Foreign Direct Investment (FDI) in Nepal (2026): FITTA, Threshold & Approval

FDI in Nepal is governed mainly by the Foreign Investment and Technology Transfer Act 2075 (FITTA), with approval commonly handled by the Department of Industry and larger projects by the Investment Board of Nepal. The applicable route, timeline and compliance depend on sector, investment size and the current office process. Our FDI registration service in Nepal can help you assess the file.

Key Takeaways

Foreign investment in Nepal follows FITTA 2075, its Rules and related foreign-exchange controls. The main practical questions are whether the activity is restricted, whether the project belongs with DOI or IBN, what the current threshold means, and how the investor will complete company, tax, banking and repatriation compliance.

• FITTA 2075 replaced the older 1992 foreign investment law and is the central statute for FDI in Nepal.
• The stated minimum foreign investment is NPR 20 million for most sectors; information technology industries may have a zero minimum on the automatic route.
• The Department of Industry handles foreign investment up to NPR 6 billion, while the Investment Board of Nepal handles investment above that level, subject to the applicable framework.
• FITTA's Schedule restricts sectors including specified agriculture, retail, personal services, certain real-estate activities, arms and gambling.
• FITTA Section 17 provides for a one-stop service arrangement, but the exact office steps and current filing requirements should be verified before submission.
• The Nepal Rastra Bank foreign-exchange framework governs repatriation, including dividends, capital gains and royalties, subject to tax and foreign-exchange compliance.
• Approval is only one part of the project. Company incorporation, capital injection, tax registration, sector licences and ongoing reporting may still be required.

What is foreign direct investment in Nepal?

Foreign direct investment in Nepal means an overseas person or entity placing capital, technology or know-how into a Nepal-based industry or business. FITTA 2075 governs the legal framework. The investment may involve equity in a Nepal-incorporated company, a technology-transfer arrangement, or reinvestment of profits earned in Nepal, subject to approval and other applicable controls.

This definition matters because foreign investment is not limited to money transferred into a bank account. A project may also involve licensing, technical assistance, management arrangements or other contractual technology transfers. The structure should therefore be reviewed before documents are signed. A foreign investor, Nepali joint-venture partner or existing company may face different issues even where the commercial plan appears similar.

FITTA 2075 replaced the former 1992 framework. The current regime combines the statute, the Foreign Investment and Technology Transfer Rules, the Schedule of restricted sectors and Nepal Rastra Bank's foreign-exchange framework. The FITTA reference text hosted by the Investment Board of Nepal should be checked alongside current Department of Industry guidance.

What is the FDI threshold in Nepal in 2026?

The stated FDI threshold in Nepal is NPR 20 million for most sectors, while information technology industries may have a zero minimum on the automatic route. The threshold is a legal and policy figure, not a professional fee. Whether the IT exception applies depends on the proposed activity and the route accepted by the relevant authority.

The earlier framework referred to a higher threshold of NPR 50 million. The current article's verified material records that the threshold was later reduced to NPR 20 million. It also records the IT exception. Those amounts should not be confused with the total project cost, the foreign investor's proposed share, or any government charge.

Do not assume that a software label automatically places every business on the IT route. The actual activity, structure and supporting description matter. If the business combines software with trading, finance, retail or another regulated activity, the classification may require closer review. Ask the Department of Industry to confirm the current treatment before relying on the zero-minimum position.

Which sectors are restricted to foreign investment?

FITTA's Schedule identifies activities restricted from foreign investment. The listed categories include specified primary agriculture, small and cottage industries, personal services, retail business, certain real-estate activities, some travel and tourism services, remittance services, arms and ammunition, radioactive or atomic activities, gambling and certain regulated entertainment.

The Schedule is more useful than a broad statement that Nepal is “open” to FDI. A permitted industry can still require a sector licence, and a restricted activity cannot be made acceptable merely by changing the wording in an application. The business description should match the real activity, revenue model and intended operations.

