Legal Framework
The Foreign Investment and Technology Transfer Act, 2075 (2019), known as FITTA, is the primary legislation for governing foreign investment in Nepal. It is implemented alongside the Industrial Enterprises Act, 2076 (2020), the Companies Act, 2063 (2006), foreign exchange legislation and sector-specific laws.
Investors must confirm how their proposed business is classified under Nepalese law, whether their investment meets the applicable minimum threshold, and the extent of foreign ownership allowed.
What is the minimum foreign investment threshold?
The general minimum foreign investment threshold is NPR 20 million per foreign investor. The threshold is related with the foreign investor’s investment in the project.
The approved investment must be brought into Nepal in accordance with the applicable timetable, approval conditions and banking requirements.
The IT exception: when does the minimum threshold not apply?
The Gazette notification dated 16 February 2026 provides that the minimum threshold does not apply when foreign investment in the specified information technology industries is approved through the automatic route.
The listed activities include:
- Technology parks, IT parks and biotech parks;
- Software development, data processing and digital mapping;
- Business process outsourcing (BPO) and knowledge process outsourcing (KPO);
- Data centres, data mining and cloud computing; and
- Web portals, web design services and web hosting.
This allows eligible technology businesses to seek foreign investment below NPR 20 million. It does not exempt them from company incorporation, industry registration, tax compliance, foreign exchange requirements or any applicable operating licences.
Which sectors are restricted?
The principal restrictions are outlined below.
Agriculture and primary production
Primary agricultural activities, including animal and poultry farming, fisheries, beekeeping, fruits, vegetables, oilseeds, pulses and dairy, are subject to restrictions.
The Schedule contains an exception referring to large industries, agricultural technology and mechanisation, with a condition of exporting at least 75% of their own production.
Micro and cottage enterprises and personal services
Micro and cottage enterprises are restricted. The statutory classification matters: a business should not be treated as prohibited merely because it is informally described as “small.” Personal service businesses, including hair cutting, tailoring and driving-related services, are also restricted.
Trading, property and specified services
The restricted list includes retail trade, real estate purchase and sale businesses (excluding construction industries), internal courier services, local catering, money-changing and remittance services.
Tourism and media
Travel agencies, tourism guides, trekking and mountaineering guides, and rural tourism including homestays are restricted. This does not mean all tourism businesses are closed: hotels and other eligible tourism industries require a separate assessment.
Mass communication businesses, including newspapers, radio, television and online news, and motion pictures in the national language are also included in the restricted Schedule.
Professional services and training
The Schedule separately restricts management, accounting, engineering and legal consultancy, as well as language, music and computer training.
It also restricts consultancy services with foreign investment exceeding 51%. 51% limit should therefore not be read as general permission for foreign investment in every professional consultancy business. The precise services proposed must first be checked against the specifically prohibited categories.
Sensitive industries
Industries producing arms, ammunition, gunpowder, explosives, nuclear, biological or chemical weapons, atomic energy and radioactive materials are restricted.
Activities subject to foreign ownership caps
Some activities permit foreign participation within a specified limit. The following limits appear in FITTA’s amended Schedule:
| Activity | Maximum foreign investment percentage |
|---|---|
| Otherwise eligible consultancy services | 51% |
| Ride-sharing | 70% |
| International airline services | 80% |
| Domestic airline services | 49% |
| Aviation training institutions | 95% |
| Aviation repair and maintenance institutions | 95% |
Sector regulators may impose additional licensing, capital, technical and operational requirements. Other regulated sectors, including telecommunications and financial services, also require a review of their respective legal frameworks.
This review is particularly useful for businesses combining several activities, such as manufacturing and retail, software and training, or technology and regulated financial services.
Frequently Asked Questions
1. How much must a foreign investor invest in Nepal?
The general minimum is NPR 20 million per foreign investor. Specified IT industries approved through the automatic route are exempt from this minimum foreign investment cap.
2. Is NPR 20 million a registration fee?
No. It is an investment threshold for foreign investors in Nepal. Registration charges, professional fees, licensing costs and operating expenses are separate.
3. Can two foreign investors invest NPR 10 million each?
Each foreign investor is generally required to meet the minimum investment threshold of NPR 20 million. Accordingly, contributions of NPR 10 million each by two foreign investors would not ordinarily satisfy this requirement, unless an applicable exemption permits investment below the prescribed threshold.
4. Can a foreign investor own 100% of a Nepali company?
Yes, in an eligible industry where no ownership cap or mandatory local participation requirement applies. FITTA permits investment individually or jointly. The business must still satisfy the investment threshold and applicable approvals.
5. Can an IT startup receive investment below NPR 20 million?
Yes, if its activities fall within the specified IT categories and the investment is approved through the automatic route. The exemption does not cover every business that uses an app, website or computer.
6. Can a foreign investor open a retail shop or an online store?
Retail trade is included in FITTA’s restricted Schedule. Selling online does not automatically change that classification. A proposed marketplace or technology-services model needs a separate assessment of who sells the goods, receives payments and earns revenue.
7. Can foreigners invest in agriculture?
Certain qualifying activities may fall within the Schedule’s exception for large industries, agricultural technology and mechanisation, which includes an export condition. Ordinary primary agricultural production should not be assumed to be open. The particular project requires assessment against the amended wording.
8. Does the 51% consultancy cap allow foreign investment in legal or engineering consultancy?
Not by itself. Management, accounting, engineering and legal consultancy are separately restricted. The 51% cap applies to otherwise eligible consultancy services and does not override those specific restrictions.
9. Can I acquire shares in an existing Nepali company instead of starting a new one?
FITTA recognises investment through purchasing shares or assets of an existing industry. However, acquisition does not remove sector restrictions, ownership limits or applicable approval requirements.
10. Does foreign investment approval allow the business to begin operating immediately?
No. Company incorporation, industry registration, tax registration and relevant sector or environmental approvals may still be required. Automatic-route approval simplifies the foreign investment approval process; it does not replace all operating permissions.
How Alpha Law Associates can assist
Alpha Law Associates assists investors with sector eligibility assessments, foreign investment applications, company incorporation, joint venture and shareholder agreements, share acquisitions, technology-transfer arrangements and regulatory compliance. An early review helps investors select a workable structure and identify the approvals required before committing funds.
This article provides general information on Nepal’s foreign investment framework as reviewed on 30 September 2026. Advice on a particular investment should take account of its activities, ownership structure and applicable regulatory requirements.