Foreign Direct Investment (FDI) in Nepal – Complete Guide (2026)

Foreign Direct Investment in Nepal is primarily governed by the Foreign Investment and Technology Transfer Act (FITTA). This Act regulates approval procedures, investment structure, technology transfer, and repatriation rights for foreign investors. Foreign exchange matters are further regulated by Nepal Rastra Bank.

FITTA stands for the Foreign Investment and Technology Transfer Act. It provides the legal foundation for foreign investment in Nepal and outlines:

• Eligible investment forms
• Approval authority and procedure
• Minimum capital requirements
• Repatriation rights
• Investor protections

FDI approval is granted by:

• Department of Industry
• Investment Board Nepal (large-scale projects)

Foreign currency inflow and repatriation approval is handled by Nepal Rastra Bank (NRB).

Yes. FITTA provides protection against nationalization except under public interest with fair compensation. Investors are entitled to full repatriation rights subject to tax and regulatory compliance.

FDI refers to investment made by foreign individuals or entities in Nepali industries through:

• Equity participation
• Joint ventures
• Technology transfer
• Reinvestment of earnings
• Establishment of branch or subsidiary

Yes. Most sectors allow 100% foreign ownership except those listed under Nepal’s negative list. A sector eligibility review is recommended before applying.

• Hydropower & Renewable Energy
• Tourism & Hospitality
• IT & Software
• Manufacturing
• Infrastructure
• Agro-processing

Industries such as small-scale retail trade, certain agriculture activities, and cottage industries may be restricted or require special approval. A sector review is recommended before filing any application.

The general minimum FDI threshold is NPR 20 million. The minimum threshold for specific sectors may differ. Contact TechMAN Consulting for sector-specific capital requirements.

Yes. Capital must enter Nepal through formal banking channels after receiving approval from Nepal Rastra Bank. Direct cash or informal transfers are not permitted.

Yes, foreign investors may obtain loans in Nepal after complying with applicable foreign exchange regulations and banking requirements set by Nepal Rastra Bank.

1. Submit FDI application with project report
2. Government evaluation by DOI / IBN
3. FDI approval issuance
4. NRB capital inflow approval
5. Company registration at Office of Company Registrar
6. Capital injection via approved banking channels

Typically 4–8 weeks from the date of complete application submission. Incomplete documentation or restricted sectors may extend this timeline.

• Passport copies of all investors/directors
• Board resolution
• Project feasibility report
• Financial credibility documents
• Bank reference letter
• Joint venture agreement (if applicable)

• Incomplete or incorrect documentation
• Investment in a restricted or negative-list sector
• Incorrect capital structuring
• Non-compliance with foreign exchange rules

Yes. Foreign investors can establish:

• Private Limited Company
• Public Limited Company
• Branch Office
• Liaison Office

1. Obtain FDI approval from DOI/IBN
2. Secure NRB approval for capital inflow
3. Register at the Office of Company Registrar
4. Obtain PAN & VAT registration
5. Inject approved capital via banking channels

Companies must comply with the Companies Act requirements regarding directors and statutory filings. Specific local director requirements depend on company structure.

Yes. A foreign company may open a branch office in Nepal after obtaining approval from the Department of Industry and Nepal Rastra Bank.

Corporate tax rates depend on industry type under the Income Tax Act. You can find the applicable Corporate Tax Rate Here.

Yes. Certain industries receive tax incentives and holidays, including hydropower, renewable energy, and infrastructure sectors. Duration and extent depend on the nature and scale of investment.

Yes. VAT registration is mandatory if annual turnover exceeds the prescribed threshold under the Value Added Tax Act.

Nepal Rastra Bank regulates all foreign exchange transactions, including capital inflow and repatriation of profits. No foreign currency may enter or leave Nepal for investment purposes without NRB approval.

Yes. Both a tax clearance certificate from the Inland Revenue Department and NRB approval are mandatory before profits, dividends, or capital gains can be repatriated.

Yes. Under FITTA, foreign investors are entitled to repatriate:

• Dividends
• Capital gains
• Loan repayments and interest
• Technology transfer fees

All repatriation is subject to tax clearance and NRB approval.

1. Complete annual audit
2. Obtain tax clearance certificate from IRD
3. Submit repatriation application to NRB
4. Initiate international bank transfer upon NRB approval

Yes. Upon dissolution, remaining capital may be repatriated subject to full compliance, independent asset valuation, settlement of all liabilities, and regulatory approval from NRB.

Yes. Foreign nationals may be employed subject to labor and immigration regulations, including obtaining valid work permits under the Labor Act.

Land acquisition by foreign entities is regulated and may require specific approvals depending on project nature. Leasing arrangements are a common alternative for foreign-owned businesses.

Yes. Reinvestment of earnings is permitted and recognized as an eligible form of foreign investment under FITTA.

The full setup — from FDI application to operational company with capital injected — is typically 6–10 weeks, assuming complete documentation and no regulatory complications.