Foreign Direct Investment (FDI) in Nepal is a regulated legal process that allows foreign investors to establish, acquire, or expand business interests in Nepal. FDI is governed primarily by the Foreign Investment and Technology Transfer Act, 2019 (2075) (“FITTA”), the Industrial Enterprises Act, 2020 (2076), and related regulations and policies.
FDI approval and registration in Nepal is administered by designated government authorities depending on the nature and size of the investment. The complete FDI approval and establishment process generally takes 3 to 6 months, provided there are no regulatory complications.
This guide is prepared to explain the FDI process in Nepal, legal framework, documentation, costs, timelines, and enforcement mechanisms.
Legal Basis for Foreign Direct Investment in Nepal
Foreign investment in Nepal is permitted only in sectors approved by prevailing laws and policies.
Under Section 3 of FITTA, any foreign investor intending to invest capital, technology, or expertise in Nepal must obtain formal approval from the competent authority prior to making the investment.
Foreign investment made without approval is not legally recognized and does not enjoy statutory protection under Nepalese law.
Competent Authority for FDI Approval
Depending on the nature and size of the investment, FDI applications are processed by:
- Department of Industry (DOI) – for industries below the prescribed investment threshold
- Investment Board Nepal (IBN) – for large-scale or priority investments
These authorities are responsible for:
- Granting foreign investment approval
- Facilitating company or industry registration
- Monitoring compliance
- Coordinating approvals with other government agencies
Foreign Direct Investment Process in Nepal
FDI approval and establishment in Nepal follows the stages below:
Step 1: Application for Foreign Investment Approval
The foreign investor submits an application in the prescribed format to the DOI or IBN, enclosing required documents and project details.
Step 2: Review and Approval
The authority examines whether:
- The proposed investment falls under permitted sectors
- Minimum investment thresholds are met
- The proposal complies with FITTA, industrial, and foreign exchange laws
If satisfied, the authority grants Foreign Investment Approval.
Step 3: Company or Industry Registration
After approval:
- Company Registration at the Office of the Company Registrar (OCR), or
- An industry is registered with the Department of Industry, as applicable.
Step 4: Capital Injection and Bank Formalities
The investor:
- Opens a foreign currency account in Nepal
- Brings approved capital through formal banking channels
- Registers the capital inflow with Nepal Rastra Bank (NRB)
Step 5: Business Operation and Licensing
After capital verification:
- Business licenses are obtained
- Operations may commence in accordance with approved objectives
Documents Required for Foreign Direct Investment
The following documents are generally required for FDI approval:
- FDI application form
- Project proposal or business plan
- Passport and profile of foreign investor(s)
- Certificate of incorporation and charter documents (foreign entity)
- Board resolution approving investment
- Joint venture agreement (if applicable)
- Technology transfer agreement (if applicable)
- Power of Attorney
- Financial credibility documents
Minimum Investment Requirement
Under prevailing policy:
- Minimum FDI amount: NPR 20 million per investor
- Certain sectors may require higher thresholds or special approval
Restricted and Prohibited Sectors
Foreign investment is restricted or prohibited in sectors listed under the Negative List, including:
- Small-scale retail trade
- Personal service businesses
- Domestic courier services
- Certain traditional and cottage industries
Time Required for FDI Approval and Establishment
- FDI approval: 15 to 30 working days
- Company registration and licensing: 15 to 30 working days
- Total time: approximately 3 to 6 months, depending on sector and compliance
Delays may occur if additional approvals or clarifications are required.
Government Fees and Costs
| Particulars | Fee (NPR) |
|---|---|
| FDI Approval Fee | As prescribed by authority |
| Company Registration Fee | Based on authorized capital |
| Industry Registration Fee | Variable |
| Notarization and Documentation | Actual cost |
Professional and compliance-related costs vary depending on project size and complexity.
Validity and Repatriation of Investment
Approved foreign investment:
- Remains valid until lawfully exited
- Allows repatriation of:
- Capital
- Dividends
- Royalties
- Loan repayments
Repatriation is subject to approval from Nepal Rastra Bank.
Legal Protection and Guarantees
Foreign investors are entitled to:
- National treatment
- Protection against expropriation
- Fair compensation
- Dispute resolution through courts or arbitration
Nepal is a signatory to multiple bilateral and multilateral investment treaties.
Enforcement and Dispute Resolution
Regulatory oversight is exercised by:
- DOI or IBN
- Nepal Rastra Bank
- Relevant sectoral regulators
Disputes may be resolved through:
- Nepalese courts
- Arbitration as agreed in contracts
- International mechanisms where treaties apply
Importance of Foreign Direct Investment Registration
a. Legal Recognition
Only approved FDI enjoys legal validity and protection.
b. Capital Repatriation
Registered investment ensures lawful profit and capital repatriation.
c. Business Expansion
FDI enables access to Nepal’s growing market and strategic location.
d. Investor Confidence
Regulatory approval strengthens credibility with banks and partners.
How CompanyNP Can Assist?
CompanyNP provides end-to-end legal support for foreign investors, including:
- FDI feasibility analysis and structuring
- Preparation and submission of FDI applications
- Company and industry registration
- NRB coordination and capital repatriation
- Compliance, licensing, and regulatory advisory
- Dispute resolution and exit planning
For professional assistance with Foreign Direct Investment in Nepal, consult Law Firm in Nepal