The current material identifies the following examples:

• Primary agriculture, including specified farm-level activities such as fish farming, animal husbandry, horticulture, dairy, beekeeping and poultry.
• Small and cottage industries as defined under the relevant industrial framework.
• Personal services, including examples such as hair salons, tailoring, driving, beauty parlours and photography studios.
• Retail business and specified real-estate activities, while construction is treated separately as an industrial activity.
• Specified travel and tourism services, including examples such as travel agencies, trekking agencies, homestays and local catering services.
• Remittance services, arms, ammunition, biological weapons, gunpowder, radioactive materials and atomic energy.
• Gambling and certain regulated entertainment activities.

The categories and wording must be checked against the current Schedule. If your project combines restricted and permitted activities, separate the activities only where the legal and commercial structure genuinely supports that separation. A paper restructure that leaves the restricted activity in substance may create a serious approval problem.

Who approves FDI in Nepal: DOI or IBN?

The Department of Industry handles foreign investment up to NPR 6 billion, while the Investment Board of Nepal handles investment above that level under the framework described in the supplied material. The correct route also depends on the project, sector and current administrative treatment, so the threshold should be verified before filing.

The DOI is the principal approval body for many ordinary FDI files, including projects in manufacturing, information technology, hospitality, education and services where the activity is eligible. The IBN route concerns larger investments and projects requiring higher-level investment facilitation. The available material describes the split by investment size, but an investor should confirm how the relevant project value is calculated.

FITTA Section 17 provides for a one-stop service arrangement. In practical terms, that provision is relevant because an approved investor may still need connected services involving incorporation, tax, banking, foreign-exchange recording and sector permissions. One-stop service does not mean every obligation disappears. It also does not allow a restricted activity to bypass the Schedule.

How does the FDI approval process work in Nepal?

The FDI process begins with sector and structure review, moves through the appropriate approval authority, and continues with incorporation, capital injection and compliance. DOI confirms a four-step approval flow, while practitioner material describes longer nine-step working sequences. Treat the official current flow as controlling and verify each filing stage with the receiving office.

1. Classify the proposed activity first. Compare the real business with FITTA's restricted-sector Schedule. Decide whether the project is an IT industry, another permitted sector, or a mixed activity needing clarification.
2. Identify the approval authority. Use the stated NPR 6 billion boundary as the starting point: DOI handles investment up to that amount and IBN handles investment above it, subject to current confirmation.
3. Prepare the investment and technology-transfer file. The file should describe the investor, proposed Nepal business, ownership or contractual structure and intended capital. The supplied material does not settle one universal document list, so obtain the current checklist from DOI or IBN.
4. Submit through the applicable authority and respond to queries. FITTA Section 17 supports a one-stop service arrangement. The authority may seek clarification where the activity, structure, threshold or supporting material is unclear.
5. Complete the post-approval company steps. Incorporate or regularise the Nepal company through the Office of Company Registrar process where required, then arrange the approved capital injection through the banking channel.
6. Complete tax and sector compliance. The live material identifies PAN or VAT registration with the Inland Revenue Department and sectoral licences where applicable. Whether VAT or another licence applies depends on the activity and should be verified.
7. Record capital and maintain reporting. The current article identifies capital reporting to Nepal Rastra Bank's Foreign Exchange Management Department and annual reporting to DOI or IBN on operations and capital.

Some practitioner guides describe the work as a nine-step process. Others refer to DOI targets of seven days and IBN targets of fifteen days. Those descriptions do not replace the official office process. Use the DOI four-step flow confirmed by the supplied source, and ask the relevant authority for the current filing sequence before relying on any timeline.

What documents are needed for FDI registration?

There is no single universal document list established by the supplied material for every Nepal FDI file. The required papers depend on the investor, proposed activity, company structure, technology-transfer terms and approving body. You should obtain the current checklist from DOI or IBN, rather than relying on a generic online list.

The confirmed compliance areas indicate the information the file must address. These include the investor and investment structure, the proposed Nepal industry, the capital plan, any technology-transfer arrangement, the intended banking channel, and the post-approval company and tax steps. A project may also need a sectoral licence if its activity is regulated.

