On October 2, 2023 (2080/06/15) the Government of Nepal, Ministry of Industry, Commerce and Supply issued notice in Nepal Gazette regarding implementation of Automated Route in Foreign Direct Investment (FDI) in Nepal with the authority vested by Section 42 (1) of Foreign Investment and Technology Transfer Act, 2019 (2075). The notice sets out the maximum investment threshold of NPR 500,000,000/- (NPR 50 Million) for foreign investment in the sectors/industries in which automatic route is applicable. As per the notice minimum investment threshold set out for foreign investment will not be applicable in Information technology based industries. Following sectors/industries are eligible for the automated route of foreign investment:
1. Energy Based Industry: Industries producing energy from wind, solar power, biomass or other sources, manufacturing machinery and equipment used to produce such energy, Biogas based energy, Energy produced as a co-product of the sugar industry, Study of potential energy.
2. Industries based on agriculture and forest product: Fruit and vegetable processing, Installation and operation of greenhouse, Silk processing, Tea and Coffee processing, Herbal processing, Rubber processing, cold Storage (storage of local fruit and vegetable), Natural Fiber processing, Industry based on paper, resins and other non-timber forest product, Plant production through new technology (such as tissue culture), Cotton Processing.
3. Infrastructure Industry: Vehicle Parking Garage, Exporting Product Processing, Polluted water processing industry (Waste water treatment plant), Construction of Film City/Film Studio Construction , Warehouse Construction and Operation.
4. Tourism Industry: Motel, Hotel, Resort, Bar and Restaurant, Amusement Park, Water Park, Conference and Sports Tourism
5. Information Technology based industries: Technology Park , I.T Park , Biotech Park , Software Development , Data Processing , Digital Mapping , Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO) , Data Center, Data Mining, Cloud Computing , Web Portal, Web Design Service.
6. Service Industry: Mechanical Workshop, Construction Business, Hospital, Nursing Home, Polyclinic, Rehabilitation Center Operation, Physiotherapy Clinic, Ayurveda and other alternative hospital, Sports facilities, swimming pool, Garbage collection and sanitation, reprocessing of garbage , Veterinary Service Health Examination (X-ray, CT Scan, MRI Service like ultra sound and health test laboratory), International Courier Service.
7. Manufacturing Industry: Livestock and fish feed production, Processing and packaging of poultry and fish meat, Production of oil fats etc. from basic raw materials, Starch, glucose etc., Manufacture of bakery items, Manufacture of confectionery and biscuits Sugar Production , Beverage Production (non-alcoholic) , Textile, garment and clothe making and reuse of fabric, Manufacture of electronic household appliances, Manufacture of product using plastic and rubber , Manufacture of bags, satchels, suitcase, trolley bags and other similar bags for carrying goods, Making wooden material and object except based traditional and cultural arts, Manufacture toiletries such as toothpaste, soap and shampoo, Manufacture of product using glass, Manufacture of bicycles, scooters, motorcycles and motor vehicle and equipment used in them, Manufacture of electric lights, switch, meter, meter fuse, wires, compressor and other such product, Manufacture of product in Medical, surgical, orthopedic work, Manufacture of electric wire.
Disclaimer: This note is not a legal opinion but for general understanding. It is advised to consult a lawyer for legal advice before initiating foreign investment in Nepal. Please note that the copyright for this note vests on Vidhi Legal Concern.