Minimum investment requirement Nepal 2026

Minimum Investment Requirement Nepal 2026

The minimum investment requirement for foreign direct investment in Nepal in 2026 is a central regulatory condition under the Foreign Investment and Technology Transfer Act, 2019 (FITTA) and related government policies. It determines the minimum capital threshold that a foreign investor must commit and inject into Nepal for the investment to be legally recognized as FDI. This requirement applies at the entry stage and directly affects approval, company registration, and subsequent operational compliance.

Statutory Minimum Investment Threshold

As per prevailing law and government policy in 2026, the minimum foreign investment requirement in Nepal is:

• NPR 20 million per investor per project

This threshold applies uniformly across most sectors unless specifically exempted by the Government of Nepal. The investment must be made in convertible foreign currency and remitted through formal banking channels in Nepal.

The threshold is applicable in the following cases:

• Establishment of a new company with foreign equity
• Investment in an existing Nepalese company
• Joint venture arrangements between foreign and domestic investors
• Acquisition of shares in an existing enterprise

The requirement ensures that foreign investment contributes to capital formation, employment generation, and industrial development rather than small-scale or informal activities.

Legal Basis of Minimum Investment Requirement

The minimum investment requirement is not stated as a fixed amount directly in FITTA, 2019 but is prescribed through government notifications and policy decisions under the authority of the Act.

Relevant Legal Provisions

• Foreign Investment and Technology Transfer Act, 2019
• Industrial Enterprises Act, 2020
• Foreign Exchange (Regulation) Act, 1962
• Government of Nepal policy decisions and notifications

FITTA authorizes the Government of Nepal to determine minimum thresholds and regulate foreign investment entry conditions. Nepal Rastra Bank enforces compliance through foreign exchange regulations.

Sector-Wise Applicability of Minimum Investment

The NPR 20 million threshold applies broadly, but sector-specific flexibility exists in certain areas.

1. General Industries

Most industries such as manufacturing, tourism, infrastructure, energy, and services require compliance with the minimum threshold.

• Mandatory minimum capital of NPR 20 million
• Applies to both wholly foreign-owned companies and joint ventures
• Required at the time of investment approval

2. Information Technology and Digital Services

Nepal has introduced policy flexibility to promote IT-based industries.

• In certain IT and software-related sectors, minimum investment requirement may be waived or reduced
• Automatic approval routes may apply
• Focus on encouraging startups and innovation

This exception reflects Nepal’s policy to develop a digital economy and attract knowledge-based investment.

3. Technology Transfer Agreements

Technology transfer arrangements are treated differently from equity investment.

• No fixed minimum capital requirement
• Payment may be structured as royalty, licensing fee, or service fee
• Must be approved under FITTA

These agreements focus on knowledge and skill transfer rather than capital investment.

4. Foreign Loan Investment

Foreign loans are not treated as equity investment.

• No minimum threshold requirement
• Must be approved by Nepal Rastra Bank
• Subject to repayment terms and foreign exchange regulations

Loan investment supports financing but does not substitute equity requirements.

Application of Minimum Investment in Different Structures

The minimum investment requirement varies depending on the investment structure.

Equity Investment

• Minimum NPR 20 million must be invested as share capital
• Applicable for wholly foreign-owned subsidiaries and joint ventures
• Capital must be reflected in company records

Joint Venture Investment

• Foreign partner must contribute at least NPR 20 million
• Domestic partner may contribute separately
• Equity ratio must be clearly defined

Share Acquisition

• Purchase value of shares must meet minimum threshold
• Applicable when entering an existing Nepalese company
• Requires approval under FITTA

Capital Injection Requirements

Foreign investors must comply with strict capital injection rules to ensure that investment is legally recognized.

Key Requirements

• Investment must be brought in convertible foreign currency
• Funds must be transferred through authorized banking channels
• Nepal Rastra Bank must record the transaction
• Investor must obtain a Foreign Inward Remittance Certificate (FIRC)

The capital must be deposited into a Nepalese bank account opened in the name of the company. This ensures transparency and traceability of funds.

Timeline for Investment Injection

The law requires foreign investors to inject capital within a specified timeframe after obtaining approval.

General Timeline

• Initial capital injection within one year of approval
• Full investment completion within project implementation schedule

Failure to comply with the timeline may result in:

• Cancellation of investment approval
• Restriction on business operation
• Difficulty in repatriation of profits

Authorities may grant extensions in justified cases.

Proof and Verification of Investment

Foreign investment must be verified and documented at each stage.

Required Evidence

• Bank remittance slip
• Foreign Inward Remittance Certificate
• Share allotment records
• Company financial statements

Nepal Rastra Bank and the Department of Industry verify these documents to ensure compliance with foreign exchange and investment laws.

Without proper documentation, the investment may not qualify for legal protection or repatriation rights.

No Maximum Limit on Foreign Investment

Nepal follows a liberal policy regarding the upper limit of foreign investment.

• No maximum cap on investment amount in most sectors
• 100% foreign ownership allowed in many industries
• Sector-specific restrictions may apply

This policy allows investors to scale operations based on project requirements.

Policy Objectives Behind Minimum Investment Requirement

The minimum investment threshold serves several regulatory and economic purposes.

• Ensures substantial capital inflow into the economy
• Prevents fragmented and small-scale foreign investments
• Promotes industrial development and employment generation
• Facilitates efficient regulatory monitoring

The policy balances openness to foreign investors with national economic priorities.

Practical Challenges Related to Minimum Investment

Foreign investors may face certain practical issues while complying with the minimum investment requirement.

• Difficulty in remitting funds due to foreign exchange procedures
• Delays in bank processing and documentation
• Regulatory interpretation differences
• Exchange rate fluctuations affecting investment value

Proper planning and professional assistance can reduce these challenges.

Compliance Obligations Linked to Minimum Investment

Meeting the minimum investment requirement is not a one-time obligation. It has ongoing compliance implications.

• Investment must be reflected in company accounts
• Share capital must match approved amount
• Financial statements must disclose foreign investment
• Compliance required for repatriation approval

Failure to maintain compliance may affect legal recognition and investor rights.

FAQs on Minimum Investment Requirement Nepal 2026

Is NPR 20 million mandatory for all foreign investors?

Yes, NPR 20 million is the standard minimum investment requirement for most sectors. However, certain IT and technology-based industries may have exemptions or relaxed requirements based on government policy.

Can the investment be made in installments?

Yes, the investment can be made in phases. However, initial capital must be injected within one year of approval, and the full investment must be completed within the approved project timeline.

Does the minimum investment apply to existing companies?

Yes, foreign investors entering an existing Nepalese company must invest at least NPR 20 million, either through share purchase or capital injection.

Is loan investment counted as minimum investment?

No, foreign loans are not counted as equity investment. The minimum threshold applies only to equity investment and share capital.

What happens if the investment is below NPR 20 million?

If the investment is below the minimum threshold, it will not qualify as foreign direct investment under Nepalese law and may not receive approval from authorities.

Conclusion

The minimum investment requirement in Nepal for 2026 is set at NPR 20 million, forming a core regulatory condition for foreign direct investment. It applies across most sectors and ensures that foreign investment contributes meaningfully to economic development. While certain sectors such as IT enjoy flexibility, investors must comply with capital injection rules, timelines, and documentation requirements to secure legal recognition and investment protection in Nepal.