Nepal's Foreign Investment Framework and What the 2025 Amendments Changed
Nepal's 2019 foreign investment act and its 2021 regulation govern inbound investment, and an omnibus act of 31 March 2025 changed parts of both.
Where the rules live
The Foreign Investment and Technology Transfer Act 2075 (2019) — FITTA — sets out what foreign investment is, who approves it, and what a foreign investor may take out of the country. It is in force. It is also not where the numbers are, because the Act delegates almost every threshold to a secondary instrument, and the thresholds are what an investor actually needs.
Section 3 shows the pattern. It grants a foreign investor the right to invest in any industry and take the gains from it, then adds that approval will not be given below “the amount specified by the Government of Nepal by a notification in the Nepal Gazette.” The statute never states a figure. That figure has since moved three times, always by notice. Section 42 does the same thing with the automatic route, letting the government channel company registration, industry registration and foreign investment approval online by gazette notification, without saying which activities qualify or up to what size.
The procedural layer is the Foreign Investment and Technology Transfer Regulation 2077 (2021), which prescribes the application forms, the schedule on which committed capital must arrive, and the ceilings on royalties. Below that sit ministry notices, cabinet decisions and Nepal Rastra Bank bylaws. Read only FITTA and you will get the architecture right and every number wrong.
The March 2025 amendments
A single act authenticated on 31 March 2025 amended six statutes together. It passed the House of Representatives on 20 March and the National Assembly on 31 March. It also followed an ordinance issued in Poush 2081 (December 2024–January 2025) that had already put most of the same provisions into effect. Investors told in early 2025 that “an ordinance” changed the law, and later that “an act” changed the law, were hearing about one reform at two stages of its life.
| Statute amended | What changed |
|---|---|
| Foreign Investment and Technology Transfer Act 2075 | Technology transfer widened to cover management and technical services, IT, marketing and market research, finance, engineering, outsourcing and digital data processing; foreign investors permitted to buy units in specialised investment funds registered with the Securities Board of Nepal; airline ownership caps written into the Act; transfer of a foreign investment made subject to Department of Industry approval; repatriation decision period shortened |
| Companies Act 2063 | Shares for non-cash consideration — intellectual property, services, goodwill, know-how — with independent valuation, capped at 20% of paid-up capital and 40% for startups; employee share schemes permitted |
| Industrial Enterprises Act 2076 | Environmental assessment dropped for capital-increase applications; facilities extended to IT-based industries above NPR 50 million annual turnover; new priority categories added |
| Special Economic Zone Act 2073 | Licence-holders must sign an agreement with the Authority within 120 days, extendable once by 30 days; collateral widened beyond land |
| Arbitration Act 2055 | Fast-track arbitration introduced; “public interest” removed as a ground of challenge, leaving public policy; district courts to enforce fast-track awards within 15 days |
| Foreign Exchange (Regulation) Act 2019 BS | Outward investment defined and partially permitted; Nepali employees allowed into foreign parent share schemes without remitting funds from Nepal |
Two of these matter more than their drafting suggests. The widened technology-transfer definition brings a large class of intra-group service arrangements — shared services, back-office processing, marketing support billed by an offshore affiliate — inside a framework that can be approved and therefore paid. Before the amendment those arrangements sat between a definition written for patents and formulas and a foreign exchange regime that will not release currency for an unapproved contract. The specialised investment fund provision reaches fewer investors but is structurally new. It is the first route by which a foreign investor can take fund exposure to Nepali private companies instead of holding shares directly, and repatriation of the proceeds turns on Securities Board approval rather than a separate central bank clearance.
Four threshold questions
The sequence matters. Answer them out of order and much of the work has to be done twice.
Is the activity open at all? The FITTA Schedule lists activities in which foreign investment is prohibited, and a few in which it is capped. Travel and trekking agencies, guiding and homestays are reserved for Nepali investors. Consultancy services admit foreign ownership only up to 51%. Cottage and small industries are closed. No amount of structuring solves a closed activity, which is where the negative list article picks up.
Does the investment clear the minimum, and does it need to? The floor is set by ministry notice and has been NPR 20 million per foreign investor since the notice of 14 November 2022, with information-technology activities exempted when they come through the automatic route.
Which body approves it? Section 17 divides the work at NPR 6 billion. The Department of Industry approves at or below that level. Investment Board Nepal approves above it, and separately takes hydropower and energy projects above 200 megawatts under its own published mandate. The automatic route sits underneath as an online channel for listed activities.
