Foreign Trade and Investment in Nepal
The Government of Nepal has identified Foreign Investment Promotion as an important strategy for the development and promotion of industrial activities in Nepal. Important measures under these policy reforms include simplification of administrative procedures, trade liberalization, tariff rationalization, tax reform, financial sector reform with full convertibility of Nepalese rupees in current account. The Government has been making every effort to attract foreign investment in the country as a strong engine of its economic development.
Why invest in Nepal?
  • Overall policies and laws conducive to foreign investments
  • Liberal tax policy for foreign investments
  • Investment-friendly legal provisions, eg. labour laws, procedures of settlement of disputes, liquidation and other pertaining legal matters made to meet the international standard and friendly to foreign investment
  • Bonded warehouse & duty- draw-back facilities on export
  • Full repatriation of profits, dividends, principals and interest on foreign loan allowed
  • No private industries or their properties to be nationalized
  • Friendly and diligent workforce readily available in the labour market
  • Availability of natural resources, specially in the hydroelectricity sector, to be tapped for processing and exporting
  • India and China, the two most populous global markets, as immediate neighbours providing ample possibilities for export of goods and services
  • Provision of resident/business visas for investors
  • Nepalese people willing to warmly welcome foreign friends to come and stay in Nepal
Potential Industries of Foreign Investment

Energy: Hydro Power project; Solar/wind energyTourism: Hotel; Resort; Golf courses; Air services; Hot-air ballooning; Cable car; Amusement parkManufacturing: Light engineering industries; Dry cell battery; Medical instruments; Pollution preventing accessories; Paper; Cement; Jute; Leather Products; Aluminum industry; Chemical/organic fertilizer and pesticides/insecticides

Agriculture and forestry: Herb/food/fruit/vegetable processing; Mushroom; Dairy; Floriculture; Sugar; Animal feed

Mineral: Cement; Petroleum/natural gas exploration/production; Construction materials (clay, sand gravel, boulder, marble, stone); Exploration/processing of quartz; Glass and mica production

Service: Freight forwarding; Nursing home; Domestic air services; Computer software and data entry; Photo scanning and off-set printing

Textile: Spinning and integrated Textile mill; Sericulture and silk production

Forms of Foreign Investment
  • Foreign loan and capital
  • Reinvestment of foreign investment earning
  • Patent of foreign products
  • Use of foreign owned trademarks and Investment in share (equity)
Forms of Technology Transfer
  • Use of any technological right, specialization, formula, process, technical know-how of foreign origin.
  • Use of any trademark of foreign origin.
  • Use of any foreign technical consultancy management & marketing services.
  • Technology transfer is allowed in all type of industries.
Procedural Arrangement and Permission
Foreign investor wishing to invest in Nepal as 100 percent ownership in industries or as joint venture investment are required to make an application to the Department of Industry with a detailed feasibility report. The department of Industry evaluates the project proposed and grants permission for projects with fixed assets up to 500 million rupees.In case of projects with fixed assets exceeding 500 million rupees the Department of Industry evaluates the project proposed and submits its recommendation to the Industrial Promotion Board for approval.

Investors need to fulfill the procedures of the Environmental Impact Assessment (EIA) and Initial Environmental Examination (IEE) as required by the Environmental Protection Act, 1997. To find out details on how to complete EIA and IEE formalities, please contact the Environment Ministry (contact details given below).

The Government of Nepal reserves the monopoly of activities economic or otherwise in areas such as Cottage industries, Arms & Ammunition industries, Atomic Energy, Real Estate Business, Security printing, Currency & Coinage, Retail business, Travel & Trekking Agencies, Consulting services etc.

Products Banned for Exports
Archaeological: Coins of archaeological value; Idols of gods and goddesses, palm leaf inscription (Tad Patra), plant leaf inscription (Bhojpatra); Scroll (Thanka paintings) of historical importanceWildlife: Wild animals and parts; Musk; Snakeskin; lizard skin

Drugs: Marijuana, opium, hashish (as defined in the Single Convention on Narcotics, 1961)

Explosive: Materials used in the production of arms and ammunition

Raw Materials: Raw hides and skin (including dry salted); Raw wool; All imported raw materials, parts and capital goods

Others: Mamira; Log and timber

Products under Quantitative Restrictions
Products as notified by the Government in the Nepal Gazette from time to time.
Products Allowed for Free Exports
All products are free for export other than banned ones and which are under quantitative restrictions.

Note:

  1. The Ministry of Commerce will decide from time to time the goods to be included under the category of quantitative restrictions and volume of their exports.
  2. The Ministry of Commerce will interpret as to which of the products listed above will be permitted to export.