Indian businesses have long been among the most active investors in Nepal, and for good reason. The border is open, trade ties run deep, and the tax treaty between the two countries reduces the cost of moving money across it. The legal pathway, though, is the same one every foreign investor follows, and that is where most Indian founders are surprised: there is no special route, only familiar ones made easier by geography.
This guide explains how an Indian investor registers a company in Nepal, what is genuinely different, and where the practical traps lie.
Quick answer
Indian investors register a company in Nepal under the Foreign Investment and Technology Transfer Act (FITTA), 2075 (2019) and the Companies Act, 2063, on the same footing as other foreign investors. Nepal generally permits up to 100% foreign ownership in sectors that are not on the negative list. The process runs through the Department of Industry (DOI) or Investment Board Nepal (IBN), the Office of the Company Registrar (OCR), and Nepal Rastra Bank (NRB). What differs for Indian investors is mostly practical: cross-border documentation, currency and banking treatment, and the relief available under the India-Nepal tax treaty.
Is Indian investment treated differently?
Indian investors are foreign investors under FITTA. The framework is identical: the minimum investment, the sector eligibility, the approval authority and the repatriation rules apply the same way to an investor from Delhi as to one from Dubai.
What Indian investors gain is convenience. The open border and Indian rupee convertibility make funding simpler than for investors from further afield. The India-Nepal Double Taxation Avoidance Agreement (DTAA) can reduce withholding on certain cross-border payments. None of this removes the formal requirements. Capital still has to be brought in through banking channels and recorded at NRB, and the investment still needs approval.
The legal framework
- Companies Act, 2063 (2006) governs incorporation and governance.
- FITTA, 2075 (2019) governs foreign investment approval and repatriation.
- Industrial Enterprises Act, 2076 (2020) classifies industries and sets out incentives.
- Nepal Rastra Bank rules govern foreign exchange, capital inflow and remittance.
- The India-Nepal DTAA provides relief from double taxation on cross-border income.
Ownership and the negative list
Most sectors allow full foreign ownership, and an Indian company can often hold 100% of a Nepali subsidiary. The exception is the negative list, which reserves certain activities for Nepali citizens. It covers areas such as parts of retail trading, cottage and small industries, travel and trekking agencies, and certain services. Sector eligibility is confirmed at the approval stage, so it is worth checking before you commit to a structure. A joint venture that assumes 100% ownership of a restricted activity will not be approved.
Minimum investment
FITTA sets a general minimum investment per foreign investor, and the figure applies per investor. In a joint venture, each foreign shareholder must meet it separately. Because the threshold is set in Nepali rupees and has been adjusted over time, confirm the current amount with the DOI or a licensed practitioner before you commit capital.
The process, step by step
- Confirm sector eligibility against the negative list.
- Reserve the company name at the OCR.
- Apply for foreign investment approval to the DOI, or IBN above the applicable project-size threshold.
- Incorporate the company at the OCR, filing the memorandum and articles with the approved investment details.
- Register for PAN and VAT at the Inland Revenue Department, and register with the local ward.
- Open a bank account and bring the approved capital in through banking channels.
- Complete NRB reporting confirming the capital inflow, and any technology transfer.
- Obtain sector licences where required, such as tourism or education.
A worked example
An Indian manufacturer wants a wholly owned subsidiary in Nepal to serve the local market. Because manufacturing is open to foreign investment, the route is straightforward. The company's board passes a resolution authorising the investment, the Indian incorporation documents are notarised and apostilled, and the file goes to the DOI for approval. Once approved, the subsidiary is incorporated, capital is remitted from India through banking channels, and NRB records the inflow. The DTAA shapes how dividends are taxed on the way back. The whole sequence takes weeks, not months, provided the Indian paperwork is ready before filings begin.
Documents commonly required
- Passport or corporate registration documents of the Indian investor
- Certificate of incorporation and board resolution for a corporate investor
- Memorandum and articles of association of the parent, where applicable
- Source-of-funds declaration and project report
- Proof of registered office address in Nepal, with the owner's consent
- Director and shareholder consent letters
- Notarised, apostilled and translated documents where executed in India
Tax and repatriation
A company incorporated in Nepal is a Nepali tax resident and is taxed on the income it earns here. Dividends paid to the Indian parent may attract withholding tax, and the DTAA can affect that. Profits and dividends can be repatriated after tax clearance and NRB approval. Indian investors should also consider how the home country will tax the Nepali income, and claim foreign tax credit under the treaty where it applies, so the same income is not taxed twice.
How long it takes
Expect roughly two to six weeks for approval and incorporation once documents are ready, with tax, banking and NRB steps adding one to two weeks. Cross-border legalisation and sector approvals are the usual sources of delay.
Where Indian investors go wrong
Assuming Indian investors are exempt. They are not. FITTA approval is required.
Ignoring the negative list. Planning a structure that cannot be approved wastes the filing cost and months of time.
Bringing funds informally. Capital must be documented through banking channels with NRB recording, or the investment is defective.
Missing the per-investor minimum in a joint venture.
Overlooking the DTAA and paying withholding that could have been reduced or eliminated.
Frequently asked questions
Can an Indian citizen own 100% of a Nepali company? In sectors not on the negative list, yes. Up to 100% foreign ownership is generally permitted.
Does Indian investment need DOI approval? Yes. Indian investors are foreign investors under FITTA 2019 and require approval.
Is the minimum investment lower for Indian investors? The general threshold applies to foreign investors. Confirm the current figure, as it is set in Nepali rupees and can change.
Can an Indian company open a branch in Nepal instead? Yes. A foreign company, including an Indian one, may register a branch or liaison office, subject to DOI approval and OCR registration.
Can profits be sent back to India? Yes, after tax clearance, NRB approval and, where relevant, applying the DTAA.
How long does it take? Typically two to six weeks for approval and incorporation once the file is complete.
How Pluto Associates can help
We advise Indian investors on approval, incorporation, NRB recording and tax, and we handle the cross-border paperwork so it is ready before filings begin. If you would like a clear view of 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.