Automatic Route: Upper Ceiling and Industries Permissible for FDI Prescribed by the GON

The Ministry of Industry, Commerce and Supplies (MOICS) issued a gazette notification on 2nd October 2023 whereby it has prescribed (a) upper ceiling of total capital investment and (b) permissible industrial sectors for making foreign investment through Automatic Route (the “Notice”). This Notice is in alignment with the provision of the budget speech for Fiscal Year 2023-2024 (2080/81 B.S.) where it had also envisioned to provide approval through automatic route for industries permissible for foreign investment, except for those that need approval.

Link to Notice:

Foreign investors are one step closer to making foreign investments via Automatic Route. Once the Department of Industry launches updated online system, investors will be able to make filings for foreign investments through Automatic Route.

i. Approval Not Required for FDI through Automatic Route – up to NPR 50 Crore

Previously, all foreign investments required pre-approval from either the Department of Industry or Investment Board of Nepal, depending on the amount of foreign investment. However, this Notice effectively waives the pre-approval requirement for industry having total capital investment up to NPR Fifty Crores (i.e., NPR 50,00,00,000).

ii. Industries where FDI can be made through Automatic Route

The Notice has identified various industrial sectors that are open for foreign investment through automatic route, which are enlisted below:

A. Energy-based Industries

S.N Industry Sector
1 The industry manufacturing machines, and equipment used to generate energy from air, solar power, biomass or other sources.
2 Energy based on Biogas
3 Energy Produced as a by-product of the Sugar Industry
4 Study of Potential of Energy

B. Industries based on Agriculture and Forest Products

S.N Industry Sector
1 Fruits and Vegetables Processing
2 Establishment and Operation of Green-Houses
3 Silk Processing
4 Tea and Coffee Processing
5 Herb Processing
6 Rubber Processing
7 Cold Storage (to store Local Fruits and Vegetables)
8 Natural Fiber Processing
9 Based on other Non-Timber Forest Products including Paper and Resin
10 Producing Plants through New Technology (Tissue Culture)
11 Cotton Processing

C. Infrastructure Industries

S.N Industry Sector
1 Vehicle Parking
2 Export Based Goods Processing Zone
3 Polluted Water Purification Industries (Wastewater Treatment Plant)
4 Building Film City/ Building Film Studio
5 Construction and Operation of Warehouses

D. Tourism Industries

S.N Industry Sector
1 Motel, Hotel, Resort, Bar and Restaurant
2 Fun Park, Water Park
3 Conference and Sports Tourism

E. Information Technology Industries

S.N Industry Sector
1 Technology Park
2 I.T. Park
3 Biotech Park
4 Software Development
5 Data Processing
6 Digital Mapping
7 Business Process Outsourcing (B.P.O), Knowledge Process Outsourcing (K.P.O)
8 Data Center, Data Mining, Cloud Computing
9 Web Portal, Web Design Service

The minimum capital requirement shall not be triggered while investing through automatic route for industries based on information technology.

F. Service-oriented Industries

S.N Industry Sector
1 Mechanical Workshop
2 Construction Business
3 Hospital
4 Nursing homes, Clinics, Polyclinics, Rehabilitation homes, Physiotherapy Clinics, Ayurvedic and other alternative Hospitals
5 Sports Services, Swimming pools
6 Solid Wastes collection and Sanitation, Recycling of Solid Wastes
7 Veterinary services
8 Health check-up services (such as X-ray, CT scan, MRI and Ultra-sound) and Health check-up Laboratory
9 International Courier Services

G. Production based Industries

S.N Industry Sector
1 Livestock and fishery feed production
2 Processing and Packaging of Livestock and Fishery Meat
3 Production of oil fat from basic raw materials
4 Production of Starch, Glucose, etc.
5 Bakery Goods Production
6 Confectionery and Biscuit Production
7 Sugar Production
8 Beverage Production (Non-Alcoholic)
9 Textiles, Garments and Fabrics Production and Reuse
10 Production of Electronic Household Appliances
11 Production of goods using Plastic and Rubber
12 Production of Bags, Pouch, Suitcases, Trolley bags and other bags carrying similar Goods
13 Making Wooden materials other than items based on Traditional and Cultural Art
14 Production of Toiletries Products such as Toothpaste, Soap and Shampoo
15 Production of Goods using Glass
16 Making Bicycles, Scooters, Motorcycles and Automobiles and making Equipment used in them
17 Making Electric Lights, Switches, Meters, Meter Fuses, Wiring Wires, Compressors and other such items
18 Making materials used in Medical, Surgical, Orthopedic Sectors
19 Production of Electrical Wire


PLA Note: This Notice has been published by the MOICS by invoking Sub-section (1) of Section 42 of the Foreign Investment and Technology Transfer Act, 2019 (2075 B.S.).

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