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.
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.
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.
Foreign Direct Investment in Nepal is governed by the following legal framework:
Official legal texts are available at https://www.lawcommission.gov.np and https://www.mof.gov.np.
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.
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.
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.
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.
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.
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.
All foreign documents must be authenticated by the Nepali embassy or consulate and translated into Nepali or English.
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.
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:
Large projects requiring Investment Board Nepal approval may take 90 to 180 days due to additional due diligence, environmental assessments, and inter-ministerial coordination.
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.
After obtaining FDI approval and commencing operations, foreign investors must comply with ongoing regulatory obligations:
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.
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.
Foreign Direct Investment in Nepal offers the following legal and operational benefits:
Investors can access detailed incentive information at https://www.mof.gov.np and https://www.nrb.org.np.
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.
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.
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.
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.
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:
August 28, 2025 - BY Admin