Foreign Direct Investment (FDI) in Nepal: Step-by-Step 2025 Guide
Last Updated: May 15, 2025
Introduction
Nepal’s FDI policies have significantly liberalized under the Foreign Investment and Technology Transfer Act (FITTA) 2019, attracting global investors. This guide covers the end-to-end FDI process, including approval, sector restrictions, and repatriation rules.
- FDI Policy Overview
Key Features of Nepal’s FDI Framework
✅ 100% foreign ownership allowed in most sectors
✅ Minimum investment: NPR 50 million (~$380,000)
✅ Sectoral caps:
- Prohibited: Agriculture, real estate brokerage
- Restricted: Media (49% max), retail (conditional)
✅ Tax incentives: 10-year holidays for priority sectors (e.g., hydropower)
Governing Bodies:
- Department of Industry (DOI) – Approvals for investments < NPR 6B
- Investment Board Nepal (IBN) – Large projects (> NPR 6B)
- Step-by-Step FDI Approval Process
Stage 1: Pre-Approval
1️⃣ Sector Eligibility Check – Verify your business against Nepal’s Negative List.
2️⃣ Reserve Company Name – Submit 3 options to the Office of Company Registrar (OCR).
Stage 2: Formal Application
3️⃣ Submit FDI Proposal – To DOI/IBN with:
- Business plan
- Financial credibility proof (bank statements)
- MOA/AOA drafts
4️⃣ DOI/IBN Approval – Typically takes 30-45 days.
Stage 3: Post-Approval Compliance
5️⃣ Register Company – File with OCR (15-30 days).
6️⃣ Open FDI Bank Account – Deposit capital via Nepal Rastra Bank-approved channels.
7️⃣ Obtain Licenses – Sector-specific permits (e.g., tourism, telecom).
⏳ Total Timeline: 2-4 months
- Required Documents for FDI Approval
| Document | Notes |
| Passport copies of investors | Notarized |
| Parent company’s incorporation certificate | Apostilled |
| Audited financial statements | Last 2 years |
| Project feasibility report | For large projects |
| Nepal-translated MOA/AOA | Certified translation |
⚠️ All foreign documents must be legalized by the Nepalese Embassy.
- Sector-Specific FDI Regulations
| Sector | FDI Cap | Special Requirements |
| Hydropower | 100% | Environmental impact assessment |
| Tourism | 100% | Minimum 3-star standards for hotels |
| Banking | 80% | NRB approval + NPR 8B capital |
| IT/Software | 100% | No restrictions |
Priority Sectors: Renewable energy, infrastructure, and manufacturing get fast-track approvals.
- Capital & Repatriation Rules
FDI Capital Requirements
- Minimum: NPR 50 million (except IT/consultancy: NPR 5M)
- In-Kind Contributions: Machinery/IP must be valued by DOI.
Profit Repatriation
- Dividends: Allowed after tax (5% withholding tax).
- Process: Submit to Nepal Rastra Bank:
- Audited financials
- Tax clearance certificate
- Board resolution
💡 *Repatriation takes 7-15 working days post-approval.*
- Challenges & Solutions
| Challenge | Workaround |
| Bureaucratic delays | Hire a local liaison officer |
| Land acquisition issues | Lease instead of purchase |
| Forex restrictions | Use Nepal’s FDI-specific accounts |
| Compliance complexity | Retain a Nepal-certified auditor |
FDI in Nepal: FAQs
- Can FDI enter Nepal without local partners?
Yes, except in restricted sectors like media and retail.
- What’s the fastest FDI approval route?
IT/software projects (30-day approval via DOI’s online portal).
- Are there tax holidays for FDI?
Yes:
- 10 years for hydropower
- 7 years for hospitals in rural areas
- How to monitor FDI compliance?
File annual reports with DOI and Nepal Rastra Bank.
- Can FDI employ foreign staff?
Yes, but must prove unavailability of local skills for work permits.
Conclusion & Pro Tips
Nepal’s FDI procedures are straightforward but paperwork-intensive. To succeed:
🔹 Double-check sectoral caps (updated annually).
🔹 Use Nepal’s One-Stop Service Center for faster processing.
🔹 Partner with local experts for compliance (lawyers, auditors).
📞 Need help? [Contact corporatebizlegal ] for a free consultation.
