Two rules decide whether a foreign investment into Nepal is possible at all — how much each investor must bring, and what the company is allowed to do. Both moved in the last eighteen months.

Prepared by Nishant Marasini and team · Position stated as at 17 August 2026

Most Nepal deals that collapse do not collapse at the Department of Industry. They collapse on a spreadsheet three weeks earlier, when someone divides the agreed equity cheque across four investors and quietly puts two of them below the statutory floor — or when a business plan that reads beautifully in English turns out to describe an activity foreign capital is not allowed to carry on at all.

Nepal has spent several years courting foreign capital: three investment summits, an online approval window, and a steady run of gazette notices loosening entry conditions. Open for business, though, is not open everywhere. The Foreign Investment and Technology Transfer Act, 2075 (2019) — FITTA — draws two lines that every prospective investor has to clear before anything else is worth discussing. This briefing sets out where both lines sit today, and where they tend to cut.

1. The floor is per investor, not per company

The minimum is NPR 20,000,000 — two crore — for each foreign investor subscribing to shares in a Nepali company. It is not a per-company figure, and this is the single most expensive misreading we see. A consortium of four foreign shareholders is looking at eight crore of committed foreign equity as an entry condition, not two. A strategic partner who wants a token five percent alongside a lead investor cannot come in for a nominal amount at incorporation; either the cheque grows, or that shareholder stays outside the cap table until a later, structured entry.

Worth knowing where the number lives: the threshold is fixed by notice in the Nepal Gazette under FITTA rather than written into the Act itself. That is why it has moved twice in recent memory — from NPR 50 million down to the present NPR 20 million — and why it can move again without any amendment to the statute. A number that changes by notice is a number you verify on the day you structure, not the day you quote.

A separate bracket may apply to Non-Resident Nepalis and certain other categories of investor, and NRN investment can also travel under its own legislation rather than under FITTA. If your client holds an NRN card, confirm the applicable route and the applicable minimum before the funding schedule is agreed — the answer changes the whole capital plan.

Approval is not injection

Clearing the threshold on paper is only half of it. Capital has to be brought in within the timeline set under the Foreign Investment and Technology Transfer Regulations, through the banking channel, and recorded with Nepal Rastra Bank. Inflow that was never properly recorded is the most common reason a profitable company finds, years later, that it cannot repatriate. The compliance you skip at entry is the compliance you pay for at exit.

2. The IT carve-out — Nepal's clearest policy signal

If you want to know where the government wants growth to come from, read this exemption. A Ministry of Industry, Commerce and Supplies notice dated 2080/06/15 (2 October 2023) removed the minimum threshold altogether for a defined list of technology-based industries. For a genuinely early-stage venture, that is the difference between a two-crore entry ticket and none.

The list is maintained, not frozen. Web hosting joined it only in February 2026, which tells you two things: the ministry is willing to extend the carve-out as the sector matures, and an activity that is outside the list this quarter may be inside it next. It also means the exemption is read against the listed activity, not against a self-description. "We are a technology company" is a pitch; "software development" is a classification, and the classification is what the Department of Industry registers.

3. What changed in the last eighteen months

Three developments matter more than anything else on this page, because they postdate most of the guidance still circulating online.

The automatic route lost its ceiling (February 2026). The online window opened in October 2023 with an upper limit of NPR 500 million per approval. The gazette notice of 16 February 2026 — the same notice that added web hosting — repealed the earlier notification and removed that ceiling, extending automatic approval to a schedule of around 102 activities across energy, agriculture and forest products, manufacturing, services, infrastructure, IT and tourism. Applications made through the Department's online system are cleared by email immediately or within a matter of working days. The general minimum of two crore is unchanged; the IT exemption continues to sit alongside it.

Share transfers now need approval before, not after (March 2025). The Act amending several investment-related statutes, authenticated on 31 March 2025, requires a foreign investor to obtain prior approval from the Department of Industry before selling or transferring shares to a domestic party. The old position — complete the transaction, then register the change within thirty days — is gone. If you are drafting an exit, that regulatory consent is now a condition precedent with a real timeline attached, and it belongs in the SPA and the escrow mechanics rather than in a closing checklist.

Technology transfer was widened. The same amendment expanded what may be structured as technology transfer — management and technical services, IT, marketing, finance, engineering, outsourcing and digital data processing among them — and opened project lending from foreign financial institutions more broadly. For groups that cannot or will not put the whole commitment into equity, this reopens a funding mix conversation that was previously quite narrow.

