Getting Through the FDI Process in Nepal: A In Depth Guidebook for 2026 - Things To Know

When it comes to international capitalists seeking to tap into South Asia's emerging markets, Nepal uses a landscape abundant with potential, especially in power, infotech, and tourist. However, successfully entering this market requires a nuanced understanding of the FDI process in Nepal. Controlled mostly by the Foreign Financial Investment and Innovation Transfer Act (FITTA), 2019, and the Industrial Enterprises Act, 2020, the regulatory framework has been dramatically streamlined to foster a more "investment-friendly" climate.

The following guide describes the vital phases of establishing a foreign-backed business in Nepal, from first approval to the final recording of capital.

1. Identifying Eligibility and the Automatic Path
Prior to starting the official FDI process in Nepal, investors need to verify if their suggested organization falls under the "Positive List" or the "Negative List."

The Negative Checklist: Particular fields continue to be restricted to safeguard local passions. These include small cottage sectors, primary farming (poultry, fisheries, beekeeping), retail profession ( other than huge worldwide chains), and security-sensitive sectors such as arms and ammo.

The Automatic Route: In a quote to simplify entrance, the federal government presented an "Automatic Path" for financial investments approximately NPR 500 million in specific industries such as IT, facilities, and power. Under this course, capitalists can get pre-approval with an online system, bypassing conventional hold-ups.

2. Getting Foreign Investment Authorization
If your project does not qualify for the automatic course, the very first formal action is acquiring authorization from the pertinent authority.

Department of Industry (DOI): This is the primary authority for investments as much as NPR 6 billion ( around USD 45 million).

Financial Investment Board of Nepal (IBN): For mega-projects going beyond NPR 6 billion or projects of nationwide satisfaction, the IBN works as the one-stop approving body.

The application requires a extensive project record, a Financial Reputation Certification (FCC) from a financial institution in the financier's home nation, and corporate resolutions licensing the financial investment. The legal timeline for this approval is 7 to 15 days, though sensible timelines can differ based upon the intricacy of the task.

3. Consolidation and Regional Registrations
Once you hold the FDI approval letter, the lawful configuration phase starts. This entails 3 crucial registrations:

Office of Company Registrar ( OPTICAL CHARACTER RECOGNITION): You have to integrate your local subsidiary (typically a Exclusive Restricted firm) within 7 days of receiving FDI approval.

Inland Revenue Department (IRD): Immediate registration for a Permanent Account Number (PAN) or Worth Included Tax ( BARREL) is necessary for all company operations.

Neighborhood Ward Workplace: Company enrollment at the city government level is called for to establish your physical presence in a certain community.

4. Sector Enrollment and Certain Licenses
In Nepal, having a company is not identified with having an " market." To legitimately run, you fdi process in nepal should acquire an Market Registration Certification from the DOI. This certificate categorizes your organization (e.g., Solution, Production, Energy) and is vital for accessing the numerous tax rewards and obligation exemptions offered to international financiers.

Additionally, relying on the sector, you may need specific licenses from regulative bodies like the Nepal Telecom Authority (NTA) for IT projects or the Department of Power Development (DoED) for hydropower ventures.

5. Fund Injection and Central Bank (NRB) Recording
The final and most important stage of the FDI process in Nepal involves the actual transfer of capital.

Nepal Rastra Financial Institution (NRB) Notice: Before remitting any funds, financiers must inform the NRB. While central bank approval is no more required for most initial financial investments (thanks to 2021 bylaws), alert is crucial for future revenue repatriation.

Financial Investment Thresholds: Nepal keeps a minimum financial investment limit of NPR 20 million (approx. USD 150,000) for share capital.

Phased Injection Timeline: Investors need to bring 25% of the overall approved investment within one year. At least 70% must be infused before the industrial procedure date, with the remaining 30% generated within two years of beginning operations.

FDI Recording: Once the funds get here in your regional company checking account, you must officially "record" the investment at the NRB to ensure the right to repatriate returns and funding in the future.

Final Thought: Ensuring Long-Term Compliance
Navigating the FDI process in Nepal is a trip of lawful precision. From the preliminary expediency research study to the last recording of funds at the reserve bank, each step should be recorded properly to shield the financier's legal rights. As Nepal remains to modernize its electronic interfaces (like the IMIS site for DOI), the process is becoming much faster and a lot more clear than ever.