition, and regulatory clearances. Investors can access IBN services at its office in Singha Durbar, Kathmandu, or through its official website https://www.ibn.gov.np.

What Laws Govern FDI in Nepal?

Foreign Direct Investment in Nepal is governed by the following legal framework:

Foreign Investment and Technology Transfer Act, 2019 (FITTA): Primary legislation regulating FDI approval, repatriation, and investor rights
Foreign Investment and Technology Transfer Rules, 2020: Procedural rules for application, approval, and compliance
Industrial Enterprises Act, 2020: Governs industrial registration, operation, and sector-specific requirements
Companies Act, 2006: Regulates company incorporation, shareholding, and corporate governance
Nepal Rastra Bank Act, 2002: Controls foreign currency transactions, fund transfers, and repatriation
Income Tax Act, 2002: Defines tax obligations, exemptions, and incentives for foreign investors
Labor Act, 2017: Regulates employment of foreign nationals and labor compliance
Immigration Act, 1992: Governs business visa and work permit issuance for foreign investors

Official legal texts are available at https://www.lawcommission.gov.np and https://www.mof.gov.np.

How to Obtain FDI Approval in Nepal Step by Step?

Step 1: Verify Sector Eligibility and Investment Threshold

Check whether the proposed business sector is open for foreign investment under the Foreign Investment and Technology Transfer Act. Confirm minimum capital requirements and foreign equity limits applicable to the sector. Consult the negative list published by the Department of Industry to ensure the sector is not restricted or prohibited.

Step 2: Prepare Project Report and Business Plan

Prepare a detailed project report including business objectives, capital structure, technology transfer details, employment generation, and environmental impact. The report must specify total investment, foreign equity percentage, and proposed timeline. Include financial projections, market analysis, and compliance strategy in the business plan.

Step 3: Compile Required Documents

Gather all mandatory documents including FDI application form, investor passport copies, company registration certificate (if applicable), project report, and proof of financial capacity. Ensure all foreign documents are notarized and translated into Nepali or English. Prepare board resolution authorizing the investment if the investor is a corporate entity.

Step 4: Submit Application to Department of Industry or Investment Board Nepal

Submit the complete application online through the DOI portal or physically at the Department of Industry office. For projects exceeding NPR 6 billion, apply directly to the Investment Board Nepal. Pay the prescribed application fee and obtain acknowledgment receipt. The authority may request additional information or clarification during review.

Step 5: Attend Review Meeting and Provide Clarifications

The reviewing authority may schedule a meeting to discuss project details, capital sources, and compliance plans. Respond promptly to queries regarding technology transfer, employment, and environmental safeguards. Provide supplementary documents or revised project reports if requested by the approval committee.

Step 6: Receive FDI Approval Certificate

Upon satisfactory review, the Department of Industry or Investment Board Nepal issues the FDI approval certificate specifying approved capital, foreign equity percentage, and conditions. The certificate is valid for the project duration and must be renewed if the investment structure changes. Use the approval certificate to proceed with company registration and fund transfer.

What Documents Are Required for FDI Approval in Nepal?

Completed FDI application form in prescribed format
Detailed project report or business plan
Passport copies of all foreign investors (notarized)
Company registration certificate of foreign investing entity (if applicable)
Board resolution authorizing the investment (for corporate investors)
Proof of financial capacity or bank statement
Technology transfer agreement (if applicable)
Joint venture agreement (if applicable)
Environmental impact assessment (for specified sectors)
Sector-specific clearances or no-objection certificates
Power of attorney (if application is filed through representative)
Passport-size photographs of investors

All foreign documents must be authenticated by the Nepali embassy or consulate and translated into Nepali or English.

