The Foreign Investment and Technology Transfer Act 2075 (FITA) is the gateway for any foreign national or company that wants to own shares in a Nepali business. It sets a minimum investment amount, lists the sectors that are closed to foreign capital, and lays down an approval process that runs through the Department of Industry (DOI) or, for large projects, the Investment Board Nepal. This article explains the route we take most often for clients: a foreign investor acquiring equity in a new or existing private limited company.
The minimum investment threshold
The government sets a minimum foreign investment amount by notice, currently NPR 20 million (roughly USD 150,000) per investor. The threshold applies to the amount the investor commits, not to the company's total capital, and it can be brought in over time according to a schedule agreed at approval. Investments in information technology have been exempted from the threshold under recent notices, but check the current Nepal Gazette notice because these exemptions are revised frequently.
Sectors closed to foreign investment
FITA's negative list bars foreign investment in a number of sectors, most of them intended to protect small domestic businesses and national security. Some sectors outside the list have their own caps set by sectoral laws; for example, foreign ownership of a bank is regulated by Nepal Rastra Bank under the Banks and Financial Institutions Act.
- Primary agriculture, poultry, fisheries and bee-keeping
- Cottage and small industries
- Personal services such as hairdressing, tailoring and driving training
- Arms, ammunition and explosives
- Real estate business (excluding construction), retail trade and travel agencies
- Local catering, money changing and remittance services
- Consultancy services with more than 51% foreign ownership in listed fields
The approval sequence
Approval starts at the DOI, not the Company Registrar. The investor submits the project profile, its own incorporation documents, a board resolution, a bank statement showing funds, and a joint venture agreement if there is a Nepali partner. After DOI approval the company is registered at the OCR, obtains PAN registration at the IRD, and then applies to Nepal Rastra Bank (NRB) for permission to bring in the investment in foreign currency. Only after NRB records the inward remittance is the investment officially recognised, which matters for later repatriation.
| Step | Authority | Typical time |
|---|---|---|
| Foreign investment approval | Department of Industry | 1 to 4 weeks |
| Company incorporation | Office of the Company Registrar | 1 to 2 weeks |
| PAN / VAT registration | Inland Revenue Department | 1 week |
| Inward remittance approval and recording | Nepal Rastra Bank | 2 to 4 weeks |
| Industry registration | Department of Industry | 1 to 2 weeks |
Technology transfer and loans
FITA also covers technology transfer agreements, such as franchise, licence and technical services agreements, which need DOI approval before royalties can be remitted. Royalties are capped as a percentage of sales by DOI guidelines. Foreign loans to a Nepali company from a parent or an overseas lender need NRB approval separately, and the interest rate ceiling and repayment schedule are set at the time of approval.