Table of Contents
Nepal has been actively working to attract foreign investment to drive economic growth, create employment, and achieve sustainable development. The Foreign Investment and Technology Transfer Act, 2075 (2019), commonly known as FITTA, is the principal legislation governing foreign investment in Nepal. It replaced the Foreign Investment and Technology Transfer Act, 1992, with the aim of streamlining procedures, providing clarity, and creating an investment-friendly environment.
This comprehensive guide provides detailed insights into FITTA, including the approval process, forms of permissible investment, restricted sectors, facilities available to foreign investors, and recent amendments.
Background and Objective of FITTA
The Foreign Investment and Technology Transfer Act, 2075 (2019) was promulgated on 27 March 2019 (2075/12/13) after receiving presidential assent. The Act was passed by the Federal Parliament with the following objectives as stated in its preamble:
- Make national economy competitive, strong, and employment-oriented
- Mobilize available means and resources for economic prosperity
- Achieve sustainable economic growth through industrialization
- Create investment-friendly environment to attract foreign capital, technology, and investment
- Promote import substitution and export promotion
- Increase productivity and infrastructure development
Related Legislation: FITTA should be read together with the Public Private Partnership and Investment Act, 2075 (2019), Industrial Enterprises Act, 2076 (2020), Foreign Exchange Regulation Act, 2019 (1962), and Nepal Rastra Bank directives for comprehensive understanding.
Governing Authorities
Multiple authorities deal with the approval, regulation, management, facilitation, and monitoring of foreign investment in Nepal:
| Authority | Functions |
|---|---|
| Department of Industry (DoI) | Approves foreign investments up to NPR 6 billion, facilitates registration and approvals, maintains records of investments and technology transfers, oversees repatriation, recommends visas, and monitors compliance |
| Investment Board Nepal (IBN) | Approves foreign investments exceeding NPR 6 billion, regulates implementation and execution, advises government on FDI policies, assists in resolving investment-related issues |
| Nepal Rastra Bank (NRB) | Regulates inflow of foreign currency, grants approval for foreign exchange transactions, oversees loan and repatriation activities, ensures compliance with financial and monetary laws |
| Securities Board of Nepal (SEBON) | Approves venture capital funds, regulates securities trading by foreign investors, oversees issuance of securities in foreign markets |
| Ministry of Industry, Commerce and Supplies | Reviews appeals against DoI decisions, provides recommendations for foreign loans, formulates investment policies |
Definition of Foreign Investment
Section 2(j) of FITTA defines foreign investment as the following investments made by a foreign investor in an industry or company:
| # | Form of Investment | Description |
|---|---|---|
| 1 | Share Investment | Investment in shares of a company in foreign currency |
| 2 | Reinvestment | Reinvestment in an industry of dividends derived from foreign currency or shares |
| 3 | Lease Finance | Lease financing in aircraft, ships, machinery, equipment, construction apparatus within prescribed limits (Section 6) |
| 4 | Venture Capital Fund | Investment made in venture capital fund with SEBON approval (Section 9) |
| 5 | Secondary Market Securities | Investment in listed securities through secondary securities market (Section 10) |
| 6 | Acquisition | Investment made by purchasing shares or assets of a company incorporated in Nepal |
| 7 | Securities Issuance | Investment received through banking channel after issuing securities in foreign capital market (Section 11) |
| 8 | Technology Transfer | Investment made through technology transfer (Section 7) |
| 9 | Industry Establishment | Investment maintained by establishing and expanding an industry in Nepal |
Additions by 2025 Amendment
The 2025 amendment added the following to the definition of foreign investment:
- Investment in units of a Specialized Investment Fund (SIF)
- Equity investments in Nepali industries by purchasing units of capital investment funds (venture capital funds) or specialized investment funds registered with SEBON
Definition of Foreign Investor
Section 2(k) defines foreign investor to include:
- Any foreign individual
- Foreign firm or company
- Non-Resident Nepali (NRN)
- Foreign government
- International agency or similar corporate body
- In case of institutional foreign investor, the ultimate beneficial owner of such institution
Key Point: The inclusion of Non-Resident Nepali (NRN) and ultimate beneficial owner in the definition ensures comprehensive coverage of all forms of foreign investment entities.
