Foreign Direct Investment Approval Process in Nepal refers to the investment made by foreign individuals or entities in Nepali businesses or economic activities. Foreign Direct Investment Approval Process in Nepal involves the transfer of capital, technology, and expertise from foreign sources into Nepal’s economy. The Foreign Investment and Technology Transfer Act (FITTA) 2019 governs FDI in Nepal. FDI in Nepal can take various forms, including: Axion Partners has skilled and experienced Foreign Direct Investment FDI Lawyers in Nepal that specialize in Investment and Incorporation Laws to assist companies and investors to enter the Nepali Market. How to incorporate a company in Nepal as a Foreigner? The process requires compliance with the Foreign Investment and Technology Transfer Act (FITTA) 2019 and other relevant laws. Foreign investors must ensure they meet all legal requirements and obtain necessary approvals before commencing business operations in Nepal. Requirements for Business Incorporation in Nepal through FDI To incorporate a business in Nepal through FDI, the following requirements must be met: Permitted Sectors for Establishing a Business in Nepal Nepal welcomes foreign investment in various sectors, including: These sectors offer significant Foreign Direct Investment opportunities in Nepal. The government actively promotes investment in these areas to boost economic growth and development. Restricted Sectors for Establishing a Business in Nepal While Nepal encourages FDI in many sectors, some areas are restricted or prohibited for foreign investment: What is the Minimum Investment for FDI Company Registration in Nepal? The minimum Foreign Investment in Nepal varies depending on the sector and type of investment: These thresholds are subject to change, and investors should verify the current minimum investment requirements with the Department of Industry or Investment Board Nepal before proceeding with their investment plans. Percentage of Ownership for Businesses in Nepal by Foreign Entities Type of Business Maximum Foreign Ownership Manufacturing Industries 100% Service Industries 100% Banking and Financial Institutions Up to 85% Insurance Companies Up to 80% Air Transport Services Up to 49% Domestic Air Transport Up to 49% Trekking Agencies Up to 51% Travel Agencies Up to 67% Consultancy Services 100% Retail Business Up to 51% It’s important to note that these percentages may be subject to change based on government policies and regulations. Foreign investors should consult with the Department of Industry or Investment Board Nepal for the most up-to-date information on ownership restrictions. Authorities approving Foreign Investment in Nepal Investment Amount Approving Authority Up to NPR 6 billion Department of Industry (DOI) Above NPR 6 billion Investment Board Nepal (IBN) Hydropower projects above 500 MW Investment Board Nepal (IBN) Special economic zones Investment Board Nepal (IBN) Public-private partnership projects Investment Board Nepal (IBN) Industries requiring EIA Ministry of Forests and Environment Banking and financial institutions Nepal Rastra Bank (NRB) Insurance companies Insurance Board Telecommunication services Nepal Telecommunications Authority Foreign investors must obtain approval from the relevant authority based on their investment amount and sector. The approval process may involve multiple agencies depending on the nature of the project. What is the Process of FDI Company Registration in Nepal? FDI PROCESS IN NEPAL Step 1: Foreign Investment Approval (DOI/IBN) Obtain approval for Foreign Direct Investment (FDI) under the Foreign Investment and Technology Transfer Act, 2019 from the Department of Industry (DOI) or Investment Board Nepal (IBN). This process is essential for legal validation of foreign investment and includes submitting detailed project reports, business plans, and investment commitments. Step 2: Company Incorporation (OCR) Register the company with the Office of the Company Registrar (OCR) under the Companies Act, 2006. This step involves selecting the company structure, reserving a name, and submitting required documents, including Articles of Association and Memorandum of Association. Registration ensures the company is recognized as a legal entity in Nepal. Step 3: Tax Registration (Inland Revenue Office) Register the company with the Inland Revenue Office for Value Added Tax (VAT) and Permanent Account Number (PAN) under the Income Tax Act, 2002. This ensures compliance with Nepal’s tax system and enables legal operations, including invoicing, tax filings, and employee-related tax obligations. Step 4: Business Registration (Local Ward Office) Obtain business registration approval from the local ward office as per the Local Governance Operations Act, 2017. This involves submitting company details, lease agreements, and other supporting documents to secure a recommendation letter, which is often necessary for industry-specific registrations. Step 5: Industry Registration (DOI) Register the industry with the Department of Industry as required by the Industrial Enterprises Act, 2020. This step is mandatory for companies engaging in industrial or manufacturing activities. It involves obtaining a recommendation from the ward office and completing the prescribed forms. Step 6: Non-Blacklist Certificate (Credit Information Bureau) Acquire a “Non-Blacklist Certificate” from the Credit Information Bureau (CIB) under Nepal Rastra Bank’s directives. This certificate ensures that the directors and stakeholders are not blacklisted for financial irregularities, enhancing credibility for foreign investors and local partners. Step 7: NRB Approval for Investment Amount Infusion Secure prior approval from Nepal Rastra Bank (NRB) to remit the proposed foreign investment amount as per the Foreign Exchange Regulation Act, 1962. This step includes submitting details of the source of funds, investment plan, and proof of compliance with foreign exchange laws. Step 8: Infusion and Recording of Investment Amount (NRB) Infuse the approved investment amount through a local bank, which will issue an Investment Certificate. Subsequently, record the investment with NRB to ensure it complies with foreign currency regulations. This process solidifies the legitimacy of the capital brought into Nepal under FDI laws. What are the Documents Required for Foreign Direct Investment Approval Process in Nepal? Timeline of Approvals of Foreign Investment in Nepal Stage Approximate Timeline Initial screening of proposal 7-10 working days Detailed evaluation 15-30 working days Approval in principle 7-10 working days Company registration 3-5 working days Foreign Investment Approval Certificate from NRB 5-7 working days Final approval 7-10 working days Total estimated timeline 44-72 working days Note: These timelines are approximate and may vary depending on the complexity of the project and the efficiency of the approval process. Government Fees for Foreign … Continue reading Foreign Direct Investment Approval Process in Nepal 2026