4. The negative list

Every investment regime reserves something. Nepal's reservations follow a recognisable logic — protect livelihoods at the base of the economy, keep security-sensitive manufacture in domestic hands, and hold consumer-facing intermediation local. Grouped by that logic, the restricted sectors are:

Three distinctions that decide files

• "Internal" courier, not all courier. The restriction is on domestic courier service. International courier, freight forwarding and logistics are a different conversation.
• Retail, and the international chain. Retail is on the list, but retail conducted as an international chain present in more than two countries has been treated as permissible in practice. Confirm the current position with the Department before it becomes a term sheet assumption.
• Real estate excludes construction. Trading in land and buildings is closed; the construction industry itself is not.

5. Capped, not closed

A second group of sectors admits foreign capital up to a ceiling. Structuring here is not about eligibility but about control, and the two are easily confused.

Note how the consultancy entries interact. Management, accounting, engineering and legal consultancy — and language, music and computer training — sit on the closed list outright. Other consultancy services are open, but only up to 51% foreign holding. Read together, the message is that Nepal will take foreign capital into advisory businesses, but not foreign control of the regulated professions.

6. Where these rules actually break deals

The arithmetic nobody checks twice

Threshold × number of foreign shareholders, before anything else. Then test it against the shareholding percentages the parties have already agreed: a shareholder who must bring two crore but was promised four percent of the company has, by implication, fixed the company's valuation at fifty crore. That is a real constraint on the cap table, and it is better discovered now than in the second round.

Being too small to qualify

Because cottage and small industries are closed, the scale classification under the Industrial Enterprises Act is doing quiet work in the background. A modest manufacturing proposal can be refused not because the sector is restricted but because the fixed capital puts it in a class reserved for domestic investors. Classification should be settled before the project report is finalised, not adjusted afterwards to fit.

51% is a governance problem, not a percentage

An investor capped at bare majority holds control on paper and very little of it in practice unless the constitutional documents say otherwise. Reserved matters, board composition, quorum, deadlock and the valuation mechanic on a put or call are where the economics of a capped sector are actually decided. Where the ceiling binds, the shareholders' agreement carries the weight the shareholding cannot.

Exit is now sequenced differently

With prior Department approval required for a transfer to a domestic buyer, the exit timeline lengthens and the valuation has to survive a review by someone who is not a party to the deal. Share valuation on exit from an unlisted Nepali company deserves a defensible, documented basis — prepared with the transfer application in view, not reverse-engineered from a price the parties have already shaken hands on.

Repatriation follows the paper trail

Dividends, interest, royalties and sale proceeds leave the country on the strength of recorded inflow, audited financial statements, tax clearance and the original approvals. Every one of those is created at entry. A clean file is not administrative tidiness; it is the mechanism by which the money gets out.

7. Before the term sheet is signed

1. Classify the activity against the negative list and the capped list — by registered activity, not by business description.
2. Multiply the threshold by the number of foreign shareholders and reconcile it to the agreed shareholding percentages.
3. Check whether the activity sits on the IT exemption list or the automatic route schedule; both are updated by gazette notice.
4. Confirm the applicable bracket for any NRN or specially categorised investor before the funding schedule is fixed.
5. Fix the funding mix — equity, shareholder loan, technology transfer — with repatriation and withholding tax modelled at the same time, not later.
6. Write the transfer-approval requirement into the exit clauses, with a realistic timeline and a valuation basis you would be content to defend.

Both of the questions this briefing answers are cheap to answer early and expensive to answer late. Restructuring an ownership model after term sheets are signed costs goodwill with the counterparty as well as fees. Confirm the threshold and the sector classification before the investment vehicle is chosen — never after.

Planning an investment into Nepal?

We advise foreign investors and Nepali promoters on FITTA eligibility, Department of Industry and Nepal Rastra Bank approvals, capital structuring, share valuation and repatriation planning — from first structuring memo through to exit.

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This article is general information current as at 17 August 2026 and is not advice on any specific transaction. Thresholds, exemption lists and sectoral caps in Nepal are set and revised by notice in the Nepal Gazette and can change without amendment to the underlying Act; the position should be verified against the current notice before it is relied upon. No professional relationship is created by reading this material.

Gazette chronology

2 Oct 2023 · 2080/06/15Automatic route opened, capped at NPR 500m. Minimum threshold removed for listed IT industries.

28 Apr 2024Ordinance amendments to FITTA; ride-sharing brought in at a 70% ceiling.

31 Mar 2025Amending Act: prior DoI approval required for share transfer to domestic parties; technology transfer scope widened.

16 Feb 2026 · 2082/11/04Automatic route ceiling repealed, c.102 activities covered. Web hosting added to the threshold exemption list.