Government Scraps Maximum Limit for FDI Under Automatic Route

The government has removed the maximum limit on foreign direct investment (FDI) arriving through the automatic route, allowing unlimited investment in Nepal for the first time.

A recent notice published in the Nepal Gazette has scrapped the previous ceiling of Rs 500 million for FDI through the automatic route. The minimum investment limit of Rs 20 million remains unchanged except for information technology-based industries, which now have no minimum requirement.

The Ministry of Industry, Commerce and Supplies issued the notification under the Foreign Investment and Technology Transfer Act, 2075, designating 92 industries across seven sectors eligible for FDI under automatic route. These include four energy-related industries, 13 agriculture and forest-based industries, eight infrastructure industries, four tourism industries, nine information technology industries, 13 service industries, and 41 manufacturing industries.

Energy industries now open for unlimited FDI include those producing wind, solar, natural oil and fuel or gas, biomass energy, machinery manufacturing for energy production, biogas-based energy, and energy feasibility study firms.

Agriculture and forest-based industries cover fruit and vegetable processing, food production and storage, animal feed production using agricultural raw materials, silk processing, tea and coffee processing, herbal processing, rubber processing, cold storage, furniture and wood-based industries including plywood, paper, resin, and cotton processing.

Infrastructure industries include convention centers, parking buildings, export processing zones, cargo complexes, wastewater treatment plants, film cities, commercial complexes, and private warehouses.

Tourism industries now eligible for unlimited FDI comprise motels, hotels, resorts and restaurants, healing centers, convention and sports tourism, entertainment parks, and water parks.

Information technology industries include technology parks, IT parks, biotech parks, software development, data processing, digital mapping, business process outsourcing (BPO), knowledge process outsourcing (KPO), data centers, data mining, cloud computing, web portals, web design services, and web hosting.

Service industries cover mechanical workshops, printing presses, construction businesses, photography, hospitals, nursing homes, polyclinics, rehabilitation centers, physiotherapy clinics, Ayurvedic and alternative hospitals, exercise and yoga centers, sports services, swimming pools, cold storage operations, waste collection and sanitation, waste recycling, heavy equipment rental and maintenance, veterinary services, diagnostic services (X-ray, CT scan, MRI, ultrasound), and operation of built infrastructure including convention centers, pipelines, warehouses, airports, stadiums, roads, power plants, railway services, and international cargo businesses.

Manufacturing industries include tire and tube production, animal and fish feed production, meat processing and packaging, oil and fat production, starch and glucose production, sugar production, non-alcoholic beverages, textiles and garments, electronic home appliances production, toiletries production (soap, shampoo, toothpaste), bicycle, scooter, motorcycle and automobile manufacturing, medical and surgical equipment production, electrical wire production, cement production, brick and tile production, iron rod production, battery production, chemical and organic fertilizer production, rice mills, oil mills, flour mills, dal mills, water treatment, bitumen and bitumen emulsion production, and furniture and plywood production.