An Overview of Foreign Investment and Technology Transfer Act (FITTA), 2019

Sep 21, 2023

FDI has always been acting as a catalyst to bring an inflow of external resources, introducing modern techniques of management, providing access to new technologies and creating employment opportunities in every host country. Keeping this idea in the center, Nepal has enacted Foreign Investment and Technology Transfer Act 2019 (2075) (“FITTA”) to reform the existing legal framework of Foreign Investment, which was inadequate and to create an investment-friendly environment to attract FDIs into the country. 

Foreign Investor:

Foreign investors are foreign persons, firms, companies, Non-resident Nepalese or foreign government or international organizations or other similar organizations, who transfer foreign investments. This subsidy also indicates the ultimate beneficiary of a foreign investor if the investor is an institutional foreign investor.

Foreign Investment:

The investment made by the foreign investors in various Industries or companies in the following form (medium) are considered as foreign Investment;

 Investment Pattern

Nepal encourages foreign investment in both ways either as a joint venture operation with Nepalese investors or as a 100 percent foreign-owned enterprise.

Investment Cap:

The amount of foreign investment maximum is not determined. However, the maximum percentage of foreign investment in a form of joint venture may be prescribed in the following sectors;

There is a minimum investment threshold in the foreign investment, which is NPR 50 million per investor.

Investment Approval Authorities

The Act requires obtaining Investment approval before making any investment in cash or in-kind (Technology or in a form of plant and machinery). The authority could be the Department of Industry (DoI) or Investment Board of Nepal (IBN) based on the scale of investment.

 Investment Approving Authorities

Post-Approval Notification

After obtaining the Investment approval and receiving fund in Nepal as investment, the company receiving the foreign investment will have to inform Nepal Rastra Bank (NRB), including a written declaration that the amount of such investment has been sourced to a legitimate origin and request for recording of such investment with the NRB. NRB will then record such investment and issue a confirmation certificate to complete the process for investment approval.

Scheduled Time to Bring Foreign Investment

Foreign investor would need to bring the approved foreign investment within a prescribed time limit of 2 years (maximum depending on the investment schedule submitted by the foreign investor). Failure to bring such investment without any reasonable cause may lead to the cancellation of foreign investment approval.


Upon paying all government taxes, a foreign investor investing in foreign currency shall be entitled to repatriate the following amounts in the same currency of investment or other convertible foreign currency with NRB approval.

Change in the Ownership

In case of any change in the ownership structure of any company with foreign investment as a result of the transfer of its shares, assets or financial instruments within or outside Nepal, the concerned company will have to apply and record the transaction in the concerned authority approving foreign investment within thirty (30) days.

Dispute Settlement

The parties are free under the existing foreign investment law to agree to the settlement of any dispute. However, the following are the basic mechanisms prescribed to resolve the disputes;

Investment Gateway

Under the FITTA a single-gateway (One-Stop Service Center) has been created to provide all investment-related services under one roof. The NRB approval is routed through this unit.

To Note

Foreign investment will be allowed in all industries (as defined in the Industrial Enterprises Act) but the following sectors.

1 Poultry farming, fisheries, and bee-keeping, fruits, vegetable, oil seeds,
2 Cottage and Small industry
3 Personal Service Business (Business such as Hair Cutting, Beauty Parlor, Tailoring, Driving Training, etc.)
4 Arms and Ammunitions, bullets and shell, gun power, explosive materials, nuclear, biological and chemical (N.B.C.) weapon producing industry, industry producing atomic energy, industry producing radioactive materials
5. Real estate business (Excluding Construction Industries.), small business, Internal Courier Service, Local Catering Service, Money Changer, Remittance Service
6. Travel Agency, Guide, Trekking and Mountaineering Guide, Homestay including Rural Tourism
7. The business of mass communication media (newspaper, radio, television, and online news) and  motion picture of the national language;
8. Management, account, engineering, legal consultancy service and language training, music training, computer training; and
9. Consultancy service having a foreign investment of more than 51 percent


 #FDI #Investment #Investor #Nepal  #DoI  #NRB  #IBN

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