Which Approval Route Applies: Automatic, Department of Industry or Investment Board Nepal

The NPR 6 billion line

Choosing an approving body in Nepal is not a matter of judgement. Section 17 of the Foreign Investment and Technology Transfer Act 2075 (2019) settles it in two sentences: the Department of Industry approves foreign investment not exceeding six billion rupees, and the Investment Board approves foreign investment exceeding six billion rupees. There is no band in which either could take the file, and no provision for one to refer to the other.

The threshold is widely misstated at NPR 10 billion, which was correct until 2019. The Public Private Partnership and Investment Act 2075, authenticated on 27 March 2019, restructured the Board and, on contemporaneous reporting of the bill, brought the figure down to NPR 6 billion. FITTA was enacted in the same period and drafted to match. An earlier draft would have devolved approval further still, letting provincial governments clear investments up to NPR 4 billion and local bodies up to NPR 2 billion. Those provisions came out before the bill went to cabinet, and nothing replaced them. That is why a federal state with a provincial layer everywhere else has none here.

The three routes compared

	Automatic route	Department of Industry	Investment Board Nepal
Legal basis	FITTA s.42; regulation amendment of 20 April 2023; gazette notice of 2 October 2023	FITTA s.17	FITTA s.17; Public Private Partnership and Investment Act 2075
Size	Up to NPR 500 million as notified in 2023 — see the caveat below	Up to NPR 6 billion	Above NPR 6 billion
Activity	Only the enumerated activities, roughly a hundred across seven categories	Any activity not on the FITTA Schedule	Any activity not on the Schedule, plus energy above 200 MW and PPP projects above NPR 6 billion regardless of the FDI figure
Minimum investment	NPR 20 million, except information-technology activities, which are exempt	NPR 20 million per investor	NPR 20 million per investor
How it is decided	Online through imis.doind.gov.np, with approval issued on compliant filing	Departmental assessment of the project report and applicant documents	Board process, typically with a project agreement rather than a bare approval
Published decision period	Approval certificate immediately or within seven working days	Seven days for foreign investment approval	Not published as a fixed period

The automatic route is a channel rather than a category of investment. Eligibility changes none of the substantive rules: the negative list still applies, the capital injection schedule still applies, and the Department of Industry still holds the file afterwards. What changes is that no officer exercises discretion at the approval step.

The Investment Board’s jurisdiction has two independent limbs, and they are easy to conflate. One is the FITTA money threshold. The other is the Board’s own mandate: public-private partnership projects with estimated cost above NPR 6 billion, and hydropower and energy projects above 200 megawatts. A 220 MW hydropower project financed largely by domestic equity is a Board matter on capacity alone, however modest the foreign investment component. Investors coming to Nepal for energy should start from the capacity figure rather than from their own cheque.

The unresolved ceiling

Whether the NPR 500 million ceiling on the automatic route still stands is the most consequential open point in this article. We have not been able to settle it.

What is documented: the route went into the Foreign Investment and Technology Transfer Regulation on 20 April 2023, with the ceiling expressly left to a later notification. That notification issued on 2 October 2023, setting the ceiling at NPR 500 million and listing the eligible industries. UNCTAD recorded the measure with a dollar equivalent of about USD 38 million.

What is reported but unverified: that the cabinet later decided to remove the ceiling altogether, so that investment of any size in a listed activity can be approved online. UNCTAD’s policy monitor records an expansion of the automatic route on 16 February 2026, described as covering additional manufacturing and services activities rather than as removing a cap. Nepali outlets have reported the removal, but their datings of the decision do not reconcile, and the ministry notice giving effect to it appears neither on the Nepal Gazette portal nor on the Department of Industry’s own notice pages.

One Nepal Gazette notice, issued by the Ministry of Industry, Commerce and Supplies under section 42, settles the question. An investor whose case turns on it should ask the Department for the current notice by date and reference number before relying on either position. An adviser who states the answer without producing that notice is reporting rather than advising.

Filing with the wrong body

An application filed with the wrong body does not move sideways. The Department of Industry and Investment Board Nepal keep separate registries and separate document requirements, and the Board issues a negotiated project agreement rather than an approval letter. A rejection on jurisdictional grounds returns the applicant to the start. Any document with a validity period — a financial credibility certificate from the investor’s bank, a board resolution, a notarised passport copy — may need reissuing before the second filing.

