Foreign investment repatriation process simplified to attract more FDI, Govt announces key reform

KATHMANDU: The Government of Nepal has announced a major policy reform aimed at improving the investment climate by simplifying the process for repatriating foreign investment, a long-standing concern among international investors.

The reform has been introduced through the fiscal year 2083/84 (2026/27) budget, which proposes amendments to the Foreign Investment and Technology Transfer Act, 2075, to make capital repatriation faster and less bureaucratic.

Finance Minister Dr. Swarnim Wagle, while presenting the budget, announced that foreign investors will no longer need prior approval from Nepal Rastra Bank (NRB) to repatriate their investment. However, they will still be required to notify the central bank after the transaction.

Major Shift in Capital Repatriation Rules

Under the existing legal framework, foreign investors are allowed to repatriate funds from Nepal through various channels, including the sale of shares, full or partial liquidation of industries or companies, profits and dividends, royalties from technology transfer, lease payments, and compensation received through legal processes.

Section 20 of the current Act requires investors to repatriate funds in the same foreign currency in which the investment was made, or in another convertible foreign currency with prior approval from Nepal Rastra Bank, after fulfilling tax obligations.

The new budget proposal removes the prior approval requirement, marking a significant shift toward a more liberal and investor-friendly regulatory regime.

Officials say this change is expected to reduce procedural delays and make Nepal a more attractive destination for foreign direct investment (FDI).

Improved Ease of Doing Business for Investors

The government believes that easing capital repatriation rules will directly address one of the key concerns raised by international investors operating in Nepal—delays and uncertainty in moving profits and capital out of the country.

By simplifying the process, authorities expect to improve investor confidence, encourage reinvestment, and enhance Nepal’s competitiveness in attracting foreign capital.

Expansion of Foreign Investment Framework

The budget also outlines broader reforms to expand the scope of foreign investment instruments in Nepal. These include allowing convertible financial instruments, project-linked financing, and hybrid investment structures.

These changes are intended to diversify funding sources and attract more sophisticated investment models into the Nepali economy.

Simplified Overseas Investment Rules for Nepali Citizens

In addition to reforms targeting foreign investors, the government has also announced facilitation measures for Nepali citizens investing abroad.

Under proposed amendments to the Industrial Enterprises Act, businesses will now only need to notify the Department of Industry regarding capacity expansion, ownership changes, or capital increases, instead of undergoing lengthy approval processes.

This is expected to streamline industrial operations and improve business flexibility.

Move Toward Automatic Approval and Digital Processes

The government has also signaled a shift toward an automatic approval system for foreign investment-related processes.

The budget proposes reducing prior approval requirements for foreign investment entry and simplifying procedures related to payments for services, royalties, and technology transfers abroad.

Officials say the reforms are designed to modernize Nepal’s investment regulatory framework and align it with global best practices.

Investor Confidence at the Center of Reform Agenda

The reforms come at a time when Nepal is seeking to significantly increase foreign direct investment to support economic growth, infrastructure development, and industrial expansion.

By reducing administrative barriers and improving regulatory clarity, the government aims to position Nepal as a more predictable and investment-friendly destination in the region.