Foreign Investment or Foreign Direct Investment (FDI) in Nepal is chiefly regulated under the Foreign Investment and Technology Transfer Act 2076 (2019) and Foreign Investment and Technology Transfer Rules 2078 (2021).
Regulatory Agency:
Department of Industry is empowered as the regulatory body to administer matters pertaining to FDI. Nepal Rastra Bank is authorized to regulate matters pertaining to foreign exchange control and foreign loan.
Definition:
“Foreign investment” means the following investment made by a foreign investor in an industry or company:
(1) Share investment in foreign currency;
(2) Re-investment in an industry of dividends derived from foreign currency or shares;
(2A) Share investment through investment of machine, tools, equipment;
(3) Lease finance;
(4) Investment made in capital investment fund;
(5) Investment made in listed securities through secondary securities market;
(6) Investment made by purchasing shares or assets of a company incorporated in Nepal;
(7) Investment received upon issuance of securities in a foreign capital market by Nepali industry/company.
(8) Investment made through technology transfer(franchising), or
(9) Investment maintained by establishing and expanding an industry in Nepal,
(10) Investment in a unit of Specialized Investment Fund
Eligibility:
Minimum Investment Requirement:
As per notice dated 2079/07/28 (Nov. 14, 2022) the minimum required investment is NPR 200 million per investor.
Industry Qualification:
A business is required to fall under any one of the following categories of businesses deemed as industries under the Industrial Enterprises Act 2076 (2020):
- Energy Production
- Manufacturing
- Agriculture and Forestry Based
- Mining
- Infrastructure
- Tourism
- Information Technology, Communication Technology, Information Broadcasting Technology based
- Service
Trading entities are not deemed as industries and no eligible for foreign investment approval.
Industries or Businesses Restricted for Foreign Investment
1. In the sector of poultry farming, fisheries, bee-keeping, fruits, vegetables, oil seeds, pulse seeds, milk industry and other sectors of primary agro-production, the industries and business other than those large industries, agricultural technology and mechanization that engage in production and export of 75 percent of the produce;
2. Cottage and small industries;
3. Personal service business (hair cutting, tailoring, driving etc.);
4. Industries manufacturing arms, ammunition, bullets and shell, gunpowder or explosives, and nuclear, biological and chemical (N.B.C.) weapons, industries producing atomic energy and radio-active materials;
5. Real estate business (excluding construction industries), retail business, internal courier service, local catering service, moneychanger, remittance service;
6. Travel agency, guide involved in tourism, trekking and mountaineering guide, rural tourism including homestay;
7. Business of mass communication media (newspaper, radio, television and online news) and motion picture of national language;
8. Management, accounting, engineering, legal consultancy service and language training, music training, computer training;
9. Consultancy services having FDI of more than 51 percent;
10. Ride Sharing exceeding 70 percent FDI; and
11. International Aviation industry exceeding 80 percent, domestic aviation industry exceeding 49 percent, flight training institution exceeding 95 percent and repair and maintenance entity exceeding 95 percent FDI.
Disclaimer: The contents of this page are for general information purposes only and shall not be construed as legal advice. Please contact our legal professionals for accurate assistance.
Our Services
- Advice on prospective investment
- Assistance in planning and structuring investment
- Assistance in filing and obtaining investment approval