Two structuring decisions therefore come before anything is filed. The first is the approved investment figure, which sets the route. An amount pitched just under NPR 6 billion to stay with the Department constrains the project’s funded capital for years afterwards. The second is the description of the activity, which decides whether the automatic route is available and whether the negative list bites. Both are fixed at application, and both are changed only by a further application.

Sector regulators

None of the three routes is a licence to operate. Where the activity is regulated, the sectoral authority decides separately, on its own statute, after the investment approval rather than as part of it.

Hydropower generation requires a licence from the Department of Electricity Development under the Electricity Act 2049 (1992). Banking and insurance are licensed by Nepal Rastra Bank and the Nepal Insurance Authority. Telecommunications services are licensed by the Nepal Telecommunications Authority. Civil aviation operations are licensed by the Civil Aviation Authority of Nepal, notwithstanding that the foreign ownership caps for airlines now appear in FITTA itself.

Sequencing follows from that. An investment approval for an activity the sponsor cannot ultimately be licensed to carry on is a sunk cost, so test the licensing question first even though the approval comes first in the filing order. A project whose economics depend on a fixed-term licence should also reconcile that term against the capital injection schedule. The obligation to remit approved capital does not pause while a licence is pending.

A cross-reference problem

FITTA section 17 confers the upper tier of jurisdiction on “the Investment Board under the Investment Board Act, 2011 (2068).” The Board’s operative statute is now the Public Private Partnership and Investment Act 2075, authenticated on 27 March 2019 and reported at the time to supersede the 2068 Act. We have not read the repeal and saving provisions of the 2075 Act, so we do not state that the 2068 Act is repealed.

For most investors this is a curiosity. It matters in one situation. Where the Board’s power to do a specific thing is challenged, the source of that power has to be identified, and a cross-reference to a statute that may no longer exist will not do. Counsel taking a project above NPR 6 billion should establish the point on the current text of both Acts rather than on secondary summaries, this one included.

Sources

1. Foreign Investment and Technology Transfer Act, 2075 (2019)

   Government of Nepal (text published by the Department of Industry) · Authenticated 2019 — in force, as amended · Tier 1 — Primary legal instrument

   Supports: Section 17, that the Department approves foreign investment not exceeding six billion rupees and the Investment Board approves investment exceeding it; section 42, the power to provide approval through an automatic route by gazette notification.

   Accessed 26 August 2026

2. Investment Board Nepal — Partnering for Economic Prosperity (institutional brochure)

   Investment Board Nepal · Undated institutional publication, hosted on the Government of Nepal content network · Tier 2 — Official publication

   Supports: The Board's own statement of jurisdiction: public-private partnership projects with estimated cost above NPR 6 billion and hydropower and energy projects above 200 MW; establishment in 2011 and chairing by the Prime Minister.

   Accessed 26 August 2026

3. Automatic Route — upper ceiling and industries permissible for FDI prescribed by the Government of Nepal

   Pioneer Law Associates · Analysis of the gazette notification of 2 October 2023 · Tier 6 — Professional or news source

   Supports: The NPR 500 million ceiling, the seven categories of eligible industry, the IT minimum-capital carve-out, and the gazette reference at rajpatra.dop.gov.np 25417.

   Accessed 26 August 2026

4. Gazette Notification on Automatic Route

   Pioneer Law Associates · Amendment to the Foreign Investment and Technology Transfer Regulation dated 20 April 2023 (7 Baisakh 2080) · Tier 6 — Professional or news source

   Supports: That the automatic route was inserted into the regulation on 20 April 2023, with the permissible threshold left to a later notification.

   Accessed 26 August 2026

5. Foreign Investment in Nepal 2024

   Department of Industry, Ministry of Industry, Commerce and Supplies · October 2024 · Tier 2 — Official publication

   Supports: The definition of the automatic route as approval without prior Department consent, the seven sector categories, the online filing point at imis.doind.gov.np and the published step timelines.

   Accessed 26 August 2026

6. Investment Policy Monitor — Nepal

   UNCTAD Investment Policy Hub · Entries to February 2026 · Tier 3 — Multilateral institution

   Supports: Introduction of the automatic route on 3 October 2023 with a ceiling equivalent to about USD 38 million, and an expansion of the route recorded on 16 February 2026.

   Accessed 26 August 2026

7. Proposed law gives new powers to Investment Board Nepal

   The Kathmandu Post · 26 February 2019 · Tier 6 — Professional or news source

   Supports: That the Public Private Partnership and Investment Bill lowered the Board's approval threshold from NPR 10 billion to NPR 6 billion, and was intended to supersede the Investment Board Act.

   Accessed 26 August 2026