With the emerging economy of Nepal, there is an opportunity to invest in various sectors of Nepal’s economy using convertible foreign currency. If you plan to invest in Nepal but do not know how to bring FDI to Nepal, this blog will guide you through bringing FDI to Nepal.

What is Foreign Direct Investment?

Foreign Direct Investment (FDI) is an investment made by a foreign individual, company or Nepali citizen residing in a foreign country (NRN) into business in another country. For Example, B a foreign citizen invested cash in Nepal to incorporate XYZ company.

In the context of Nepal, foreign citizens or a company can invest in various ways. They are

Foreign Investment by purchasing assets or shares of a company incorporated in Nepal.
Investment maintained by establishing and expanding industry in Nepal.
Investment by Lease Investment
Share investment in foreign currency,
Investment through technology transfer
Investment by establishing a branch
Investment by establishing a venture capital fund
Maintained by establishing and expanding an industry in Nepal.
Re-investment in an industry of dividends derived from foreign currency or shares.
Investment received through the banking channel after issuing securities in a foreign capital market by an industry or company incorporated in Nepal.
Investment made in listed securities through the secondary securities market.
Loan may be borrowed from a foreign financial institution

These are the ways to enter foreign investment in Nepal. However, this blog will guide you through the process of Foreign Direct Investment by establishing the industry and establishing branches.

Governing Authority

Department of Industry: Foreign Investment not exceeding Six Billion Rupees. (NRP 6 Arba)

Investment Board: Foreign Investment exceeding Six Billion Rupees. (NRP more than 6 Arba)

Nepal Rastra Bank (Foreign Exchange Management Department)

Governing Laws

The Foreign Investment and Technology Transfer Act, 2075 (2019)

Foreign Investment and Technology Transfer Regulation, 2077

Industrial Enterprise Act, 2073

Industrial Enterprise Regulation, 2078

Nepal Rastra Bank Foreign Investment and Loan Management by Laws 2078

Public Private Partnership and Investment Act, 2019

Process of Foreign Direct Investment

There are two different processes to bring foreign investment in Nepal to establish Industry in Nepal. The process differs according to Investment Criteria.

Prior Approval From DOI/Investment Board

Automatic Routes

Step 1: Register New User in IMIS

Step 2: Fill the Detail

Step 3: Fill the Application

Step 4: Submission of Physical copy

Step 5: Examination of Submitted Document

Step 6: Approval for Investment

Step 7: Pay Fee

Step 8: Approval certificate

Step 9: Registration of the Company/ Registration of the Industry

Step 10: Information to be given to Nepal Rastra Bank

Step 11: Register in Ward if necessary

Step 12: PAN Registration

Step 13: Open Bank Account in A Grade Nepali Commercial Bank

Step 14: Record your foreign investment with Nepal Rastra Bank (NRB) in the Foreign Exchange Management Department after bringing FDI in Nepal

Step 15: Inform the Ministry of Foreign Affairs of the investment

Step 1: Register New User in IMIS

Step 2: Fill the Detail

Step 3: Upload the document

Step 4: Examination of detail and document

Step 5: Approval Certificate

Step 6: Registration of the Company/Step Registration of the Industry

Step 7: Information to be given to Nepal Rastra Bank

Step 8: Register in Ward if necessary

Step 9: PAN Registration

Step 10: Open Bank Account A Grade Nepali Commercial Bank

Step 11: Record your foreign investment with Nepal Rastra Bank (NRB) in the Foreign Exchange Management Department

Step 12: Inform the Ministry of Foreign Affairs of the investment

What are Automatic Routes?

Automatic Route means the FDI approval route through which investment by foreign investors does not require the prior approval of the Department of Industry (DOI). The investors will automatically get the FDI approval certificate just after submitting the application through the online system imis.doing.gov.np operated by the DOI.

What are the criteria for registering through Automatic Routes?

The criteria are:

The total project cost (equity and Loan) should not exceed Nepalese Rupees 500 million.
Investment amount should be more than 20 million Nepalese rupees for non-IT sector projects.
For the IT sector there is no minimum investment limit.

Your industry/business should not fall under the following category

Industries, except the large industries exporting at least seventy-five percent of their own products, in the sectors of animal husbandry, fisheries, bee-keeping, fruits, vegetables, oilseeds, pulses, dairy business, and other industries or business related to primary products of agriculture.
Cottage and micro industries
Personal service business (hair cutting, tailoring, driving, etc.)
Industries manufacturing arms, ammunition, bullets and shells, gunpowder or explosives, and nuclear, biological, and chemical (N.B.C) weapons; industry producing atomic energy and radioactive materials.
Real estate business (excluding construction industries), retail business, internal courier service, local catering service, moneychanger, remittance service.
Travel agency, guide involved in tourism, trekking and mountaineering guide, rural tourism including homestay.
Business of mass communication media (newspaper, radio, television, and online news) and motion picture in national languages.
Management, accounting engineering, legal consultancy service, language, music, and computer training.
Consultancy services having foreign investment of more than fifty-one percent.

