Table of Contents1 1. What is the Statutory Procedure for FDI Approval in Nepal2 2. What Is FDI in Nepal?3 3. Where To Apply for FDI Approval?4 4. What Are the Requirements for FDI in Nepal?4.1 4.1. Eligibility Criteria4.2 4.2. Investment Threshold Requirements4.3 4.3. Timeline for Investment5 5. What Documents Are Required for FDI Approval?6 6. How To Obtain FDI Approval in Nepal?6.1 Step 1: Prepare Project Proposal and Obtain FCC6.2 Step 2: Submit FDI Application to DOI or IBN6.3 Step 3: Obtain DOI/IBN Approval and Register Company6.4 Step 4: Complete Tax and Industry Registration6.5 Step 5: Notify NRB and Open Bank Account6.6 Step 6: Bring Investment Amount and Record at NRB7 7. What Documents Must Be Submitted for FDI?7.1 7.1. Documents for Company Registration7.2 7.2. Documents for Tax Registration7.3 7.3. Documents for Industry Registration8 8. What are the Sector-Specific FDI Restrictions and Caps?9 9. How Long Does the FDI Process Take?9.1 9.1. Timeline for FDI Approval9.2 9.2. Timeline for Investment Injection9.3 9.3. Timeline for Post-Investment Procedures10 10. What Are the Costs of FDI in Nepal?10.1 10.1. Government Fees and Charges10.2 10.2. Professional Service Costs11 11. What Are the Renewal and Compliance Requirements?12 12. What Laws Govern FDI in Nepal?13 13. What Types of FDI Are Permitted in Nepal?14 14. What Benefits Does FDI Provide?14.1 What is the minimum investment required for FDI in Nepal?14.2 How long does FDI approval take?14.3 When can foreign investors repatriate profits?14.4 What is the FDI approval process?14.5 What are FDI approval costs?14.6 What documents are needed for FDI?14.7 Can foreigners own 100% of Nepalese companies?14.8 What taxes apply to foreign investors?14.9 How is foreign investment protected?14.10 What visa options exist for foreign investors? Foreign Direct Investment (FDI) is the procedure of establishing company or investing in Nepal as a Foreigner. Foreign Businesses or Investors can establish companies by obtaining FDI Approval from the Department of Industry. Nepal’s FDI framework is governed by the Foreign Investment and Transfer of Technology Act, 2075 (2019). The FDI process in Nepal involves obtaining regulatory approvals, meeting investment thresholds, complying with sectoral restrictions, and fulfilling post-investment obligations. Foreign investors can invest through equity participation, technology transfer, loan financing, or establishing branch operations. The Government of Nepal has procedures through the Department of Industries and Investment Board of Nepal, offering protections including repatriation rights, national treatment, and dispute resolution mechanisms. This guide has been prepared by Axion Partners after assisting clients from more than thirty countries in successfully making investments in Nepal. It includes the process, timelines, requirements, investment regulations, investment vehicles, and other relevant details. 1. What is the Statutory Procedure for FDI Approval in Nepal Step 1: Verify business eligibility under positive and negative lists. Step 2: Obtain FDI approval from Department of Industries or Investment Board of Nepal. Step 3: Register company with Office of Company Registrar within seven days. Step 4: Complete tax registration with Inland Revenue Department immediately after incorporation. Step 5: Obtain industry registration certificate from Department of Industries within fifteen days. Step 6: Bring investment amount to Nepal through banking channels within prescribed timeline. 2. What Is FDI in Nepal? Foreign Direct Investment in Nepal refers to investment made by foreign individuals, companies, or entities in Nepalese industries and businesses. FDI is governed by the Foreign Investment and Transfer of Technology Act, 2075 (2019), commonly known as FITTA. This legislation replaced the earlier Foreign Investment and Transfer of Technology Act, 2049 (1992). FDI in Nepal is permissible only in industrial activities, not in trading activities. The law distinguishes between sectors where foreign investment is allowed and those where it is restricted. Foreign investors must commit to invest a minimum of approximately USD 140,000 (NPR 20 million) in convertible foreign currency with the exception of IT Sector. The investment can take various forms including equity participation, technology transfer, loan financing, asset purchase, lease financing, or establishment of branch operations. Nepal’s FDI regime operates primarily through an approval-based mechanism. Foreign investors must obtain approval from either the Department of Industries (DOI) for investments up to NPR 6 billion or the Investment Board of Nepal (IBN) for investments exceeding this threshold. The recently enacted Foreign Investment and Foreign Loan Management Bylaws, 2021 by Nepal Rastra Bank has introduced elements of automatic route, eliminating the need for central bank approval except for share purchase transactions. 3. Where To Apply for FDI Approval? The primary approving authorities are the Department of Industries and the Investment Board of Nepal. The Department of Industries, operating under the Ministry of Industry, Commerce and Supplies, handles FDI applications for investments up to NPR 6 billion (approximately USD 51 million). For larger investments exceeding NPR 6 billion, the Investment Board of Nepal serves as the approving authority. IBN was established to facilitate and promote large-scale foreign investment in Nepal. The board operates independently and has authority to approve mega projects across various sectors. Foreign investors can access IBN services at their office in Kathmandu. More information is available at https://www.ibn.gov.np. Nepal Rastra Bank, the central bank of Nepal is also involved in the process. While the recent bylaws have reduced NRB’s approval requirements for most investments, approval is still mandatory for foreign investment through share purchase. All foreign investors must notify NRB before bringing investment amounts into Nepal. 4. What Are the Requirements for FDI in Nepal? 4.1. Eligibility Criteria Foreign investors must meet several eligibility requirements to invest in Nepal. The proposed business activity must not fall under the negative list specified in FITTA. The negative list includes sectors such as small and cottage industries, personal service businesses, retail trading, real estate business (except construction), arms and ammunition manufacturing, and certain agricultural activities. The business must qualify as an industry under the Industrial Enterprises Act, 2076 (2020). 4.2. Investment Threshold Requirements Foreign investors must invest a minimum of NPR 20 million (approximately USD 140,000) in convertible foreign currency. This threshold applies regardless of the ownership percentage held by the foreign investor. The investment amount must be brought into Nepal through proper … Continue reading Foreign Direct Investment (FDI) Process in Nepal