Technology Transfer
Section 2(f) defines technology transfer as any transfer of technology under an agreement between an industry and a foreign investor on the following matters:
Scope of Technology Transfer
- Intellectual Property: Patent, design, trademark, goodwill, technological specificity, formula, process
- Licensing: User's license, technological know-how sharing, use of technological knowledge (franchise)
- Services: Provision of foreign technical adviser, management and marketing service, or other technological skill or knowledge
Expanded Scope (2025 Amendment)
The 2025 amendment expanded technology transfer to include:
- Management and technical services
- Information technology
- Marketing and market research
- Finance, accounting, and auditing
- Engineering
- Outsourcing and human resource outsourcing
- Digital data processing and migration
- Design services
Requirements for Technology Transfer
- Terms must be specified in technology transfer agreement between industry and foreign investor
- Agreement must be approved by the foreign investment approving body
- Royalty repatriation cannot exceed prescribed ceiling
Royalty Rates
| Technology Transfer Agreement Royalty Rates | ||
|---|---|---|
| Sales Type | Alcohol and Tobacco | Other Industries |
| Local Sales | Up to 4% of total sales (excluding VAT) | Up to 5% of total sales (excluding VAT) |
| Export Sales | Up to 5% of total sales (excluding VAT) | Up to 6% of total sales (excluding VAT) |
| Trademark Franchise Agreement Royalty Rates | ||
|---|---|---|
| Sales Type | Alcohol and Tobacco | Other Industries |
| Local Sales | Up to 2% of total sales (excluding VAT) | Up to 3% of total sales (excluding VAT) |
| Export Sales | Up to 5% of total sales (excluding VAT) | Up to 6% of total sales (excluding VAT) |
Restricted Sectors (Negative List)
The Schedule to FITTA lists industries and businesses where foreign investment is restricted:
| # | Restricted Sector |
|---|---|
| 1 | Poultry farming, fisheries, bee-keeping, fruits, vegetables, oil seeds, pulse seeds, milk industry, and other sectors of primary agro-production |
| 2 | Cottage and small industries |
| 3 | Personal service business (hair cutting, tailoring, driving, etc.) |
| 4 | Industries manufacturing arms, ammunition, bullets, shell, gunpowder, explosives; nuclear, biological, and chemical (NBC) 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, 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 foreign investment of more than 51% |
Additional Restrictions (2025 Amendment)
The 2025 amendment added restrictions on:
| Sector | Maximum Foreign Investment Limit |
|---|---|
| International Airlines | 80% |
| Domestic Airlines | 49% |
| Aviation Training Institute | 95% |
| Aviation Maintenance Institute | 95% |
| Agricultural sector (animal husbandry, fisheries, beekeeping, etc.) | Restricted except for large industries exporting at least 75% of products |
Important: Even if a sector is not in the Negative List, foreign investment is only allowed if the activity is classified as an "industry" under the Industrial Enterprises Act (Positive List). Technology transfer in industries established with local investment is permitted even in restricted sectors with DoI approval.
Minimum Investment Threshold
Section 3(3) provides that the Government of Nepal may prescribe minimum foreign investment amounts by notification. The current thresholds are:
| Category | Minimum Investment |
|---|---|
| General Industries | NPR 20 million (reduced from NPR 50 million) |
| IT Companies | No minimum threshold |
Maximum Investment Ceiling
Section 13 provides that no maximum ceiling of investment amount and share of investment shall be prescribed for foreign investors, except:
- In service industries, maximum ceiling of equity foreign investment may be prescribed (not less than Nepal's WTO commitment)
- Maximum ceiling for investment in securities transactions under Section 10 may be prescribed
Forms of Investment
Individual or Joint Investment (Section 4)
A foreign investor may make foreign investment:
- Individually
- Jointly with other foreign investors
- By establishing an industry jointly with an industry established in Nepal or a Nepali citizen
Investment Through Purchase of Assets or Shares (Section 5)
A foreign investor may make foreign investment by purchasing:
- Assets of any industry established in Nepal
- Shares not exceeding the prescribed percentage of any industry established in Nepal
Lease Investment (Section 6)
A foreign investor may make foreign investment, subject to prescribed ceiling, in:
- Aircraft
- Ships
- Machinery and equipment
- Construction equipment
- Similar other equipment
Branch Establishment (Section 8)
Any industry incorporated in a foreign country may make foreign investment by establishing or expanding its branch industry in Nepal, subject to prevailing law.