How to register a User Name in the Industry Management Information System (IMIS)?

To create a new user name, visit the DOI website or visit this link https://imis.doind.gov.np/#/auth/register to register the user’s name. Once you click the link you will view the following page:

Make sure you use your phone number and email address. Once you enter all the information, an email will be sent to your email. You need to follow the instructions of email and change the password. Once you change your password you need to log in.

How to fill in details in the IMIS?

Once you see this page click on the icon of FDI New Investment (नयाँ विदेशी लगानी) on the left side of the screen.

Once you click the icon you will see the as shown in the figure.

If your investment lies within the criteria of Automatic Route, then you need to click on Automatic Route for FDI Approval (एकडीआई स्वीकृतिको लागि स्वचालित मार्ग). Once you click Automatic Route for FDI Approval, you will see 2 Icons and choose Automatic Route for New Industry. Click on the icon created in the green icon on the right side of the screen and enter the details.

Other than registering on Automatic Route you need to on Foreign Investment (विदेशी लगानी). Once you click on the New Investment, you will see the following page, click on the icon of New Direct Investment shown in the green icon on the right side of the screen.

What are the details needed to fill in IMIS?

The list of details differs as per the process.

You need to fill in following detail in case of register in Automatic route for FDI:

General Information (सामान्य जानकारी)
Sub- Investment sector Information (उप-लगानी क्षेत्र जानकारी)
Investor Information (लगानीकर्ताको जानकारी)
Investment Information (लगानी सम्बन्धी जानकारी)
Investment Plan (लगानी योजना)

The list of details you need to fill the following detail in case of register other than Automatic route for FDI:

Basic Information (सामान्य जानकारी)
Contact Information (सम्पर्क जानकारी)
Investors (लगानीकर्ताहरू)
Product Service (उत्पादन)
Raw Material (कच्चा पदार्थ)
Human Resources (कर्मचारी विवरण)
Utilities Fuels (उपकरण ईन्धन)
Machinery (मेशिनरी)
Investment (लगानी)
Annual Operation Cost (वार्षिक परिचालन लागत)

What documents are required to submit during the physical visit to the department/board?

The List of Documents are:

Application Form for foreign investment.
Project Proposal – 3 Copy (परियोजना प्रस्ताव) (Each Paged Signed by investors or an authorized person)
Joint Venture Agreement (JVA) (संयक्त लगानि सम्झौता)- 2 Copy (For more than 1 Investor)
Time schedule for bringing in foreign investment in Nepal and investment action plan in the industry - 1/1 copy (to be certified by the representative of the investor/investment company)
Power of Attorney Document if appointed and verifying document of the appointed person.
Copy of Citizenship if Nepali Investor is a Person (Notary Certified).
Decision of BOD, Certificate of Incorporation, Article of Association, and Memorandum of Association if the Nepali Investor is a Company (Notary Certified).
Board Decision regarding investing in Nepal, project proposal, and Joint venture Agreement

Documents if the Investor is a Foreign Person

Passport of the Investor, the Investor's BIO-DATA certified by an investor, and the Original Financial Credibility certificate of the investor issued by a bank (Notary Certified).

Document if the Investor is a Foreign Company

Certificate of Incorporation (Notary certified or Notary Seal)
Memorandum of Association, Article of Association (English Translation) (Notary certified or Notary Seal)
Company profile certified by the company (Including Description of company founders, Share Structure, Objectives, investment details if any done by the company, and other details of the company)
Original Financial Credibility Certificate issued by the bank.

Document if the Investor a Foreign Firm

Registration Certificate of the Firm, a Document revealing the firm as a partnership in case of a partnership firm, the profile of the firm, and the partners’ decision in case of a partnership firm.

Document if the Investor is an international institution

Charter of Institution
Document revealing the identity of the directors.
The profile of the institution’s
Financial Statement related to the investment to be made in Nepal.

Document if the Investor is NRN

Copy of citizenship (Notary certified)
Proof of Nepali citizen residing abroad.

What are the documents required to upload in Automatic Route?

You need to upload the Joint venture agreement (संयक्त लगानि सम्झौता) (For more than 1 Investor) and other documents listed above.

What is the amount paid for a fee?