FDI Sector Classification and Foreign Equity Limits in Nepal

The following table categorizes sectors based on foreign equity participation limits and minimum investment requirements under the Foreign Investment and Technology Transfer Act:

Sector Category	Foreign Equity Limit	Minimum Investment (NPR)	Approval Authority	Special Conditions
Manufacturing (General)	Up to 100%	50 Million	Department of Industry	Technology transfer encouraged
Service Sector	Up to 100%	50 Million	Department of Industry	Excludes small-scale services
Tourism and Hospitality	Up to 100%	50 Million	Department of Industry	Environmental clearance required
Energy and Infrastructure	Up to 100%	6 Billion (for IBN)	Investment Board Nepal	Long-term concession agreements
Information Technology	Up to 100%	50 Million	Department of Industry	No technology transfer mandatory
Agriculture Processing	Up to 100%	50 Million	Department of Industry	Must use local raw materials
Education and Health	Up to 80%	50 Million	Department of Industry	Sector regulator approval required
Consulting Services	Up to 51%	50 Million	Department of Industry	Local partnership mandatory

This classification is subject to periodic updates by the Government of Nepal. Investors should verify current limits at https://www.doi.gov.np.

How Long Does the FDI Process Take in Nepal?

The FDI approval and registration process in Nepal typically takes 30 to 90 days depending on project complexity, sector requirements, and completeness of documentation. The timeline includes application review, approval issuance, company registration, and industry registration.

FDI approval timeline breakdown:

Application submission and acknowledgment: 1 to 3 days
Document verification and initial review: 7 to 15 days
Review meeting and clarification process: 10 to 20 days
Approval decision and certificate issuance: 7 to 14 days
Company registration at Office of Company Registrar: 7 to 15 days
Industry registration at Department of Industry: 5 to 10 days
Bank account opening and fund transfer: 10 to 20 days
Business visa and work permit processing: 15 to 30 days

Large projects requiring Investment Board Nepal approval may take 90 to 180 days due to additional due diligence, environmental assessments, and inter-ministerial coordination.

What Are the Costs for FDI in Nepal?

The following table outlines government fees and costs associated with the FDI process in Nepal:

Fee Type	Amount (NPR)	Payment Stage	Payable To
FDI Application Fee	5,000 to 25,000	Application submission	Department of Industry / IBN
Company Registration Fee	1,000 to 15,000	Company incorporation	Office of Company Registrar
Industry Registration Fee	2,000 to 10,000	Industry registration	Department of Industry
PAN Registration	Free	Tax registration	Inland Revenue Department
VAT Registration	Free	VAT registration	Inland Revenue Department
Business Visa Fee	5,000 to 30,000	Visa application	Department of Immigration
Work Permit Fee	10,000 to 50,000	Work permit application	Department of Labor
Environmental Clearance	10,000 to 100,000	Project approval	Ministry of Environment

Additional costs include legal fees, notarization, translation, and professional consultancy charges. Fees are subject to change based on government notifications.

What Are the Post-FDI Compliance Requirements in Nepal?

After obtaining FDI approval and commencing operations, foreign investors must comply with ongoing regulatory obligations:

Submit annual progress reports to the Department of Industry or Investment Board Nepal
File annual financial statements and tax returns with the Inland Revenue Department
Maintain minimum capital as specified in the FDI approval certificate
Renew industry registration annually or as per sector requirements
Comply with labor laws including employment contracts and social security contributions
Obtain necessary sector-specific licenses and renewals
Report any changes in shareholding, capital structure, or business activities
Maintain proper accounting records and statutory registers
Facilitate government inspections and audits
Renew business visa and work permits for foreign employees
Comply with foreign exchange regulations for fund transfers and repatriation
Submit technology transfer reports if applicable

Non-compliance may result in penalties, suspension of operations, or cancellation of FDI approval. Detailed compliance guidelines are available at https://www.ird.gov.np.

What Types of FDI Are Allowed in Nepal?

The following table describes the types of foreign direct investment permitted under Nepali law:

FDI Type	Description	Minimum Capital	Approval Requirement
Equity Investment	Direct capital contribution in shares of Nepali company	NPR 50 Million	FDI approval required
Joint Venture	Partnership between foreign and Nepali investors	NPR 50 Million	FDI approval and JV agreement required
Technology Transfer	Transfer of technical know-how, patents, or trademarks	NPR 50 Million	Technology transfer agreement required
Reinvestment of Profits	Reinvestment of repatriable profits in same or new project	No minimum	Prior approval from DOI required
Loan Investment	Foreign loan to Nepali enterprise (subject to NRB approval)	As per NRB norms	Nepal Rastra Bank approval required
Franchise Agreement	Foreign brand licensing to Nepali entity	NPR 50 Million	FDI approval and franchise agreement required

All types require compliance with the Foreign Investment and Technology Transfer Act and sector-specific regulations.