Venture Capital Fund (Section 9)
An institutional foreign investor may:
- Establish a venture capital fund by incorporating a company under prevailing law
- Obtain approval from SEBON
- Invest equity in any industry from such fund
- Provide statements of the fund to DoI every six months
Securities Trading (Section 10)
Foreign investors registered with SEBON may trade in securities through the secondary market. Provisions on minimum securities purchase, investment ceiling, minimum holding period, and reserve fund requirements shall be as prescribed.
Loan Financing
Issuance of Securities in Foreign Market (Section 11)
A public limited company incorporated in Nepal or corporate body authorized to issue securities may:
- Borrow a loan or acquire foreign currency by issuing bonds, debentures, or other securities in foreign capital market
- Requires approval from Nepal Rastra Bank and SEBON
- Funds must be invested in Nepal
Loan from Foreign Financial Institutions (Section 12)
Any industry with foreign investment may:
- Borrow project loan from foreign financial institutions
- Enter into project financing agreements
- Requires recommendation from Ministry of Industry, Commerce and Supplies
- Requires approval from Nepal Rastra Bank
Expanded Loan Provisions (2025 Amendment)
The 2025 amendment expanded loan provisions:
- Any industry (not just those with foreign investment) may obtain project loans from foreign financial institutions with NRB approval
- Industries may mortgage immovable property to foreign financial institutions for approved loans
- Foreign financial institutions may repatriate loan principal and interest by auctioning mortgaged property if borrower defaults
- Industries in the Negative List cannot obtain project loans from foreign financial institutions
FDI Approval Process
Approving Authorities (Section 17)
| Investment Amount | Approving Authority |
|---|---|
| Up to NPR 6 billion | Department of Industry (DoI) |
| Above NPR 6 billion | Investment Board Nepal (IBN) |
Application Process (Section 15)
A foreign investor wishing to make foreign investment shall:
- Make an application in prescribed form to the Foreign Investment Approving Body
- Include time schedule for bringing investment into Nepal
- Include action plan on investment in the industry
Approval Timeline
- If application is complete, approval shall be given within 7 days of receipt
- If approval cannot be given, written information with grounds and reasons shall be provided within 7 days
Review of Decisions
- If investor is not satisfied with DoI's decision, application for review may be made to the Ministry
- Ministry shall make decision within 30 days
Reinvestment Approval
An industry that has obtained approval and wishes to reinvest earned profits in the same industry or any industry not in the Negative List does not require re-approval for foreign investment.
