Foreign Private Investment in Nepal FDI Process in Nepal

Foreign Private Investment in Nepal FDI Process in Nepal

Foreign direct investment in Nepal has been simplified through digital reforms and updated regulations. Understanding the fdi approval process in nepal is essential for international investors seeking opportunities in this emerging market.

What Is Foreign Direct Investment in Nepal?

Foreign direct investment in nepal is defined as investment made by a non-resident entity or individual in a Nepali business entity. The Foreign Investment and Technology Transfer Act, 2019 governs all fdi in nepal activities.

The fdi process in nepal involves multiple government agencies. However, recent digitalization has reduced processing times significantly. The minimum investment threshold has been set at NPR 20 million (approximately USD 155,000).

Why Invest in Nepal?

Nepal's strategic location between India and China provides unique market access. Additionally, low labor costs and liberal repatriation policies make fdi company in Nepal establishment attractive.

Several sectors have been opened for foreign participation. These include tourism, hydropower, manufacturing, and information technology. Recent policy updates have also added electric vehicles and renewable energy to the positive list.

FDI Approval Process in Nepal: Step-by-Step Guide

Step 1: Investment Approval from DOI or IBN

The first step in the fdi approval process in nepal involves obtaining permission from the relevant authority.

• Department of Industry (DOI): Approves investments below NPR 6 billion
• Investment Board of Nepal (IBN): Handles investments above NPR 6 billion

Approval applications must be submitted with complete documentation. Processing typically takes 7-14 working days.

Documents Required for fdi in Nepal 

• Project report with technical and financial aspects
• Foreign investor's company profile or bio-data
• Certificate of incorporation (translated into Nepali)
• Board resolution approving Nepal investment
• Financial credibility certificate from foreign bank
• Source of funds documentation
• Power of Attorney for local representative
• Passport copies of investors and directors
• One-year investment retention commitment letter
• Joint Venture Agreement (if applicable)

Step 2: Company Name Reservation

The Office of Company Registrar's CAMIS portal is used for name reservation. Applicants must create an account and propose 2-3 unique names in both English and Nepali.

The fee of NPR 500 is paid online. Approval is granted within 1-2 working days. A name reservation certificate is then downloaded from the portal.

Step 3: Company Incorporation

Company incorporation documents must be prepared after name approval. The Memorandum of Association (MOA) and Articles of Association (AOA) are drafted.

Key clauses to be included:

• Company objectives and business activities
• Share capital details
• Board composition rules
• Meeting procedures
• Dividend distribution policies

Documents are uploaded to the CAMIS portal. Government fees are paid based on investment amount. The Certificate of Incorporation is issued within 5-7 working days.

Step 4: Tax and Business Registrations

Following incorporation, several registrations must be completed:

• Permanent Account Number (PAN) registration at Inland Revenue Office
• Business registration at local ward office
• Industry registration at DOI

The PAN is now automatically generated through system integration. Business registration typically takes 2-3 days.

Step 5: Nepal Rastra Bank Approval

Foreign currency remittance approval must be obtained from Nepal Rastra Bank (NRB). The approval request is submitted along with DOI/IBN approval and incorporation documents.

A Non-Blacklist Certificate from Credit Information Bureau is required. NRB approval usually takes 5-7 working days.

Step 6: Investment Infusion and Recording

Foreign currency is remitted through banking channels. The convertible currency must be brought through proper banking systems. Indian investors may use Indian Rupees through banking channels.

After remittance, the investment is recorded by NRB. An Investment Certificate is issued. This completes the fdi process in nepal.

Table 1: FDI Timeline Summary

Step	Agency	Processing Time	Cumulative Days
Investment Approval	DOI/IBN	7-14 days	7-14
Name Reservation	OCR	1-2 days	8-16
Incorporation	OCR	5-7 days	13-23
Tax/Business	IRO/Ward	2-3 days	15-26
NRB Approval	NRB	5-7 days	20-33
Recording	NRB	2-3 days	22-36

Note: Total fdi approval process in nepal typically requires 1-2 months.

Investment Structures for Foreign Investors

Different entity types can be established through fdi in nepal. Selection depends on business objectives and sector requirements.

Table 2: FDI Entity Comparison

Entity Type	Foreign Ownership	Permitted Activities	Minimum Capital	Liability
Private Limited Company	Up to 100%	All commercial activities	NPR 20 million	Limited
Branch Office	100% (extension of parent)	Same as parent company	NPR 20 million	Unlimited (parent liable)
Liaison Office	100% (representative)	Non-commercial only	None specified	Parent liable

Private Limited Company is most common for foreign direct investment in nepal. Profits and dividends can be repatriated freely after tax compliance.

Legal Framework for FDI in Nepal

Foreign Investment and Technology Transfer Act, 2019

This primary legislation governs all fdi company in Nepal operations. Key provisions include:

• Investment can be made individually or jointly with Nepali partners
• Technology transfer is permitted with approval
• Lease investment in equipment is allowed
• Profits can be repatriated after one-year retention period

Negative List Restrictions

Certain industries are prohibited for foreign direct investment in nepal. The Schedule to FITTA lists these restricted sectors. Some examples include:

• Small-scale agriculture
• Retail business (except international brands)
• Personal services
• Cottage industries

Technology transfer may be permitted in restricted sectors with special approval.

Investment Protection Mechanisms

Bilateral Investment Protection Agreements exist with several countries. France, Germany, and other nations have treaties providing full protection. Double taxation avoidance agreements are in place with multiple jurisdictions.

Recent Regulatory Updates (2025-2026)

The government has introduced several reforms to attract more fdi in nepal:

• Enhanced online verification systems
• Integration between OCR and tax systems for automatic PAN generation
• Fast-track approval for investments above NPR 100 million
• New sectors opened: electric vehicles, renewable energy
• Streamlined document requirements
• 24/7 tracking system implemented

These changes have improved Nepal's investment climate significantly. The World Bank's business readiness indicators show gradual improvement.

Challenges in FDI Process

Despite reforms, challenges remain in the fdi process in nepal:

• Bureaucratic delays can extend timelines
• Document authentication requirements are strict
• Language barriers exist in government offices
• Banking procedures for large transfers need coordination
• Sector-specific approvals may be required

Professional legal assistance is recommended. Experienced firms can navigate these challenges effectively.

Costs Associated with FDI Registration

Table 3: Government Fees Structure

Service	Fee (NPR)	Payable To
Name Reservation	500	OCR
Company Registration (up to NPR 10M)	15,000	OCR
Company Registration (NPR 10M-100M)	40,000	OCR
Company Registration (above NPR 100M)	100,000+	OCR
Industry Registration	5,000	DOI
NRB Application	1,000	NRB
PAN Registration	Free	IRD

Additional costs include legal fees, translation services, and notarization charges.

People Also Ask: FDI in Nepal

What is the minimum investment required for FDI in Nepal?

The minimum investment for foreign direct investment in nepal is NPR 20 million (approximately USD 155,000). This amount must be invested within the approved timeframe.

How long does FDI approval take in Nepal?

The fdi approval process in nepal typically requires 1-2 months. DOI/IBN approval takes 7-14 days. Complete registration including all approvals may extend to 2-3 months in complex cases.

Which sectors are open for foreign investment in Nepal?

Most sectors are open except those on the Negative List. Priority sectors include tourism, hydropower, manufacturing, IT, agriculture (large scale), infrastructure, and recently added renewable energy.

Can foreign investors repatriate profits from Nepal?

Yes, profits can be repatriated after fulfilling tax obligations and the one-year retention requirement. NRB approval is required for repatriation. Nepal has liberal repatriation policies.

What is the role of Nepal Rastra Bank in FDI?

Nepal Rastra Bank regulates foreign currency inflows. NRB approval is required for investment remittance and profit repatriation. The bank monitors compliance with foreign exchange regulations.

Do foreign investors need a local partner in Nepal?

No, 100% foreign ownership is permitted in most sectors. Local partnership is optional and depends on business strategy. Joint ventures are common for market knowledge benefits.

What documents need notarization for FDI registration?

Foreign company documents, board resolutions, and bank certificates must be notarized. Some documents require apostille or embassy attestation depending on the country of origin.

Is online registration available for foreign investors?

Yes, the CAMIS portal at camis.ocr.gov.np handles company registration. However, FDI approval from DOI/IBN and NRB requires separate applications, some with physical document submission.

Best Practices for Successful FDI Registration

Document Preparation

All documents must be prepared in English or Nepali. Foreign language documents need certified translation. Notarization should be completed before submission. Digital copies must be clear and legible.

Timeline Management

Applications should be submitted with complete documentation. Incomplete submissions cause delays. Follow-up with agencies is recommended. Professional liaisons can expedite processes.

Banking Coordination

Banks should be informed about large transfers in advance. Proper documentation must be provided to banks for currency conversion. NRB approval copies should be shared with banking partners.

Compliance Maintenance

Post-establishment compliance is crucial. Annual returns must be filed. Tax obligations must be met regularly. Investment records should be maintained for NRB reporting.

Why Professional Assistance Is Recommended

The fdi process in nepal involves multiple agencies and complex documentation. Experienced legal professionals provide:

• Single-window service coordination
• Document preparation and review
• Agency liaison and follow-up
• Compliance guidance
• Problem resolution

Reputable firms offer guarantees on registration timelines. Some provide money-back guarantees if registration is not completed within specified periods.

Final Checklist for FDI Investors

Before starting the fdi approval process in nepal, ensure:

• Minimum capital of NPR 20 million is available
• Business sector is not on Negative List
• Complete document set is prepared
• Local representative is appointed
• Banking arrangements are confirmed
• Legal counsel is engaged
• Timeline expectations are realistic

This preparation ensures smoother processing and higher success rates.

FDI Source

Government Sources:

• Office of Company Registrar Nepal: https://www.ocr.gov.np
• Department of Industry: https://www.doi.gov.np
• Nepal Rastra Bank: https://www.nrb.org.np

Legal Framework:

• Foreign Investment and Technology Transfer Act, 2019 via UNCTAD: https://investmentpolicy.unctad.org
• Nepal Law Commission: https://www.nepallawcommission.gov.np

International Resources:

• UNCTAD Investment Policy Hub: https://investmentpolicy.unctad.org
• World Bank Business Ready: https://www.doingbusiness.org

Professional Services:

• Nepal Lawyer: https://www.nepallawyer.com - Comprehensive legal support for foreign investors

Note: This guide is for informational purposes only. Legal requirements change frequently. Professional consultation is recommended for specific investment scenarios.