Foreign Investment Approval in Nepal — DOI, IBN and Automatic Route

Automatic Route

the foreign investor can apply electronically through DOI's IMIS system and obtain FDI approval without the ordinary prior manual approval process. Nepal substantially expanded the automatic route in February 2026.

What Is Foreign Investment?

FITTA permits foreign investment through several legally recognised forms, including investment connected with:

• shares/equity;

• reinvestment of earnings;

• lease investment;

• technology transfer;

• specified financing/securities arrangements;

• other permitted forms under the Act.

The correct form should be determined before submitting the investment application.

New Industry vs Existing Industry

A foreign investor may invest by:

Establishing a new industry

or

Investing in an existing industry/company

through permitted:

• share subscription;

• share purchase;

• asset/investment arrangements.

DOI maintains separate procedural paths for:

• foreign investment in a new industry;

• foreign investment in an existing industry.

These transactions require different corporate documentation.

Foreign Investment Negative List

Foreign investment is not permitted in every Nepalese business activity.

FITTA contains a Schedule of activities reserved/restricted for foreign investment.

Before preparing any application:

Check the current FITTA Schedule first.

This is particularly important for activities involving specified:

• micro and cottage enterprises;

• primary agriculture;

• personal services;

• retail;

• local tourism/service activities;

• mass media;

• certain consultancy/professional services;

• other restricted sectors.

Apply the current FITTA Schedule and later enacted or Gazette changes to the proposed activity before preparing the application.

Foreign Ownership Percentage

FITTA itself generally does not impose a maximum overall foreign-investment ceiling.

However, the investor must separately check whether a sector law limits: foreign ownership percentage.

Examples may arise in regulated sectors such as:

• telecommunications;

• banking/financial services;

• insurance;

• aviation;

• other regulated activities.

Therefore:

FITTA permits foreign investment ≠ automatically 100% foreign ownership permitted.

General Minimum Investment

The Gazette dated 2079/07/28 sets the general minimum at NPR 20 million per foreign investor. The automatic-route Gazette dated 2082/11/04 exempts its listed IT-based category from that minimum. Confirm the proposed activity and other applicable sector conditions before using the exemption.

Qualifying IT-based industries using the automatic route have a specific exemption from the general minimum threshold. This treatment is reflected in government/regulatory investor materials.

Because FITTA authorises the Government to change the minimum amount by Gazette notice, the threshold should always be reverified immediately before filing.

Automatic Route — Major 2026 Reform

Nepal's Automatic Route has changed materially.

The earlier system applied to designated industries subject to a total-capital ceiling.

A Gazette notification in February 2026 expanded the permitted industry areas and removed the earlier: NPR 500 million automatic-route ceiling.

The Gazette dated 2082/11/04 specifies 102 industry areas for the automatic route: four energy, thirteen agriculture/forest-product, eight infrastructure, four tourism, nine IT, twenty-three services and forty-one manufacturing areas. Its final notes remove the upper automatic-route investment limit, waive the minimum for the listed IT category and repeal the earlier notification dated 2080/06/15.

Accordingly:

Older guides stating that Automatic Route is limited to NPR 500 million are now outdated.

How Automatic Route Works

DOI describes the Automatic Route as an online approval path where qualifying investors apply through:

IMIS

and receive the FDI approval certificate through the electronic system without the ordinary prior DOI approval process.

Automatic Route does not mean:

• no legal review;

• no company registration;

• no industry registration;

• no tax registration;

• no foreign-exchange compliance.

It changes the FDI approval mechanism, not the rest of the investment lifecycle.

Ordinary DOI Approval

Where the investment/activity does not qualify for Automatic Route and falls within DOI's jurisdiction, the investor submits the prescribed foreign-investment application.

DOI's current foreign-investment page lists principal documents including:

• Project Report;

• Joint Venture Agreement where there is more than one investor;

• citizenship/incorporation documents of the Nepalese party;

• passport/incorporation documents of the foreign party;

• foreign investor bio-data/company profile;

• Financial Credibility Certificate;

• authority letter where applicable.

The required documents depend on the investment structure.

Joint Venture Agreement

Where there is more than one investor, particularly Nepalese and foreign parties, a Joint Venture Agreement should address matters such as:

• investment amount;

• ownership;

• Board representation;

• management;

• reserved matters;

• technology;

• dividend;

• additional financing;

• transfer restrictions;

• deadlock;

• exit;

• dispute resolution.

The commercial JVA should be coordinated with the company's MOA/AOA.

Financial Credibility Certificate

DOI currently requires a Financial Credibility Certificate of the foreign investor from a bank in the investor's home or domiciled country for the ordinary FDI application.

The certificate should correspond with the legal investor named in the application.

FDI Approval Is Not Company Incorporation

The foreign-investment process should distinguish:

FDI approval

Permission to make the foreign investment.

