Understand Nepal's foreign investment negative list, prohibited activities, ownership caps and the sector-screening checks foreign investors should complete before applying.
Quick answer
Nepal restricts foreign investment in activities listed in FITTA's negative list, including specified primary agriculture, micro and cottage enterprises, personal services, arms and sensitive materials, real estate business and certain cultural or local services. Other sectors allow investment only up to an ownership cap or with a local partner.
Nepal permits foreign investment in many industries, but the Foreign Investment and Technology Transfer Act, 2075 contains a schedule of industries and businesses that are not open to foreign investment. Other sectors may permit investment only up to an ownership cap, with a local partner or after approval from a specialist regulator.
The legal question is activity-specific. A company name, broad industry category or local partner's existing registration does not establish eligibility. Investors should screen every proposed product, service and revenue stream before committing funds or signing final transaction documents.
The negative list is the statutory schedule associated with FITTA that identifies industries or businesses in which foreign investment is restricted. The list protects specified small-scale, personal-service, primary-production, cultural, security-sensitive and other reserved activities.
The schedule, related laws and government notices can be amended. The current legal text and responsible regulator's practice should therefore be checked rather than relying solely on an older online article or a generic business description.
The FITTA schedule includes specified primary agricultural activities, including livestock farming, fisheries, beekeeping, fruits, vegetables, oilseeds, pulses, dairy business and other areas of primary agricultural production.
This restriction does not mean every activity connected with agriculture is necessarily closed. Processing, technology, logistics, equipment, commercial scale and value addition may require a different classification analysis. The proposed activity should be mapped precisely against the current industrial classification and statutory wording.
Micro and cottage enterprises identified by the applicable law are restricted for foreign investment. DOI guidance provides examples of traditional and small-scale activities associated with the cottage-industry category.
Classification depends on the actual production method, machinery, fixed capital and applicable industrial law. A larger mechanised manufacturing project should not be assumed restricted merely because it produces a traditional product, and a small reserved activity should not be disguised through broad objectives.
Specified personal services such as hair cutting, beauty parlour, tailoring and driving training appear in official DOI guidance as activities not granted permission for foreign investment.
Investors should distinguish a reserved local personal service from a larger technology, education, manufacturing or franchise model. Branding an activity as a platform or consultancy does not change its legal substance if the company actually delivers the restricted service.
Industries involving arms and ammunition, gunpowder, explosives, atomic energy, radioactive materials and nuclear, biological or chemical weapons are restricted. These activities also engage national security and specialised regulatory laws.
Do not include sensitive objectives speculatively in the memorandum or project report. Any related technology, dual-use material or security activity requires specialist regulatory analysis beyond ordinary FDI approval.
Official DOI guidance lists real estate business as restricted while distinguishing construction industries. This distinction is important: speculative dealing or development rights in land are not automatically treated the same as an eligible construction, infrastructure, hotel or industrial project.
Foreign ownership of land, project land use and a Nepali company's acquisition of immovable property are separate legal questions. An eligible operating project may still need land, planning, environmental and local approvals.
Official guidance identifies film industries in national and other recognised languages among restricted activities. Media, broadcasting, publishing, cultural production and digital-content models may also involve separate constitutional, communications or sector restrictions.
The distribution platform, production language, editorial control, licence and ownership structure must be reviewed. Do not assume that online delivery removes the underlying sector restriction.
Security printing and the production of banknotes and coins are restricted due to their sovereign and security-sensitive nature. Ordinary commercial printing, packaging or software services require a separate classification and should not be confused with security printing.
The project report and objectives should describe the exact product and customer market so the authority can distinguish an open commercial activity from a reserved sensitive one.
Official DOI guidance lists retail business as restricted, subject to an exception for qualifying international chain retail business operating in at least two countries. The legal conditions applicable to the exception, investment, network and local operations must be verified from the current law and government practice.
Wholesale, distribution, e-commerce marketplace, direct retail and franchise models are not interchangeable labels. Analyse who buys, who sells, who owns inventory, how revenue is earned and which entity contracts with the customer.
The current DOI foreign-investment page also identifies bidi production subject to an export exception, internal courier service, processing of food grains on rent, local catering services and rural tourism among activities not granted permission.
Each term must be read in its statutory and regulatory context. A logistics, hospitality, food-processing or tourism project may be open or restricted depending on the exact activity, scale, location and licence.
Some sectors are not completely closed but limit foreign equity or require a local partner. DOI's current published guidance refers to an 80 percent foreign equity limit for aeroplane service, an 80 percent limit for telephone service, a maximum 51 percent for specified consultancy services and a local-partner requirement for casino industry.
Sector legislation and regulator licensing may impose different or additional conditions. Confirm the applicable cap with the responsible aviation, telecommunications, professional-services, tourism, financial or other regulator before setting the capital table.
Official DOI guidance specifically identifies management, accounting, engineering and legal consultancy in connection with a maximum 51 percent foreign investment limit. Professional licensing and restrictions on who may practise can apply separately from the equity cap.
A software product, outsourced operational service and regulated professional consultancy may receive different classifications. The contract, deliverables, staffing and revenue model should support the selected industry code.
DOI's current guidance notes that technology transfer may be possible even in areas where foreign equity investment is not allowed. Technology transfer is a separately regulated structure and is not a device for giving the foreign party prohibited ownership or control.
The technology-transfer agreement, intellectual property, services, royalty, tax and foreign-exchange terms require approval and must reflect genuine technology or rights. The commercial arrangement should be reviewed for substance, not merely its title.
An activity being open to foreign investment does not eliminate licensing. Banking, insurance, securities, payments, telecommunications, aviation, energy, education, health, tourism, mining, alcohol and other regulated businesses may require approval, capital, ownership and operational conditions from a specialist authority.
Foreign-investment approval, company registration and sector permission are separate legal layers. All must be aligned before business begins.
Describe each proposed activity in operational terms: the product or service, customer, revenue model, production method, technology, location and scale. Match it against FITTA's schedule, industrial classification, sector law and regulator guidance.
Then determine whether the activity is prohibited, capped, conditionally open or generally open. Record the legal basis, required local ownership, approval authority and licences. Align the conclusions with the project report, memorandum, agreements and website claims.
A proposed company may combine an open activity with a restricted one. The open activity does not cure the restricted objective, and a broad memorandum can trigger rejection or create later enforcement risk.
Separate businesses, narrow the approved objects or restructure the commercial model only where legally and commercially genuine. Do not use nominee ownership, side agreements or contractual control to circumvent a foreign investment restriction.
Common errors include using an outdated negative list, treating every agriculture-related activity as identical, confusing construction with real estate, confusing wholesale with retail, assuming a digital label changes a personal service, and ignoring sector ownership caps.
Another frequent mistake is obtaining OCR name approval or incorporation and assuming the sector is FDI-eligible. The foreign-investment authority and sector regulator make separate decisions.
This guide was reviewed in July 2026 against FITTA and current Department of Industry materials. Negative-list entries, exceptions, equity caps and regulator policies can change. Obtain a written, activity-specific eligibility review before committing capital, signing a lease or finalising a joint venture.
Common questions
Primary materials used for the legal review of this guide.
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Reviewed by: Wakil Nepal Legal Team
Last reviewed: July 21, 2026
This guide provides general legal information. Procedures and official requirements can change, and case-specific advice may be necessary.
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