Step-by-Step FDI Approval Process
| Step | Action | Authority |
|---|---|---|
| 1 | Foreign Investment approval application | Department of Industry |
| 2 | Company incorporation | Office of Company Registrar |
| 3 | Business registration | Local Ward Office |
| 4 | Tax registration (PAN) | Inland Revenue Office |
| 5 | Industry registration | Department of Industry |
| 6 | Non-Blacklisted Certificate | Credit Information Bureau (CIB) |
| 7 | Approval to inject foreign investment | Local bank where company has account |
| 8 | Statutory notice of investment injection | Nepal Rastra Bank |
Capital Injection Timeline
The Foreign Investment and Technology Transfer Regulation, 2077 (2020) provides the following schedule for capital injection:
| Stage | Timeline | Percentage |
|---|---|---|
| Stage 1 | Within 1 year of receiving approval | Minimum investment (NPR 20 million): 25% |
| NPR 20-250 million: 15% | ||
| NPR 250 million - 1 billion: 10% | ||
| Above NPR 1 billion: As prescribed | ||
| Stage 2 | When production starts or commercial transaction begins | Up to 70% of investment amount |
| Stage 3 | After 2 years of production or transaction commencement | Remaining 30% of investment amount |
Required Documents for FDI Approval
While FITTA refers to "prescribed" documents, the following are commonly required:
- Company registration certificate of the foreign investor (from investor's home country)
- Passport copy (for individual investors)
- Board resolution or letter of intent authorizing investment
- Financial statements or bank guarantee showing capital availability
- Project proposal or business plan with projected costs, employment generation, and returns
- Technology transfer agreement (if applicable)
- Lease agreement or land ownership documents (if premises are secured)
- Joint venture agreement (if investment is with Nepali partner)
- Power of attorney (if someone is authorized to act on behalf, must be notarized)
Bringing Investment into Nepal (Section 16)
After obtaining approval for foreign investment:
- Foreign investor shall provide written information to NRB along with self-declaration that investment amount was earned from legitimate source
- Investment must be brought in convertible foreign currency through banking system
- Indian investors may also invest in Indian currency through banking channel
Repatriation of Investment and Earnings (Section 20)
A foreign investor may repatriate the following amounts in the same foreign currency as investment or other convertible foreign currency, with NRB approval, after paying applicable taxes:
| # | Amount Eligible for Repatriation |
|---|---|
| (a) | Amount received from sale of shares with foreign investment |
| (b) | Amount of profit or dividend received from foreign investment |
| (c) | Amount remaining after liquidation or winding up, after paying all liabilities |
| (d) | Royalty received under technology transfer agreement |
| (e) | Lease rent under lease investment |
| (f) | Damages or compensation from final settlement of lawsuit, arbitration, or legal process |
| (g) | Amounts from sale of specialized investment fund units (2025 amendment) |
| (h) | Profits earned from specialized investment fund units (2025 amendment) |
Repatriation Process
- Apply to foreign investment approving body for approval
- Approval granted within 7 days (reduced from 15 days by 2025 amendment) if terms and liabilities fulfilled
- Apply to NRB for foreign currency exchange facility
- NRB provides exchange facility for repatriation
Restrictions on Repatriation
- For liquor industry (non-100% export): Royalty cannot exceed 5% of net selling price (excluding tax)
- Repatriation only to the extent of ratio of investor's portion in the company
- Full repatriation on sale/liquidation only after payment of all liabilities including tax
Facilities and Concessions
General Facilities (Section 24)
Industries with foreign investment are entitled to:
- Exemptions, facilities, concessions under FITTA
- Facilities available under Industrial Enterprises Act
- Facilities under other prevailing laws
Note: Facilities available to "sick industries" under prevailing law are not available to industries with foreign investment.
Foreign Currency Facilities (Sections 25 & 26)
- Open account in Nepali currency with any commercial bank in Nepal
- Open account in foreign currency with banks licensed to deal in convertible foreign currency (with NRB approval)
- Use approved derivatives to mitigate foreign exchange fluctuation risk
- Obtain foreign exchange facility for:
- Remuneration payable to foreign employees
- Principal or interest of bonds/debentures issued under Section 11
- Repatriation of investment or income under Section 20
Visa Facilities (Section 30)
| Visa Type | Eligibility | Duration |
|---|---|---|
| Non-Tourist Visa | Foreign citizens visiting Nepal for study, research, or survey for foreign investment | Up to 6 months |
| Business Visa | Foreign investor, one authorized representative, and their family members | Until foreign investment of minimum prescribed amount is maintained |
| Residential Visa | Foreign investor making investment exceeding USD 1 million (or equivalent) at one time, authorized representative, and family members | Until foreign investment of minimum prescribed amount is maintained |
| Tourist Visa | Foreign experts, technical or managerial employees employed in industry, and their families (2025 amendment) | As per necessity |
Identity Card (Section 29)
The Department may provide an identity card to any foreign investor who makes prescribed foreign investment.
Industrial Security (Section 28)
Industries with foreign investment shall be provided such industrial security as available to any other industry established in Nepal.
Land Provisions (Section 31)
- Foreign investor shall manage land required for industry by purchasing on own or through other means under prevailing law
- If unable to purchase/manage land, foreign investment approving body shall make necessary recommendation, coordination, and facilitation
- If land exceeding ceiling is required, registering body shall make necessary recommendation in accordance with prevailing law
- Land not subject to ceiling shall be used only for the purpose for which it was purchased
National Treatment (Section 32)
Foreign investment shall be accorded national treatment no less favorable than that accorded to investment made by Nepali person in respect of:
- Management of investment
- Maintenance of investment
- Use of investment
- Transfer of investment
- Sale of investment
Specific Protections
- Same treatment as industry of same nature with Nepali investment
- Freedom to determine price of goods and services (subject to prevailing law)
- No prevention from doing trade being limited to that industry
- No restriction on repatriating profit, investment, paying interest, or repaying principal of loan
Non-Applicability of National Treatment
National treatment does not apply to:
- Intellectual property rights matters under WTO agreements
- Exemptions granted to domestic industry under public procurement law
- Government grants or concessions
- Non-commercial government services
- Financial services measures adopted for protection of investors, insurance policyholders, etc.
- Special treatment due to regional/multilateral organization membership
- Terms specified by regulatory body on repatriation, loan repayment, service fees
- Protection of human, animal, plant health, or environment
Protection from Nationalization (Section 33)
- No industry with foreign investment shall be nationalized
- No industry shall be expropriated directly or indirectly, except for public purpose following due process under prevailing law
Stabilization Clause (Section 34)
If any provision changing terms of foreign investment or exemptions, facilities, concessions receivable by foreign investors is to the disadvantage of a foreign investor who obtained approval prior to such change, such change shall not apply to that investor.
One-Stop Service Center (Section 23)
The Government of Nepal may arrange for services to foreign investors through One-Stop Service Center, including:
- Registration and administration of industries
- Approval of foreign investment and loan
- Registration and administration of companies
- Labor permit
- Visa facility
- Testing and control of quality of goods produced
- Approval of environmental study report
- Energy and infrastructure development coordination
- Exemptions and facilities to which industries are entitled
- Permanent Account Number provision
- Foreign exchange approval
Dispute Settlement (Section 40)
Step-by-Step Dispute Resolution
- Mutual Discussion/Negotiation: Department may facilitate settlement through mutual discussions
- Agreement-Based Settlement: If not settled within 45 days, dispute may be settled as per joint investment or dispute settlement agreement
- Arbitration Under Nepal Law: If no agreement exists, dispute shall be settled by arbitration under Arbitration Law of Nepal
- UNCITRAL Rules: Any dispute shall be settled by arbitration under UNCITRAL Rules unless otherwise agreed
Key Provisions
- Arbitration shall be held in Nepal
- Substantive law of Nepal shall apply
- Parties may make agreement for dispute settlement even after dispute has arisen
- Information of settlement must be given to foreign investment approving body within 15 days
- Parties are not bound to disclose terms of settlement
Validity of Foreign Investment Approval (Section 43)
Approval remains valid until investment remains in Nepal. Approval is deemed ineffective if:
- Failure to commence bringing investment within 2 years after approval (without reasonable grounds)
- 100% ownership transferred to Nepali investor through sale of shares
- Registration revoked due to default by industry or company
Change in Ownership (Section 19)
- Any sale, transfer of title, or change in ownership of property, assets, shares, or financial instruments from foreign investment must be notified within 30 days to the approving body
- Transaction shall not be recorded until applicable tax is paid
- If ownership change results from transfer of title in holding company abroad, the Nepali branch/unit has liability to provide information
Key 2025 Amendments Summary
| Area | Change |
|---|---|
| Technology Transfer | Expanded scope to include IT, marketing, finance, engineering, outsourcing, digital services |
| Specialized Investment Funds | Foreign investment in SIF units now permitted with SEBON approval |
| Foreign Loans | Any industry (not just those with foreign investment) can obtain project loans from foreign financial institutions |
| Repatriation Timeline | Approval reduced from 15 days to 7 days; appeal decision from 30 to 15 working days |
| NRN Investment | NRN investments and companies with 50%+ NRN shareholding must notify DoI |
| Visa Facilities | Tourist visas now granted to families of foreign experts, technical, and managerial employees |
| Provincial Industries | Only industry registration certificate needed (provincial ministry recommendation removed) |
| Aviation Sector | New caps on foreign investment (international: 80%, domestic: 49%, training/maintenance: 95%) |
| Agriculture Sector | Restricted except for large industries exporting at least 75% of products |
Related Services
For assistance with foreign investment approval and related matters:
- Company Registration in Nepal
- Corporate Law Firm Nepal
- Merger and Acquisition in Nepal
- Industry Registration Nepal
- Income Tax Rate Nepal
- Contact Us
Disclaimer
This guide provides general information about the Foreign Investment and Technology Transfer Act, 2075 (2019) and related regulations. Foreign investment involves complex legal, regulatory, and procedural requirements. Specific investments require detailed analysis by qualified professionals. Please consult legal and financial advisors before making foreign investment decisions.
Need legal advice on investment, banking, or financial regulations in Nepal? Court Marriage in Nepal Pvt. Ltd. provides expert legal counsel on financial compliance, investment structuring, and banking law. Contact us today.
Frequently Asked Questions
The Foreign Investment and Technology Transfer Act, 2075 (2019), commonly known as FITTA, is the principal legislation governing foreign investment in Nepal. It was promulgated on 27 March 2019, replacing the Foreign Investment and Technology Transfer Act, 1992. The Act aims to create an investment-friendly environment by streamlining procedures, providing clarity on investment forms, establishing approval processes, and protecting foreign investors. It must be read together with the Public Private Partnership and Investment Act, Industrial Enterprises Act, and Foreign Exchange Regulation Act for comprehensive understanding.
Section 2(k) of FITTA defines a foreign investor to include any foreign individual, foreign firm or company, Non-Resident Nepali (NRN), foreign government, international agency, or similar corporate body that makes foreign investment. For institutional foreign investors, the definition also includes the ultimate beneficial owner of such institution. The inclusion of NRN and ultimate beneficial owner ensures comprehensive coverage of all foreign investment entities.
FITTA recognizes nine forms of foreign investment:
(1) share investment in foreign currency,
(2) reinvestment of dividends,
(3) lease finance in aircraft, ships, machinery, and equipment,
(4) investment in venture capital fund with SEBON approval,
(5) investment in listed securities through secondary market,
(6) investment by purchasing shares or assets of Nepali company,
(7) investment received after issuing securities in foreign capital market,
(8) investment through technology transfer, and
(9) investment by establishing and expanding industry in Nepal.
The 2025 amendment added investment in Specialized Investment Fund units.
The Schedule to FITTA lists restricted sectors (Negative List) including: primary agricultural production (poultry, fisheries, bee-keeping, fruits, vegetables), cottage and small industries, personal service businesses (hair cutting, tailoring, driving), arms and ammunition manufacturing, real estate (excluding construction), retail business, internal courier service, local catering, moneychanger, remittance service, travel agency, tourism guides, homestay, mass communication media, national language motion pictures, and consultancy services with more than 51% foreign investment. The 2025 amendment added aviation sector caps and agricultural restrictions with export exceptions.
Section 3(3) authorizes the government to prescribe minimum investment amounts. Currently, the minimum threshold is NPR 20 million (reduced from NPR 50 million) for general industries. IT companies have no minimum threshold. This means foreign investors cannot make investments below these amounts for recognition as foreign investment under FITTA. The minimum ensures that foreign investment brings substantial capital into the country.
Section 17 establishes two approving authorities based on investment amount:
- Department of Industry (DoI): Approves foreign investment up to NPR 6 billion
- Investment Board Nepal (IBN): Approves foreign investment exceeding NPR 6 billion Applications must be submitted in prescribed form with time schedule and action plan. If complete, approval must be given within 7 days. If the investor is dissatisfied with DoI's decision, they may apply to the Ministry, which must decide within 30 days.
The Foreign Investment and Technology Transfer Regulation provides a three-stage timeline: Stage 1 requires injecting a percentage (10-25% depending on amount) within 1 year of approval; Stage 2 requires up to 70% when production starts or commercial transaction begins; Stage 3 requires the remaining 30% after 2 years of production commencement. Investment must be brought in convertible foreign currency through banking system. Indian investors may use Indian currency. Failure to commence bringing investment within 2 years without reasonable grounds makes approval ineffective.
Technology transfer under Section 2(f) means any transfer of technology between an industry and foreign investor covering: intellectual property (patent, design, trademark, goodwill, formula, process), licensing arrangements (user's license, know-how sharing, franchise), and services (technical adviser, management and marketing service). The 2025 amendment expanded scope to include IT, marketing, finance, accounting, engineering, outsourcing, digital data processing, and design services. Technology transfer agreement must be approved by DoI, and royalty cannot exceed prescribed ceilings.
Section 20 allows repatriation of: amount from sale of shares, profit or dividend, residual amount after liquidation, royalty from technology transfer, lease rent, damages or compensation from legal settlements, and (after 2025 amendment) amounts from specialized investment fund units. Investors must apply to the approving body, which must grant approval within 7 days (reduced from 15 days by 2025 amendment) if terms and liabilities are fulfilled. Then apply to NRB for foreign currency exchange facility. Repatriation is in same currency as investment or other convertible currency at prevailing exchange rate.
Industries with foreign investment receive: exemptions, facilities, and concessions under FITTA, Industrial Enterprises Act, and other prevailing laws; ability to open Nepali currency accounts with any commercial bank and foreign currency accounts with licensed banks; foreign exchange facility for employee remuneration, debt service, and repatriation; visa facilities (non-tourist, business, residential, tourist); identity card for investors; industrial security equal to domestic industries; land acquisition facilitation if unable to manage independently; and national treatment in management, use, transfer, and sale of investment.
Section 32 provides that foreign investment shall receive national treatment no less favorable than investment by Nepali persons regarding management, maintenance, use, transfer, and sale of investment. Specific protections include same treatment as Nepali industries of same nature, freedom to determine prices, no prevention from doing trade within industry scope, and no restriction on repatriating profit/investment or repaying loans. However, national treatment does not apply to intellectual property matters under WTO, public procurement exemptions for domestic industry, government grants, and certain regulatory measures.
No. Section 33 explicitly prohibits nationalization of any industry with foreign investment. Additionally, no industry can be expropriated directly or indirectly except for public purpose, and even then, due process under prevailing law must be fulfilled. This protection provides significant security for foreign investors. Furthermore, Section 34 provides a stabilization clause ensuring that any legal change disadvantageous to foreign investors who obtained approval before such change shall not apply to them.
Section 40 provides a tiered dispute settlement mechanism: First, DoI may facilitate settlement through mutual discussions/negotiations. If not settled within 45 days, parties follow their joint investment or dispute settlement agreement. If no agreement exists, arbitration under Nepal's Arbitration Law applies. Any dispute shall be settled under UNCITRAL Rules unless otherwise agreed. Arbitration must be held in Nepal with Nepal's substantive law applying. Parties may agree on dispute settlement even after dispute arises. Information of settlement must be given to approving body within 15 days.
Section 30 provides four visa types: (1) Non-tourist visa (up to 6 months) for foreign citizens visiting for study, research, or survey for investment; (2) Business visa for foreign investor, one authorized representative, and family members until minimum prescribed investment is maintained; (3) Residential visa for investors making investment exceeding USD 1 million at one time, their authorized representative, and family members; (4) Tourist visa for foreign experts, technical or managerial employees to be employed in industry. The 2025 amendment extended tourist visa to families of foreign employees.
Key 2025 amendments include: expanded technology transfer scope (IT, marketing, finance, outsourcing, digital services); foreign investment allowed in Specialized Investment Fund units; any industry (not just foreign-invested) can obtain project loans from foreign financial institutions; repatriation approval timeline reduced from 15 to 7 days; appeal decision timeline reduced from 30 to 15 working days; NRN investments and 50%+ NRN-owned companies must notify DoI; tourist visas extended to families of foreign employees; provincial industry approval simplified (only registration certificate needed); aviation sector caps (international 80%, domestic 49%); and agricultural restrictions with 75% export exception for large industries.