Rs. 20,000/- should be paid after the approval of Foreign Investment and will be refunded after the operation of the industry.

What are the documents required to submit to Nepal Rastra Bank?

The list of Documents is as follows:

Application Form
Industry Registration Certificate or document showing that the amount being remitted in industry/company is the one established for foreign investment
Copy of approval of foreign investment from foreign investment

Application Sample

What documents are required to submit to Nepal Rastra Bank (NRB) to Record Foreign Investment?

The list of Documents required to submit in NRB to Record Foreign Investment is listed in the file shown below:

File for list of documents required to be submitted in NRB if foreign currency is brought in without prior approval or informing NRB. Here is the link to the file:

List of document to submit in NRB if foreign currency is brought in without prior approval or informing NRB
List of document to submit in NRB for FDI recording. Here is the link to the file:

List of document to submit in NRB for FDI recording

Application sample to submit in NRB to record FDI with prior approval or informing NRB

Application sample to submit in NRB to record FDI without prior approval or informing NRB

How to Register a Company?

To know the process of company registration then read the blog of Company Registration Process in Nepal. To read the blog go through this link: Biznest Bazaar | Company Registration Process in Nepal

How to register the industry and what are the documents required to register Industry?

To know the process of industry registration then read the blog of Industry Registration process in Nepal. To read the blog go through this link: Biznest Bazaar | Industry Registration Process in Nepal

The blog also listed the required documents for the register industry. However, in the case of FDI, you need a copy of the foreign investment approval letter issued by the Foreign Investment Section, DOI.

What documents are required for the PAN Registration Register?

You must apply through the IRD website. You can visit this link (https://ird.gov.np/) to visit the IRD website. After filling out the online application, you must visit the chosen IRD office. The documents required for the PAN Registration Process in Nepal are:

The required documents are:

Copy of the certificate of incorporation
Copy of the memorandum and article of incorporation
Copy of the citizenship certificate (or passport in case of foreign national) who signs the application.
Two passport-size photos of the individual who signs the application
Hand-drawn sketch of the business located in the application.
Power of attorney, if applicable

Frequently Asked Question

Are all foreign investors treated equally?

All investors, whether foreign or local, are treated without discrimination. They are entitled to the same facilities and incentives outlined in the Act and Regulation.

Is there a minimum threshold for foreign investment?

Yes, foreign investors are required to invest a minimum of Rs. twenty million in the project. There is no maximum limit for foreign investment.

Are there any limits on the percentage of equity holding in any project?

Yes, there are restrictions on the percentage of equity holding in certain projects are as follows:

Aeroplane service- 80%
Telephone service- 80%
Consultancy service- Maximum 51%
The casino industry required a local partner to be established

How can an investor invest in an industry?

An investor can invest in an industry either in cash or in a kind such as goods, equipment, or machinery. For cash investments, the foreign investor must use a convertible foreign currency publicly traded by the Nepal Rastra Bank (Central Bank of Nepal). The investment must be routed through the appropriate banking channels and directly transferred to the company's account.

For investments in kind, particularly in the form of machinery and equipment, the investor must obtain prior approval from the Department of Industry.

Do industries need any additional approvals from the Department of Industries after registration?

Yes, industries are required to obtain further approvals from the Department of Industries even after registration of industry in the following case.:

Change in the company name
Change of the owner/investor of the company
Change in production capacity
Change in type of product
Change in location
Change in Electricity capacity
Approve foreign investment in the existing industry through
- Share Purchase Agreement
- Loan Agreement
- Technology transfer Agreement
Extension of operation date or license of industries
Closing of industries/Cancellation of license of Industries

You must submit the application form and the required documents to obtain approval.

How long does the FDI approval typically take in Nepal?

Upon submission of a complete application and all required documents, the authority responsible for approving foreign investments must approve the foreign investment within seven days.

Is there any limitation on bringing FDI after the approval of the concerned authority?

Yes, there is a limitation on bringing FDI after the approval of the concerned authority. They are as follow:

25 %, if the approved FDI is as much as the minimum threshold (in one year)
15 %, if the approved FDI is more than the minimum threshold Up to 25 Crore (in one year)
10%, if the approved FDI is more than 25 crores up to 1 Arba.
5%, if the approved FDI s more than 1 Arba.

However, foreign investors must invest at least 70% of the approved investment amount in the industry or business before commercial production or operation and the remaining 30% within 2 Years of the industry or commercial production's operation.

Disclaimer: The information provided here is for informational purposes only and should not be considered as legal advice. Please consult with a qualified legal expert for professional legal opinions. You can also consult with our professionals for further assistance.

Process of Foreign Direct Investment (FDI) in Nepal

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