How does money leave? Repatriation of dividends, sale proceeds, liquidation balances, royalties and lease rentals is permitted, on condition that the original inflow was remitted through the banking system and recorded. An error in that record does not surface for years. It surfaces at exit, when the file is reconstructed.
Commitments and actual inflows
Nepal’s inward FDI stock was NPR 332.97 billion at mid-July 2024, up 12.7% year on year, on Nepal Rastra Bank’s survey of 243 enterprises drawn from 867 with foreign investment approval. India held 32.3% of that stock, China 10.2%, Singapore 8.3%. Electricity and gas, manufacturing and financial services accounted for the great majority of it.
Commitments run ahead of that. NPR 39.25 billion was approved across 476 projects in the first half of FY 2082/83 (2025/26), a 52% rise on the same period a year earlier, against actual inflow of NPR 7.47 billion over five months. Both figures are real and they measure different things. Approval is a permission; inflow is money that has cleared a Nepali bank and been recorded. Commentary that treats the first as evidence of the second is common and worth resisting, and the ratio between them is the most useful single indicator of whether liberalisation is reaching the balance of payments.
Unverified claims
Two claims circulate widely and are absent here because the underlying instrument has not been obtained.
The first is that the NPR 500 million ceiling on the automatic route has been removed. UNCTAD’s policy monitor records an expansion of the automatic route on 16 February 2026, and Nepali outlets reported a cabinet decision removing the cap. The dates given in different reports do not line up, and the ministry notice itself has not been located. The route and its ceiling are dealt with in the approval-routes article, where the uncertainty is set out in full.
The second is that approval for repatriating dividends and sale proceeds has been decentralised to commercial bank head offices with a fixed decision period. UNCTAD records an amendment to Nepal Rastra Bank’s Foreign Investment and Foreign Loan Management Bylaw dated 30 December 2025 liberalising inflows and repatriation. If the decentralisation claim is accurate, the standard account of Nepal’s repatriation bottleneck is out of date, which is precisely why it should not be repeated on the strength of firm briefings alone.
One caution applies to all of the above. Nepal remained on the FATF list of jurisdictions under increased monitoring as at the June 2026 statement. That has no effect on the legal right to invest or repatriate, and a considerable effect on how long correspondent banks take to move the money either way.
Sources
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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 3 approval requirement and gazette-set minimum; section 17 split of approving authority at six billion rupees; section 42 automatic route power; section 2(f) technology transfer definition; the Schedule of restricted activities.
Accessed 26 August 2026
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Nepal — Foreign Investment and Technology Transfer Act, 2019 (2075), Investment Laws Navigator
UNCTAD · Database entry, accessed 2026 · Tier 3 — Multilateral institution
Supports: Forms of foreign investment under section 2(j) and sections 6 to 11; visa categories under section 30; repatriation under section 20.
Accessed 26 August 2026
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Pradhan & Associates · 6 April 2025 · Tier 6 — Professional or news source
Supports: Passage dates of 20 and 31 March 2025, authentication on 31 March 2025, and the changes made to each of the six amended statutes.
Accessed 26 August 2026
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Foreign Investment in Nepal 2024
Department of Industry, Ministry of Industry, Commerce and Supplies · October 2024 · Tier 2 — Official publication
Supports: The NPR 20 million minimum resting on the ministry notice of 14 November 2022, the automatic route sectors, the published step-by-step timeline and the restricted list.
Accessed 26 August 2026
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Survey Report on Foreign Direct Investment in Nepal 2081
Nepal Rastra Bank, Research Department · September 2025 — data as at mid-July 2024 · Tier 2 — Official publication
Supports: FDI stock of NPR 332.97 billion, the source-country split led by India at 32.3%, and the sector split.
Accessed 26 August 2026
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Investment Policy Monitor — Nepal
UNCTAD Investment Policy Hub · Entries to February 2026 · Tier 3 — Multilateral institution
Supports: The sequence of measures: automatic route introduced 3 October 2023 with a NPR 500 million ceiling; equity-transfer approval added 31 March 2025; automatic route expanded 16 February 2026.
Accessed 26 August 2026
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Jurisdictions under Increased Monitoring — June 2026
Financial Action Task Force · June 2026 · Tier 3 — Multilateral institution
Supports: That Nepal remained under FATF increased monitoring as at the June 2026 statement.
Accessed 26 August 2026
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