What Benefits Does FDI Provide in Nepal?

Foreign Direct Investment in Nepal offers the following legal and operational benefits:

Legal protection of investment: Full protection under bilateral investment treaties and Nepali law
Repatriation rights: Repatriation of profits, dividends, and capital after tax payment
Business visa and work permit: Automatic eligibility for business visa and work permit for investors and key personnel
Tax incentives: Income tax exemptions and reduced rates for specified sectors and regions
Single-window facilitation: Streamlined approval process through Department of Industry or Investment Board Nepal
Technology transfer benefits: Legal framework for technology licensing and royalty payments
Access to domestic market: Full market access for approved sectors without local partnership requirement
Foreign currency account: Permission to maintain foreign currency accounts for business transactions
Dispute resolution: Access to international arbitration under bilateral investment treaties
Employment of foreign nationals: Right to employ foreign experts and managers with work permits
Ownership of assets: Right to own land, buildings, and equipment for business purposes (subject to restrictions)
Convertibility: Convertibility of Nepali currency for approved transactions through authorized banks

Investors can access detailed incentive information at https://www.mof.gov.np and https://www.nrb.org.np.

Frequently Asked Questions (FAQs)

What is the minimum investment required for FDI in Nepal?

The minimum foreign direct investment required in Nepal is NPR 50 million for most sectors under the Foreign Investment and Technology Transfer Act. This threshold applies to manufacturing, services, tourism, and technology sectors. Certain sectors may have higher minimum capital requirements based on regulatory guidelines issued by the Department of Industry.

Can a foreign investor own 100% equity in Nepal?

Yes, foreign investors can own up to 100% equity in most sectors including manufacturing, tourism, energy, and information technology. However, certain sectors such as consulting services and professional practices restrict foreign equity to 51% or require mandatory local partnership. Investors must verify sector-specific equity limits before applying for FDI approval.

How do I apply for FDI approval in Nepal?

Step 1: Verify sector eligibility and minimum capital requirement
Step 2: Prepare detailed project report and required documents
Step 3: Submit application to Department of Industry or Investment Board Nepal
Step 4: Attend review meeting and provide clarifications
Step 5: Receive FDI approval certificate and proceed with company registration

What documents are needed for FDI approval?

Completed FDI application form
Detailed project report or business plan
Passport copies of foreign investors (notarized)
Company registration certificate of investing entity
Proof of financial capacity or bank statement

How long does FDI approval take in Nepal?

The FDI approval process typically takes 30 to 90 days from application submission to certificate issuance. The timeline includes document verification, review meetings, approval decision, and certificate issuance. Large projects requiring Investment Board Nepal approval may take 90 to 180 days due to additional due diligence and environmental assessments.

Can FDI profits be repatriated from Nepal?

Yes, foreign investors can repatriate profits, dividends, and capital after paying applicable taxes under the Foreign Investment and Technology Transfer Act. Repatriation requires approval from Nepal Rastra Bank and must be processed through authorized commercial banks. Investors must submit audited financial statements and tax clearance certificates for repatriation approval.

What sectors are prohibited for FDI in Nepal?

Arms and ammunition manufacturing
Explosives and radioactive materials production
Cottage and small-scale industries reserved for Nepali citizens
Retail trading below specified investment threshold
Personal services and small consultancy businesses

Do foreign investors get business visas in Nepal?

Yes, foreign investors who obtain FDI approval are eligible for business visas valid for up to five years. The visa allows multiple entries and can be renewed based on continued investment and compliance. Investors must apply at the Department of Immigration with FDI approval certificate, company registration, and passport. Work permits are also issued for foreign employees

Government Portal Links Included: