Establishing an Industry in Nepal as a Foreigner: FITTA 2019 Guide

QUICK SUMMARY, What This Guide Covers

This guide covers everything a foreigner needs to know about establishing an industry in Nepal in 2025, including the full legal framework (FITTA 2019, FITTR 2021, IEA 2020, Companies Act 2063), the nine forms of foreign investment under FITTA Section 2(j), who qualifies as a foreign investor (including Non-Resident Nepalis and venture capital funds from January 2025), the FITTA Negative List of prohibited sectors, the IEA industry classification by capital size (micro to large) and type (manufacturing/service/infrastructure), the two-route system (Automatic Route: 7 working days for investments up to NPR 500 million vs Standard Route for larger projects), the complete 10-step registration process from OSSC FDI application through NRB investment recording, the FITTR 2021 three-stage investment injection schedule under Rule 9, the full 14-document checklist, government fees and realistic timelines (2-3 months total), foreign equity caps by sector, comprehensive tax incentives (including complete income tax exemption for mountain region industries, SEZ benefits), investor protections under FITTA (nationalization protection, international arbitration, 15-day repatriation guarantee), profit repatriation procedure, post-registration compliance obligations, common challenges and how to avoid them, and 12 detailed FAQs. Researched and verified against 2025 regulations including the January 2025 FITTA amendment and FY 2024/25 Automatic Route adoption statistics.

Introduction: Why Nepal Is Attracting More Foreign Industrialists Than Ever

Something has genuinely shifted in Nepal’s investment story. In the first nine months of fiscal year 2024/25, Nepal recorded approximately NPR 58 billion in foreign investment commitments, with a remarkable 97% of those commitments flowing through the Automatic Route that the government introduced in 2023. That single statistic matters: it tells you the reforms are real, the process has meaningfully improved, and foreign investors worldwide are responding.

China contributes 45.34% of Nepal’s total foreign direct investment. India follows at 21.54%. The remaining third comes from Hong Kong, South Korea, the United States, the United Kingdom, Singapore, Spain, Australia, and a growing list of countries discovering what Nepal’s position between the world’s two largest economies actually means for manufacturing, energy, technology, services, and hospitality.

What does 'establishing an industry' mean in Nepal’s legal framework? It means more than opening a consulting office or a retail shop. In Nepal, an 'industry' is a specific category of business as defined by the Industrial Enterprises Act (IEA) 2020, one that produces goods, provides services, or engages in any activity classified as an industrial enterprise under the Act. This classification is the prerequisite for foreign investment: FITTA 2019 is explicit that foreign investment can only be made in businesses that qualify as an industry under the IEA. If your proposed activity does not meet the IEA’s definition, FDI approval cannot be granted.

This guide is written for foreign entrepreneurs evaluating Nepal entry, multinational companies considering a Nepali subsidiary, Non-Resident Nepalis returning to invest, and anyone who needs to understand Nepal’s foreign investment framework in practical, usable detail. It covers every step from eligibility check through to the ongoing compliance obligations that follow your industry’s first day of operations.

“In FY 2024/25, 97% of Nepal’s foreign investment commitments, nearly NPR 58 billion, came through the Automatic Route. The reforms are working. Nepal is open for business in ways it simply was not five years ago. The question is whether your preparation matches the opportunity.”

The Legal Framework: Laws That Govern Foreign Industry Establishment in Nepal

Nepal’s foreign investment framework is built on four primary laws that work together. Understanding how they interact is not academic, it directly determines which approval route you use, which authority you approach first, and what documents you need.

⚖️ The One Stop Service Centre (OSSC): The OSSC at the Department of Industry (DoI), Tripureshwor, Kathmandu, is the primary interface for all FDI registration activities. It brings together the DoI, OCR, IRD, NRB, Department of Immigration, and other agencies under one roof. Online portal: imis.doind.gov.np. Office hours: Sunday, Friday, 10:00 AM, 5:00 PM. For investments above NPR 6 billion, approach the Investment Board Nepal (IBN) at Singha Durbar instead.

Who Qualifies as a Foreign Investor Under Nepal’s Law?

The definition of 'foreign investor' under FITTA 2019 Section 2(h) is deliberately broad. It encompasses far more than just passport-holding foreigners.

✅ Non-Resident Nepali Advantage: If you hold NRN status, confirm it through the Non-Resident Nepali Association (NRNA) before applying. NRNs can invest in certain sectors restricted to purely foreign nationals and may access preferential investment pathways under the NRN Act.

Nine Forms of Foreign Investment Recognised Under FITTA 2019

Section 2(j) of FITTA 2019 defines foreign investment to include nine distinct forms. The form your investment takes affects the approval process, NRB recording requirements, and applicable repatriation rules. Understanding this from the outset shapes your investment structure correctly.

What Industries Can Foreigners Invest In? The Open Sectors and the Negative List

FITTA 2019 uses a negative list approach: all sectors are open for foreign investment EXCEPT those specifically listed in the FITTA Schedule as prohibited or restricted. The March 2025 FITTA amendment further expanded the open sectors by removing the previous positive-list requirement from the Industrial Enterprises Act. This is a significantly more investor-friendly framework than what existed before 2019.

5.1 Prohibited and Restricted Sectors (The Negative List)

⚠️ These Sectors Cannot Accept Foreign Investment: Investing in any Negative List sector results in FDI approval denial. Attempting to circumvent these restrictions through nominee arrangements or mislabelled business activities constitutes fraud and carries criminal liability under Nepal’s laws.

5.2 Priority Sectors Where Nepal Actively Encourages Foreign Investment

• Hydropower and renewable energy generation, Nepal’s greatest export potential
• Manufacturing (especially export-oriented), currently Nepal’s smallest FDI sector by commitment, with enormous growth room
• Information technology and software development, no minimum investment threshold
• Tourism and hospitality, hotels, resorts (NOT travel/trekking agencies)
• Healthcare and medical services
• Education institutions
• Infrastructure, roads, bridges, airports, tunnels
• Mining and mineral processing
• Pharmaceuticals and medical devices
• Agro-processing and food manufacturing (not primary farming)
• Special Economic Zones, enhanced incentives for all qualifying industries

IEA 2020 Industry Classification: Where Does Your Business Fit?

Before approaching any government office, identify how the IEA 2020 classifies your business. This determines which regulatory authority handles your file, what tax incentives apply, and what operational obligations you will carry.

6.1 Classification by Fixed Assets (Capital Size)

📌 Minimum FDI vs Industry Category: The NPR 20 million minimum FDI threshold places most foreign-invested businesses squarely in the Medium or Large category administered by the DoI. Micro, cottage, and small industries with fixed assets below NPR 5 million are generally inaccessible to foreign investors because they fall below the FITTA minimum threshold.

6.2 Classification by Business Type

The Two Approval Routes: Automatic vs Standard

Nepal’s 2023 Automatic Route was the most transformative single reform in the country’s FDI history. The 97% adoption rate in FY 2024/25 tells you everything about how foreign investors have responded. Here is what each route means in practice.

✔ 97% Chose Automatic: In FY 2024/25, approximately 97% of Nepal’s foreign investment commitments, nearly NPR 58 billion, came through the Automatic Route. This is the normal pathway for the vast majority of foreign investors.

The Complete 10-Step Process: How to Establish an Industry in Nepal as a Foreigner

The registration process for a foreign-invested industry in Nepal involves 10 sequential steps across multiple government agencies. Each step’s output is a mandatory input for the next. The OSSC at Tripureshwor coordinates many of these steps under one roof, which is a significant practical improvement over the pre-2023 multi-office process.

STEP 1 Sector Eligibility Check and Investment Structure Decision

Before approaching any government office, answer two questions with certainty:

• Is your sector open? Confirm that your proposed industry is not on the FITTA Negative List. The DoI’s website (doind.gov.np) publishes the current list. For any uncertainty, get a written legal opinion from a Nepal-based FDI lawyer before committing capital.
• Does your business qualify as an IEA industry? Foreign investment can ONLY be made in businesses classified as industries under the IEA 2020. Confirm this classification before proceeding.

Also decide your ownership structure:

• 100% wholly foreign-owned company (permitted in most open sectors)
• Joint venture with Nepali partner (not legally required except in equity-capped sectors, but often strategically valuable)
• Acquisition of existing Nepali company shares (requires FDI approval for the acquisition itself)
• Technology transfer combined with equity investment

✅ Invest in a Legal Opinion First: A sector eligibility assessment and investment structure opinion from a qualified Nepal FDI lawyer costs a fraction of the cost of a rejected application or misdirected structure. It is the most cost-effective preparation step available.

ℹ️ Timeline: 1-2 weeks for legal opinion and structure decision.

STEP 2 Prepare the Investment Proposal and Authenticate Documents

The FDI approval application requires a comprehensive, consistent package of documents. Completeness at the time of first submission is critical, especially for Automatic Route applications where the 7-day statutory clock begins at receipt of a COMPLETE application. Incomplete applications trigger queries that pause the clock and delay approval.

Complete document checklist for FDI approval:

1. Prescribed FDI application form (from the OSSC at imis.doind.gov.np or in person)
2. Project proposal / feasibility study: business description, market analysis, investment amount and source, employment projections, technology details if any, environmental considerations
3. Bio-data (personal details form) of the foreign investor: full name, address, nationality, occupation, date of birth, contact details
4. Copy of the foreign investor’s valid passport (all biographical pages)
5. Certificate of Incorporation of the foreign investing company (if investor is a company), with apostille or Nepal Embassy authentication
6. Memorandum of Association (MOA) and Articles of Association (AOA) of the foreign investing company, apostilled/authenticated + certified English or Nepali translation
7. Financial Credibility Certificate (FCC): A letter from the foreign investor’s home-country commercial bank confirming financial standing and capacity to make the proposed investment. Must be recent (within 6 months of application)
8. Board Resolution of the foreign investing company authorizing the Nepal investment and designating the authorized representative (if investor is a company)
9. Joint Venture Agreement (if investing with a Nepali partner), notarized
10. Citizenship certificate of any Nepali partner/shareholder
11. Power of attorney (if filing through a Nepal-based agent or legal representative)
12. Source of funds declaration and documentary support
13. Draft Technology Transfer Agreement (if the investment involves technology contribution)
14. Application fee payment proof

⚠️ Authentication Takes Time: Foreign company documents (Certificate of Incorporation, MOA, Board Resolution) must be apostilled (if the home country is a Hague Convention member) or authenticated by the Nepal Embassy in the home country. Allow 1-3 weeks for this process, and start it before everything else.

ℹ️ Timeline: Document preparation and authentication: 2-4 weeks (authentication often takes longest).

STEP 3 Submit FDI Application at the OSSC (Department of Industry)

Submit the complete application package to the Foreign Investment and Technology Transfer (FITT) Unit at the One Stop Service Centre (OSSC), Department of Industry, Tripureshwor, Kathmandu. For Automatic Route investments, you can also submit online at imis.doind.gov.np.

OSSC officers conduct a preliminary completeness review. If documents are complete and consistent:

• Automatic Route (up to NPR 500M): DoI issues the FDI Approval Certificate within 7 working days under FITTA Section 15(2). No additional ministry consultations required.
• Standard Route (NPR 500M, 6B): DoI conducts a detailed review, which may include consultation with sector-specific ministries. Timeline: 30-45 working days.
• Investment Board Nepal (above NPR 6B): IBN conducts its own comprehensive project review. Timeline: 60-90 days. Involves higher-level government engagement for major projects.

The FDI Approval Certificate specifies the approved investment amount, business sector, shareholding structure, and the investment injection schedule. It is the foundational authorization document for all subsequent steps.

✔ FDI Approved! The DoI FDI Approval Certificate is the most important document you will receive in this entire process. Keep multiple certified copies. Every subsequent registration step requires it.

ℹ️ Timeline: Automatic Route: 7 working days. Standard Route: 30-45 working days.

STEP 4 Register the Company at the Office of the Company Registrar (OCR)

With the FDI Approval Certificate in hand, incorporate the Nepali company through the CAMIS portal at camis.ocr.gov.np. The FDI Approval Certificate is a mandatory prerequisite, the OCR will not register a company with foreign shareholders without it.

Company Structure Options

• Private Limited Company (Pvt. Ltd.), recommended for most FDI: Minimum 1 shareholder, maximum 101 shareholders. Most flexible governance. Standard for small to medium investments.
• Public Limited Company: Minimum 7 promoters. Required for industries planning to raise capital from the public or eventually list on NEPSE. Appropriate for large-scale infrastructure or manufacturing projects.

Critical MOA Requirement

The company’s Memorandum of Association MUST clearly state the industry type and business activities as approved in the FDI Approval Certificate. Any discrepancy between the MOA business objectives and the FDI-approved activities creates problems at the industry registration stage and during DoI monitoring visits. The MOA must be drafted with the FDI Approval Certificate in hand, not before it.

Additional documents required for OCR registration:

1. DoI FDI Approval Certificate (mandatory prerequisite)
2. Completed CAMIS portal application
3. MOA, business objectives matching approved FDI activities exactly
4. Articles of Association (AOA), internal governance rules
5. Passport copies of foreign shareholders (apostilled/authenticated)
6. Citizenship certificates of any Nepali shareholders
7. Photographs of all shareholders and directors
8. Proposed registered office address documentation
9. Digital Signature Certificate (DSC), required for authenticated CAMIS submission
10. OCR registration fee payment

ℹ️ Timeline: OCR company registration: 7-10 working days from complete submission.

STEP 5 PAN and VAT Registration at the Inland Revenue Department (IRD)

Every company in Nepal, including foreign-invested industries, must register for a Permanent Account Number (PAN) at the IRD before commencing any commercial activity. PAN is your company’s tax identity and is required for opening a bank account, issuing invoices, signing contracts, and filing tax returns.

VAT registration is mandatory if projected annual turnover exceeds NPR 50 lakhs for goods businesses or NPR 30 lakhs for service businesses. For most medium and large industries, VAT registration is standard practice from the outset.

The IRD’s online PAN/VAT registration at ird.gov.np is straightforward with the OCR Registration Certificate and FDI Approval Certificate as primary supporting documents.

ℹ️ Timeline: PAN and VAT registration: 3-5 working days.

STEP 6 Ward Office Registration and Business Operation Permit

Register with the Ward Office (Wada Karyalaya) of the local municipality where the industry’s premises will be physically located. This local government authorization, the Business Operation Permit (Sanchalana Anumati Patra), is specifically required for physical operation of the business at that address. It is separate from all central government approvals and must be renewed annually.

Submit: OCR Registration Certificate, PAN certificate, and lease or ownership documentation for the business premises. The Ward Office may inspect the premises before issuing the permit.

ℹ️ Timeline: Ward Office registration: 3-7 working days.

STEP 7 Industry Registration at the Department of Industry (DoI)

This is the step most foreign investors overlook. OCR registration makes your company a legal entity. Industry registration at the DoI makes it a registered industry eligible for industrial incentives, entitled to operate as an industrial enterprise, and subject to the one-year commencement obligation.

The Industry Registration Certificate issued by the DoI establishes your industry’s official category (medium/large), determines eligibility for sector-specific tax incentives, and starts the one-year clock for commencement of operations.

Documents to submit to the DoI Industry Registration Section:

1. DoI FDI Approval Certificate
2. OCR Company Registration Certificate
3. MOA and AOA
4. PAN certificate
5. Ward Office Business Operation Permit
6. Business premises documentation (lease agreement or ownership proof)
7. Project plan and employment projections

⚠️ One-Year Commencement Obligation: From the date the Industry Registration Certificate is issued, the industry has ONE YEAR to commence commercial operations. For construction-phase industries: active, documented construction activity satisfies this requirement. For service industries: generating first commercial revenue. Failure to commence within one year can result in cancellation of the Industry Registration Certificate and complications with the FDI approval.

ℹ️ Timeline: Industry registration at DoI: 7-10 working days.

STEP 8 Open Corporate Bank Account and Inject Foreign Investment Capital

Open a corporate bank account at any commercial bank in Nepal in the company’s name. Then remit the foreign investment capital from your home country through official banking channels (SWIFT transfer) directly into this account. Cash investments are not permitted under Nepal’s FERA.

The Three-Stage Investment Injection Schedule (FITTR 2021 Rule 9)

Rule 9 of the FITTR 2021 mandates a phased capital injection schedule. This is one of the most misunderstood compliance requirements for foreign investors in Nepal:

The bank issues an Investment Inflow Certificate upon receipt of each foreign currency remittance. Retain this document carefully, it is a mandatory submission for the NRB recording step that follows.

📌 In-Kind Investment: Foreign investment through machinery, equipment, and technology (in-kind) is permitted under FITTA. In-kind investment requires prior DoI approval for asset valuation by an approved certified valuator before import into Nepal.

ℹ️ Timeline: Bank account opening: 3-7 working days. SWIFT transfers: 3-5 business days per transaction.

STEP 9 Record the Investment with Nepal Rastra Bank (NRB)

This is the step that determines whether you can ever get your money back out of Nepal. Within 6 months of each foreign currency injection into your Nepali bank account, the company must formally record the investment with Nepal Rastra Bank (NRB). Without this recording:

• Future dividends and profits cannot be repatriated through official channels
• The original investment capital cannot be returned to the investor
• Technology transfer royalties cannot be remitted abroad
• Capital gains from share sales cannot be repatriated

Submit to NRB at Baluwatar, Kathmandu:

1. Investment Inflow Certificate from the commercial bank confirming each foreign currency receipt
2. Share Registry Certificate (Sher Darta Pramaanpatra) from OCR confirming shareholding
3. DoI FDI Approval Certificate
4. OCR Company Registration Certificate
5. PAN certificate

NRB issues the Investment Recording Certificate (also called the NRB Investment Certificate). Keep this permanently, it is required for every future repatriation application.

⚠️ 6-Month Deadline Is Non-Negotiable: FITTA regulations require NRB recording within 6 months of each capital injection. This is not a soft guideline. Set a calendar reminder from the date each SWIFT transfer is received by your Nepali bank. Missing this deadline creates regulatory complications that require additional NRB review to resolve, which can take months.

ℹ️ Timeline: NRB recording: 2-3 weeks from complete document submission.

STEP 10 Obtain Sector-Specific Licenses and Commence Operations

Depending on your industry type, additional sector-specific licenses or approvals are required before commencing commercial operations. These are mandatory, operating without them in regulated sectors carries criminal liability, not just administrative penalties.

✔ Ready to Operate! With the OCR Registration Certificate, PAN, Ward Office Business Operation Permit, DoI Industry Registration Certificate, NRB Investment Recording Certificate, and any required sector-specific licenses, your foreign-invested industry is fully authorized to commence commercial operations in Nepal.

ℹ️ Total Timeline (End-to-End): Document prep in home country (2-4 weeks) + FDI approval Automatic Route (7 working days) + OCR, PAN, Ward, DoI industry registration (4-6 weeks) + NRB recording (2-3 weeks) + sector licenses if required (2-8 weeks) = approximately 2-3 months for a standard Automatic Route industry.

Complete Government Fee Structure

Tax Incentives and Investor Benefits: What Nepal Offers

Nepal’s government offers a substantial package of fiscal incentives designed to attract quality foreign investment in priority sectors and underdeveloped regions. These incentives are not trivial, a manufacturing industry in a mountain district can operate completely tax-free for 10 years.

🔑 SEZ Is the Premium Option: Nepal’s SEZs at Bhairahawa (Siddharth Nagar), Simara, and Panchkhal offer the single best incentive package for export-oriented manufacturers. The 10-year full income tax exemption, combined with duty-free raw material imports and dividend tax exemptions, makes SEZ investment significantly more financially attractive than non-SEZ locations for industries whose products can be exported.

Profit Repatriation: How to Get Your Returns Out of Nepal

The right to repatriate profits is guaranteed by FITTA 2019 and is one of the most investor-friendly provisions in Nepal’s legal framework. For investors who have maintained proper NRB recording from day one, the process is well-defined and predictable.

11.1 What Can Be Repatriated

• Dividends: Net dividends after payment of the 15% dividend withholding tax on amounts paid to foreign shareholders.
• Operating profits: Net profits after payment of applicable corporate income tax.
• Capital gains: Gains from sale of shares, after applicable capital gains tax (which varies based on holding period).
• Technology transfer royalties: Royalties under registered Technology Transfer Agreements, capped at 5% of net annual sales. NRB must approve the underlying TTA before royalties can be remitted.
• Return of principal investment: Original invested capital, subject to a general expectation that investors should not repatriate principal within 1 year of injection. After 1 year, NRB approval is required.

11.2 Step-by-Step Repatriation Process

1. Obtain a current Tax Clearance Certificate from the Inland Revenue Department confirming all Nepal taxes are fully paid
2. Pass a Board Resolution approving the dividend distribution or other repatriation, with proper corporate governance documentation
3. Apply to Nepal Rastra Bank with the NRB Investment Recording Certificate, audited financial statements, Board Resolution, tax clearance certificate, and the repatriation application form
4. NRB must respond within 15 days of a complete application under FITTA Section 20, this is a statutory guarantee
5. Upon NRB approval, the company’s commercial bank executes the SWIFT transfer to the investor’s designated foreign bank account

📌 15-Day Guarantee: FITTA Section 20 requires NRB to grant repatriation permission within 15 days of a complete application. This statutory timeframe makes Nepal’s profit repatriation process significantly more predictable than many comparable South Asian jurisdictions.

Ongoing Compliance Obligations After Registration

Establishing the industry is the beginning of your regulatory relationship with Nepal’s government, not the end. Foreign-invested industries carry a comprehensive set of ongoing compliance obligations. The most critical, the NRB recording deadline and the commencement obligation, have been emphasised throughout this guide because they are the most commonly missed.

Real-World Challenges and How to Avoid Them

Nepal’s FDI framework has improved dramatically. But challenges remain, and experienced investors know that preparation is what separates a smooth 2-month registration from a frustrating 6-month one.

1. Document Authentication Delays Are the Most Common Cause of Delay

Foreign company documents must be apostilled or embassy-authenticated before Nepal submission. In countries without a Nepal Embassy or Consulate nearby, finding the right authentication pathway can take 2-3 weeks. Start the authentication process before you finalise your documents. This single step, done early, saves the most time overall.

2. Investment Amount vs Injection Schedule Mismatch

Investors who apply for FDI approval for an ambitious total investment amount but then cannot meet the Stage 1 minimum injection of 25% within one year face regulatory complications. Apply for the investment amount you can realistically inject on schedule. The DoI can approve amendments to investment amounts, but this adds time and uncertainty.

3. MOA Business Description Not Matching FDI Approval

The company’s MOA must describe business activities that precisely match the FDI approval and the IEA industry classification. Draft the MOA AFTER receiving the FDI Approval Certificate, not before. A mismatch, however small, creates complications at industry registration and during DoI monitoring visits.

4. Missing the NRB 6-Month Recording Deadline

The most consequential compliance failure for foreign investors in Nepal is missing the 6-month NRB recording deadline after capital injection. This affects profit repatriation rights. Multiple investors have discovered this problem when they first tried to repatriate dividends, years after the injection. Set calendar reminders from the date of every SWIFT receipt confirmation from your Nepali bank.

5. Confusing Company Registration with Industry Registration

These are two separate steps with two separate legal effects. OCR registration makes the company a legal entity. DoI industry registration makes it an industry eligible for incentives and subject to the commencement obligation. Foreign investors who skip the DoI industry registration step discover the omission when they first try to claim tax incentives or when the DoI conducts a monitoring visit.

6. Underestimating Post-Registration Monitoring

The DoI conducts periodic monitoring visits to foreign-invested industries to verify that operations have commenced, capital has been properly injected according to the schedule, and regulatory obligations are being met. These are thorough, not courtesy calls. Maintain clean, organized records from day one and designate a responsible person (internal or external advisor) to track all compliance deadlines.

Frequently Asked Questions

1. Can a foreigner own 100% of an industry in Nepal?

Yes, in most sectors. FITTA 2019 permits 100% foreign ownership in all industries that are not on the Negative List or subject to specific foreign equity caps. A Nepali joint venture partner is not legally required in most open sectors. 100% foreign-owned companies are legally and operationally common in manufacturing, IT, healthcare, hotels, education, and most services. Sectors with equity caps include banking (49-65%), telecommunications (80%), domestic airlines (49%), and consultancy services (51%).

2. What is the minimum investment required for a foreigner to establish an industry in Nepal?

The minimum foreign investment threshold under FITTA 2019 is NPR 20,000,000 (NPR 20 million, approximately USD 150,000). This threshold was reduced from NPR 50 million in 2019 reforms. The IT sector has no minimum investment threshold for Automatic Route applications, a foreign investor can establish an IT company in Nepal with any capital amount above zero, making Nepal one of the most accessible markets in South Asia for technology startups.

3. What is the Automatic Route and how fast is it?

The Automatic Route, introduced in 2023, allows foreign investments up to NPR 500 million (approximately USD 3.8 million) to be approved by the Department of Industry through an online portal. FITTA Section 15(2) mandates a 7-working-day processing deadline for complete Automatic Route applications. In FY 2024/25, 97% of Nepal’s foreign investment commitments, approximately NPR 58 billion, came through this route. It has transformed the FDI process from a multi-month ordeal into a manageable 7-day approval.

4. Do I need a Nepali joint venture partner?

No, in most sectors. A Nepali joint venture partner is not legally required for industries not on the Negative List and not subject to foreign equity caps. 100% foreign ownership is the legal baseline for most open sectors. However, many foreign investors choose Nepali partners for practical reasons: local market relationships, land acquisition facilitation (individual foreigners cannot own land directly, only Nepali-incorporated companies can), government liaison, and cultural navigation. A Nepali partner is a business strategy decision, not a legal requirement for most sectors.

5. Which sectors are completely closed to foreign investment in Nepal?

Completely prohibited sectors include: primary agriculture (with limited export-oriented agritech exceptions), cottage and traditional handicraft industries, personal services, arms and weapons manufacturing, real estate trading (not construction), retail and domestic trading, travel agencies, trekking companies, tour guides, rural tourism and homestays, and mass communication media in Nepali language. These cannot be accessed through any ownership structure, nominee arrangement, or legal workaround.

6. How long does the complete registration process take?

For a standard Automatic Route investment with completely authenticated documents, the total process from FDI approval through NRB investment recording typically takes 2 to 3 months. The home-country document authentication process (apostille or embassy authentication) is usually the longest pre-submission stage at 2 to 4 weeks. The FDI approval itself takes only 7 working days. Sector-specific licenses add 2 to 8 additional weeks for regulated industries.

7. Can I repatriate 100% of my profits from Nepal?

Yes. FITTA 2019 Section 20 explicitly guarantees the right to repatriate 100% of dividends, profits, capital gains, and technology transfer royalties, subject to payment of all applicable Nepal taxes and NRB approval. NRB must respond to a complete repatriation application within 15 days. Investors who have properly recorded each investment injection with NRB within the 6-month deadline can repatriate without complications.

8. What is the three-stage investment injection schedule?

FITTR 2021 Rule 9 requires foreign investors to inject their approved capital in stages: at least 25% of the total approved investment within 1 year of the FDI Approval Certificate date, additional tranches within 2 years, and the remaining balance within 3 years. For investments below NPR 50 million, the schedule is more flexible. IT sector investors on the Automatic Route have no prescribed minimum per stage. Apply for only the total investment amount you can realistically inject within the prescribed schedule.

9. What tax incentives are available for foreign-invested industries?

Nepal’s incentives are substantial: manufacturing industries in mountain districts receive a 100% income tax exemption for 10 years; hill district industries receive 7 years; Terai and valley industries receive 5 years. Infrastructure industries receive a 40% income tax concession. Export manufacturers receive a 20% reduction plus 5% additional on export income. Industries in Special Economic Zones receive a 10-year full exemption, 50% reduction in years 11-15, and dividend tax exemption for the first 5 years.

10. What happens if I invest in a sector on the Negative List by mistake?

Investing in a Negative List sector without authorization violates FITTA 2019 and the Companies Act. The DoI will deny the FDI approval at the application stage. If the investment is somehow structured around the restriction using nominee arrangements, it constitutes fraud under Nepal’s laws and can result in criminal prosecution of all involved parties, forced divestiture of the investment, and potential blacklisting from future investment in Nepal. Always conduct a sector eligibility check with a qualified Nepal lawyer before committing capital.

11. Can I invest through a venture capital fund in Nepal?

Yes, from 2025. A January 2025 ordinance amended FITTA to allow foreign investors to make equity investments in Nepali companies through venture capital funds or specialized investment funds registered with Nepal’s Securities Board of Nepal (SEBON). This represents the most recent liberalization of Nepal’s FDI framework and opens a new institutional investment pathway particularly relevant for technology sector and growth equity investors.

12. What is the Investment Board Nepal (IBN) and when do I need it instead of the DoI?

The Investment Board Nepal (IBN) at Singha Durbar, Kathmandu, handles foreign investments above NPR 6 billion (approximately USD 45 million) and certain nationally strategic projects such as large hydropower, major infrastructure, and special economic zone development. For the vast majority of foreign investors, those investing below NPR 6 billion, the Department of Industry (DoI) at the OSSC, Tripureshwor, is the correct and sole approval authority.

Conclusion: Nepal Is Open, Do It Right

The numbers from FY 2024/25 are clear: NPR 58 billion in commitments, 97% through the Automatic Route, China and India leading but investors from 30+ countries participating. The 2019 FITTA reforms, the 2023 Automatic Route launch, the minimum capital reduction to NPR 20 million, the elimination of the provincial recommendation requirement in 2025, and the January 2025 venture capital fund amendment, these are not cosmetic changes. Nepal is actively building an investment environment that works.

But the process still rewards preparation. The investors who move through Nepal’s FDI framework in 2 to 3 months are those who authenticate documents before submitting, whose investment amounts match their actual injection capacity, whose MOA objectives align precisely with their FDI approval, and who set calendar reminders for the NRB 6-month recording deadline from day one.

The investors who take 6 to 12 months are those who discover authentication requirements after submission, who apply for larger investment amounts than they can inject on schedule, or who miss the NRB recording deadline and spend months regularizing the situation before they can even think about repatriating their first dividend.

At Pluto Associates, our legal team provides end-to-end support for foreign investors establishing industries in Nepal, from initial sector eligibility assessment and investment structure advice, through OSSC application management, company incorporation, NRB investment recording, and ongoing compliance advisory. Our goal is to make Nepal’s investment gateway as predictable and efficient as the law allows.

“Nepal has removed the provincial recommendation, introduced the 7-day Automatic Route, reduced the minimum capital to NPR 20 million, guaranteed repatriation within 15 days, and opened the door to venture capital investment. The government has done its part. What separates successful investors from frustrated ones is preparation.”

About Pluto Associates

Pluto Associates is a professional services firm based in Kathmandu, Nepal, providing legal consultation, company registration, foreign investment advisory, IT support, and business compliance to individuals, startups, and corporations across Nepal. Our legal team specialises in FDI structuring, industry registration, company law, immigration, and ongoing compliance.

Website: www.plutoassociates.com Email: [email protected] Location: Kathmandu, Nepal

Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. FDI laws, fees, and procedures are subject to change. Readers should consult a qualified legal professional for advice specific to their circumstances. © 2025 Pluto Associates. All rights reserved.

Pluto Associates advises clients on foreign investment and company setup in Nepal. If you would like a clear view of how this applies to your own situation, contact our team for a consultation, message us on WhatsApp, or call +977 9802356987. We will tell you what is possible, what it costs, and how long it takes.