Company incorporation

Creation of the Nepalese legal entity through OCR/CAMIS.

Industry registration

Registration of the approved industrial activity.

Foreign-exchange recording

Bank/NRB recognition of capital actually brought into Nepal.

All four may be necessary.

One Stop Service Centre

The DoI One Stop Service Centre at Tripureshwor coordinates services such as industry registration, visa recommendations, foreign-exchange facilitation and investor assistance. Current FITTA section 17 assigns FDI approval to DoI. Separately assess Investment Board project approval under the Public-Private Partnership and Investment Act, including its estimated-project-cost test; do not substitute the foreign investor’s contribution for that test.

• industry registration;

• visa recommendation;

• foreign-exchange facilitation;

• environmental approval;

• investor assistance.

The OSSC is located at DOI, Tripureshwor, Kathmandu.

Bring Investment Through Banking System

FITTA requires approved foreign investment to be brought into Nepal using the banking system under NRB procedure.

Investment should therefore be traceable from: approved investor

1. → foreign bank
2. Nepal bank
3. foreign currency conversion/account
4. company
5. share-capital records.

Cash/informal transfer should not be used as a substitute for the approved foreign-capital process.

Investment Time Schedule

The FDI application includes an investment implementation/time schedule.

FITTA requires approved investment to be brought within the prescribed period and allows approval to be cancelled where the investor fails to invest within the required timeframe without reasonable cause.

The specific current tranche/timeline requirements should be checked against the current FITTA Rules/DOI approval letter before funds are remitted.

Share Purchase in Existing Company

Where a foreign investor acquires shares in an existing Nepal company, review:

• FDI approval;

• company share-transfer procedure;

• capital-gains tax;

• valuation;

• existing industry registration;

• beneficial ownership;

• DOI recording;

• OCR/CAMIS;

• NRB/bank investment recording.

The ownership-change reporting requirement must be assessed separately from any approval required before the transaction. A post-transfer reporting period does not authorise completion where prior investment, company or sector approval is required. Confirm the current FITTA consolidation and the applicable transaction route before closing.

Technology Transfer

Foreign investment may also involve an approved Technology Transfer Agreement covering areas such as:

• patent;

• design;

• trademark;

• goodwill;

• technical specifications;

• formula/process;

• know-how;

• franchise/user licence;

• management/technical services.

Technology-transfer payments then interact with:

• DOI approval;

• tax/TDS;

• transfer pricing;

• VAT;

• NRB repatriation.

Foreign Loan

A foreign-invested company can potentially obtain a permitted foreign loan, but this is not the same as equity FDI.

Foreign borrowing requires separate NRB treatment and approval/recording under the current foreign investment and foreign loan regulation. NRB's current FX archive shows the fifth amendment to the Foreign Investment and Foreign Loan Management Regulation 2078 issued in late 2082.

Read the foreign-loan guide for the separate approval, recording and repayment requirements.

After FDI Approval

The ordinary project then moves to: Company incorporation → PAN/tax registration → Industry registration → Bank account → Capital inflow → share allotment → foreign-investment recording → commercial operation → annual compliance.

DOI's current new-FDI guidance expressly identifies FDI approval, company incorporation, tax registration and industry registration as the core establishment path.

Investor Exit / Repatriation

FITTA permits foreign investors, after satisfying legal and tax liabilities, to repatriate permitted:

• share-sale proceeds;

• dividend/profit;

• liquidation proceeds;

• royalty/technology-transfer proceeds;

• other authorised investment returns.

NRB then governs the foreign-exchange repatriation process.

Exit documentation should therefore be built from the initial investment date onward.

FDI Approval Checklist

• Identify investor

• Identify proposed activity

• Check FITTA negative list

• Check sector foreign-ownership ceiling

• Check current minimum investment

• Determine Automatic Route eligibility

• Determine DOI/IBN jurisdiction

• Prepare Project Report

• Prepare JVA where required

• Obtain investor identification/incorporation records

• Obtain Financial Credibility Certificate

• Obtain sector recommendation where required

• Submit IMIS/FDI application

• Obtain FDI approval

• Incorporate Nepal company

• Obtain PAN/VAT

• Register industry

• Open bank account

• Bring investment through banking channel

• Complete share allotment

• Complete foreign-investment/NRB recording

• Preserve investment evidence

Common Errors

Using an old NPR 500 million Automatic Route ceiling after the 2026 reform

Assuming Automatic Route means no further registrations

Ignoring the FITTA negative list

Assuming every permitted industry allows 100% foreign ownership

Bringing investment before establishing the required banking/approval trail

Treating a foreign loan as ordinary equity investment

Failing to preserve records needed for future repatriation

Further guidance and practical checks

Foreign investment should be structured around the full investment lifecycle—approval, incorporation, capital inflow, operation, compliance and exit. A transaction that is easy to fund initially can become difficult to repatriate later if the original investment trail is incomplete.