FDI in Nepal: Rules, Thresholds, Automatic Route & Approval Process

Foreign direct investment (FDI) in Nepal is regulated principally by the Foreign Investment and Technology Transfer Act (FITTA) 2019, known in Nepali as the Foreign Investment and Technology Transfer Ain, 2075 Bikram Sambat. Enacted in 2019 AD (2075 BS), it replaced the older 1992 (2049 BS) law and modernised the rules for how foreigners can bring capital, machinery and technology into the country. FITTA is supported by the Foreign Investment and Technology Transfer Rules, the Industrial Enterprises Act, the Companies Act, and the Investment Board Act 2011 (2068 BS), which together form Nepal's foreign-investment regime.

Nepal operates a 'negative list' system: foreign investment is broadly permitted across the economy except in the sectors specifically prohibited or restricted by the schedule to FITTA and its rules. This means manufacturing, energy, tourism, infrastructure, financial services, information technology and most service industries are open to foreign capital, subject to sector-specific caps and licensing. A 2025 amendment ordinance further widened the door by explicitly allowing investment in 'any industry other than those included in the Schedule', reinforcing the open-by-default approach.

FITTA recognises several forms of foreign investment: equity (share) investment in a Nepali company, reinvestment of dividends or earnings from such shares, investment through the purchase of shares or assets of an existing company, and the establishment of an industry with 100 percent foreign ownership or as a joint venture with Nepali partners. Following a 2025 amendment, foreign investors may also invest indirectly through units of venture capital funds or specialised investment funds registered with the Securities Board of Nepal. Technology transfer arrangements—covering patents, trademarks, know-how, franchising and technical or management services—are also treated as a recognised channel.

The single most-searched figure is the minimum foreign investment in Nepal. Since 14 October 2022 (Kartik 2079 BS) the minimum threshold has been NPR 20 million per foreign investor—roughly USD 150,000 depending on the exchange rate. This was a sharp cut from the earlier NPR 50 million floor, made to attract smaller and mid-sized foreign investors and startups that had previously been priced out.

There is an important exception: the information technology (IT) sector has no minimum investment requirement. Since May 2023 the government removed the floor entirely for IT-based industries, meaning a foreign investor can enter Nepal's software, IT-enabled services and digital sectors with any amount of capital. This carve-out is intended to draw skilled, technology-driven investment that does not need large upfront capital.

The threshold is a per-investor minimum, not a maximum. There is generally no upper ceiling on how much a foreign investor may bring in, subject to any sector-specific equity caps on the negative list. Investors should also budget for the fact that the committed capital must actually be injected within the timelines set at approval; failing to bring in the pledged investment can lead to the approval lapsing.

Nepal splits FDI approval authority by project size. Under Section 15 of FITTA 2019, the Department of Industry (DoI), under the Ministry of Industry, Commerce and Supplies, approves foreign investment in projects with a total investment up to NPR 6 billion. Investment Board Nepal (IBN), constituted under the Investment Board Act 2011, approves projects with a total investment above NPR 6 billion. This NPR 6 billion line is the primary jurisdictional divide investors need to know.

Beyond the monetary threshold, IBN has a dedicated mandate over strategically large and complex projects. It is the approving and facilitating body for hydropower projects above 200 megawatts, and it typically handles mega-infrastructure such as large transmission lines, fast-track roads, international airports, special economic zones and other national-priority projects. IBN also negotiates Project Development Agreements (PDAs) and offers a 'one-window' service to major investors, coordinating across ministries and regulators.

The Department of Industry is the workhorse for the large majority of FDI cases, which fall well below NPR 6 billion. It issues foreign-investment approval, registers the industry, and coordinates the downstream steps of company registration and tax registration. FITTA sets service standards for both bodies: once complete documents are submitted, approval is to be granted within a defined window—commonly cited as around seven days at the DoI for qualifying applications.

To cut red tape, Nepal introduced an automatic route for foreign investment, operationalised through an online portal run by the Department of Industry (accessible via the DoI's integrated management information system). Under this route, an eligible foreign investor applies online—including from abroad—and receives pre-approval automatically once the system checks are met, without a separate case-by-case government decision. The route was rolled out from 2 October 2023 and was promoted heavily around the third Nepal Investment Summit in April 2024.

Initially the automatic route was capped at NPR 500 million (about USD 37.6 million) per project. In January 2024 the government moved to remove that ceiling, allowing much larger commitments to flow through the streamlined online channel rather than the conventional file-by-file process. The minimum threshold of NPR 20 million still applies (with the IT-sector exemption), so the automatic route lowered the approval friction, not the entry floor.

The automatic route is limited to a defined set of priority sectors rather than the whole economy. The uptake has been striking: in the first nine months of the fiscal year ending mid-April 2025, official data showed the automatic route accounting for the large majority of Nepal's FDI commitments—figures reported at roughly NPR 55 billion of the total, reflecting how quickly investors have adopted the simplified process. Investors should confirm current eligibility and any caps directly with the Department of Industry, as this area has been changing rapidly.

The negative list is the schedule of industries where foreign investment is either fully prohibited or capped. Fully prohibited areas include primary agriculture and livestock (poultry, fisheries, bee-keeping, dairy, horticulture and similar), small and cottage industries, and personal service businesses such as hairdressing, beauty parlours, tailoring and driving-training schools. Also barred are the arms, ammunition, explosives and atomic-energy industries; the manufacture of tobacco products, cigarettes and bidi; and real estate trading (as distinct from construction/development).

Several service and consumer sectors are closed to foreign investment to protect small domestic operators: retail trade (with limited exceptions), remittance services, money-changing, local catering, travel and trekking agencies, homestay and rural tourism, and internal courier services fall on the restricted side of the line. Certain traditional crafts—handloom, pottery, traditional blacksmithing and similar—are reserved for Nepali entrepreneurs unless they are export-oriented or preserve traditional art.

Some sectors are open but with an equity ceiling rather than an outright ban. The clearest example is media: foreign ownership in print, broadcast and online news media is capped (commonly cited at a maximum of around 49 percent, and lower for certain print media). Consultancy services also carry a foreign-equity cap. Because the schedule is periodically revised—including by the 2025 amendment—investors should verify the current negative list with the Department of Industry or Investment Board Nepal before committing to a restricted sector.

A typical FDI approval process in Nepal begins with securing foreign-investment approval and then moves through company incorporation, banking and tax registration. For projects up to NPR 6 billion, the applicant files with the Department of Industry (or uses the automatic-route portal for eligible sectors); for projects above NPR 6 billion, the application goes to Investment Board Nepal. The applicant submits a project report, the investment agreement or shareholders' agreement, the investor's corporate documents and financial credentials, and a board resolution authorising the investment.

After foreign-investment approval, the investor registers the company at the Office of the Company Registrar under the Companies Act, then registers with the Inland Revenue Department for a Permanent Account Number (PAN) and VAT where applicable, and obtains any sector licences. The inbound capital is then remitted through the banking channel and recorded with Nepal Rastra Bank (NRB), the central bank, which is essential for later repatriation. NRB records confirm the foreign currency actually entered Nepal.

A defining feature of Nepal's regime is repatriation: once taxes are paid, foreign investors may repatriate dividends and profits, the proceeds of selling their shares, amounts received on liquidation, and lump-sum payments under technology-transfer agreements—generally in the currency of the original investment or another convertible currency, subject to NRB approval. Keeping clean records of the NRB-recorded inbound investment from day one is the single most important practical step for guaranteeing smooth repatriation later.