Before submission, check these points with the receiving office:

• Whether the investor is applying as an individual, company or other foreign entity.
• Whether the proposed ownership and contractual arrangements match the activity described.
• Whether the business falls within the IT automatic route or the ordinary threshold.
• Whether the application is for DOI or IBN based on the project size and current authority guidance.
• Whether the file includes technology-transfer terms, if technology or know-how is part of the transaction.
• Whether the company, PAN or VAT, banking and sector-licence stages require separate filings after approval.

Do not treat an approval letter as permission to skip the remaining steps. Company incorporation, capital reporting, tax compliance, sector permissions and annual reporting may each carry their own requirements.

How long does foreign direct investment approval take in Nepal?

Published and practitioner timelines for FDI in Nepal are not consistent. The current material records automatic-route estimates of 7–14 days, standard-route estimates of 30–45 days, and IBN estimates of 60–90 days. Other practitioner sources mention seven days, fifteen days or a broader three-to-five-month working period. Verify the current timeline with the office.

These figures should not be presented as guaranteed completion dates. The applicable route, completeness of the file, authority questions, project scale, sector classification and post-approval work can affect the overall period. A DOI approval timeline also does not necessarily cover incorporation, bank processing, tax registration, sector licensing or NRB recording.

For planning, separate three periods:

• Approval period: the time taken by DOI or IBN to consider the investment application.
• Implementation period: the work needed to incorporate or regularise the company, inject capital and obtain connected registrations.
• Operating period: continuing tax, sector, foreign-exchange and reporting obligations.

That separation gives you a more realistic project plan than attaching one number to the entire investment. Before signing a long-term lease, hiring staff or transferring funds, obtain current confirmation of the route and outstanding conditions.

What happens after FDI approval?

FDI approval does not end the Nepal compliance process. The post-approval stack identified in the current material includes company incorporation through the Office of Company Registrar, capital injection through the banking channel, capital reporting to Nepal Rastra Bank, PAN or VAT registration, sectoral licensing where applicable, and annual reporting to DOI or IBN.

The company stage matters because the investment must operate through a legally recognised Nepal structure where the project requires one. The banking stage matters because the capital must enter through the appropriate channel. The reporting stage matters because an investor may need to show how approved capital was introduced and how the business operates.

Tax should be reviewed separately from approval. The live material refers to tax withholding in connection with repatriation and flags the 183-day issue and Section 93 for tax analysis. The supplied sources do not establish a universal tax result for every investor, payment or transaction. Obtain current advice from the Inland Revenue Department or a tax adviser before declaring dividends, paying royalties or transferring gains.

Existing companies should also review their constitutional documents, ownership records, annual reporting and sector permissions before bringing in foreign capital. A new FDI application is not a substitute for correcting an earlier company or tax compliance problem.

How does repatriation work for foreign investors?

Repatriation of foreign investment in Nepal is controlled through Nepal Rastra Bank's foreign-exchange framework. The current material identifies dividends, capital gains and royalties as potentially repatriable, subject to tax withholding and foreign-exchange compliance. The applicable approval, banking evidence and conditions should be confirmed with NRB before any transfer is planned.

The Nepal Rastra Bank Foreign Exchange Management Department has the mandate relevant to this area, and the supplied material refers to the applicable foreign-exchange bylaw as Bylaw 2078. Repatriation is therefore not simply a private payment instruction between the company and overseas investor.

A repatriation review should connect four records:

• The original FDI approval and the approved investment structure.
• The evidence showing capital entered Nepal through the appropriate banking channel.
• The company's accounting, tax and withholding position for the proposed payment.
• The NRB or bank process applicable to the particular dividend, royalty, gain or other amount.

Different payments may receive different treatment. A dividend is not the same as a royalty, and a capital gain is not the same as a return of paid-in capital. The commercial agreement should therefore be checked against FITTA, tax rules and current NRB requirements before the payment is authorised.

What mistakes can delay or weaken an FDI application?

FDI files commonly become difficult when the proposed activity, investment amount, ownership structure and supporting description do not match. Other risks include relying on an outdated threshold, treating a restricted activity as permitted, assuming an IT label guarantees the automatic route, or planning repatriation without first checking tax and NRB requirements.

Watch for these issues:

• Wrong sector classification: a business may contain retail, personal services or another restricted element even if its main description sounds technological.
• Wrong authority: using the DOI route without confirming the project-size boundary can cause avoidable referral or delay.
• Incomplete structure: equity, technology transfer, management services and reinvestment may require different descriptions and supporting terms.
• Unverified documents: a checklist copied from another project may not suit the investor, sector or authority.
• Timeline promises: seven days, fifteen days, 7–14 days, 30–45 days and 60–90 days are not interchangeable guarantees.
• Post-approval gap: approval does not complete incorporation, capital reporting, tax registration, sector licensing or annual reporting.
• Premature repatriation planning: dividends, royalties and gains require tax and foreign-exchange review before payment.

Keep a written record of what the authority has confirmed. If an officer asks for clarification, answer the actual question and keep the business description consistent across the approval, company, tax and banking records.

What does a Nepal FDI scenario look like?

Consider an illustrative foreign software company planning a Nepal subsidiary. It would first need to confirm that the real business qualifies as an information technology industry, rather than assuming that every digital service receives the automatic route. It would then verify the zero-minimum position, the DOI route and the current document checklist.

After approval, the project would still need to address company incorporation, capital injection through the banking channel, NRB capital reporting, tax registration and any sector permission. If the company later pays a dividend or royalty abroad, it would separately review tax withholding and NRB foreign-exchange requirements.

This example does not promise approval, a particular timeline or a particular document outcome. It shows why the commercial plan should be tested against the legal route before money is transferred or contracts are finalised. A different investor, sector or project size may produce a different result.

What alternatives and edge cases should investors consider?

Investors may use equity, technology transfer or reinvestment structures, but the correct route depends on the legal and commercial substance of the transaction. A project may also involve a Nepali joint-venture partner, a regulated activity, an existing Nepal company or an investor who cannot attend Nepal personally. Each feature can change the review.

A foreign investor should consider these edge cases:

• IT and non-IT activities: mixed operations may need a clear separation or confirmation of the applicable route.
• Joint ventures: the foreign share, domestic share and total project description should remain consistent across the file.
• Technology transfer without equity: a contractual arrangement may still require review under FITTA's technology-transfer framework.
• Reinvestment: profits already earned in Nepal should not be treated as new capital without checking the applicable approval and recording process.
• Large projects: projects above the stated NPR 6 billion boundary should be discussed with IBN rather than assumed to belong with DOI.
• Regulated sectors: approval under FITTA may not replace a licence from the sector regulator.
• Non-resident investors: remote execution, banking evidence and authority communications should be planned before the file is submitted.

Where the law or office practice is not settled by the supplied material, the safe answer is to verify with DOI, IBN, NRB or the relevant regulator. Do not build a transaction around an unverified online summary.

In short: what should an FDI investor do first?

Start with the real business activity, not the desired approval route. Check FITTA's restricted-sector Schedule, the NPR 20 million threshold or IT exception, the DOI–IBN boundary, and the current filing checklist. Then plan company, banking, tax, NRB and sector compliance as part of the investment, not afterthoughts.

• Confirm the activity and structure.
• Verify DOI or IBN jurisdiction.
• Obtain the current document and timeline position.
• Plan post-approval capital, tax and reporting duties.
• Review repatriation before promising returns to the foreign investor.

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FDI rules, thresholds, office procedures and foreign-exchange requirements can change or depend on the project. Alpine Law Associates can help you review the structure, coordinate the approval work and plan post-approval compliance through our foreign direct investment registration service. Contact our team for a current assessment; this article is general information, not legal advice.