Nepal permits foreign investment in hotels and resorts. It restricts foreign investment in several other tourism activities, including travel agencies, guiding, trekking and mountaineering guiding, and rural tourism including homestay. Those have sat on the schedule of restricted industries under the Foreign Investment and Technology Transfer Act 2019, which is amended from time to time. Confirm the current schedule with the Department of Industry before committing anything.
The restricted schedule decides everything else
Most guidance written for foreign investors in Nepal opens with process: which office approves what, what a company registration involves, how long the paperwork takes. All of that is useful and none of it matters until one prior question is settled. Is the activity you have in mind open to foreign money at all?
The Foreign Investment and Technology Transfer Act 2019, usually shortened to FITTA, carries a schedule of industries in which foreign investment is not permitted. It is commonly called the negative list. It is short, it is specific, and several of the tourism businesses foreigners most often want to start are on it.
The schedule has been amended before and can be amended again, which is why nothing below should be read as a quotation of the statute as it stands today. What follows is the set of categories the list has covered. The reason it matters is that the consequence of getting it wrong is not administrative. Money placed into a restricted activity is money placed into something that cannot be registered as yours.
Which tourism activities have been closed to foreign investment?
Four activities on the restricted schedule bear directly on tourism. Travel agency is one. Guide involved in tourism is another. Trekking and mountaineering guiding is a third. Rural tourism, expressly including homestay, is the fourth. Read together, they close off most of the small, low-capital, people-first tourism businesses that a visitor falls for and then thinks about buying into.
The pattern is consistent once you see it. What is closed is service delivery that a Nepali citizen can perform without capital: booking a trip, walking a client over a pass, letting a room in a village house. What is open is the capital-intensive end, where the binding constraint is money rather than local knowledge and labour.
| Tourism activity | Position on the restricted schedule | Practical effect for a foreign investor |
|---|---|---|
| Hotel | Not listed | Open, subject to the minimum foreign investment threshold and to approval |
| Resort | Not listed | Open on the same basis as a hotel |
| Travel agency | Covered by the restricted schedule | Foreign equity not permitted |
| Guide involved in tourism | Covered by the restricted schedule | Foreign equity not permitted |
| Trekking and mountaineering guiding | Covered by the restricted schedule | Foreign equity not permitted |
| Rural tourism, including homestay | Covered by the restricted schedule | Foreign equity not permitted |
The table describes categories, not the current wording of the law. Wordings shift, and entries are added and removed. The Department of Industry holds the operative version and is the only place to settle what is restricted on the day you ask.
Can a foreigner own a trekking company in Nepal?
On the basis of the restricted schedule as it has stood, no. Trekking and mountaineering guiding has been a restricted activity, and travel agency alongside it. A trekking company in the ordinary sense is both of those things at once: it sells the trip and it supplies the guide.
This surprises people who have seen foreign names on trekking operators in Thamel. Some of those are marketing arrangements with a Nepali-owned operator, some are foreign agencies selling from abroad and subcontracting the ground handling, and some are older structures set up under earlier rules. None of them is evidence that a foreigner may register a trekking company today. If you have been shown one as a precedent, ask what the shareholding actually is and whose name is on the licence, then put the answer to a lawyer.
The route that does exist for restricted categories is working with a Nepali-owned entity rather than owning one, and it is narrower and more fragile than it sounds. Joint ventures and local partnership in Nepali tourism sets out what that arrangement does and does not give you.
Can a foreigner invest in a homestay in Nepal?
Rural tourism including homestay has been on the restricted schedule, so foreign equity in a homestay business has not been permitted. This is the entry that causes the most avoidable harm, because a homestay is precisely the thing a visitor who has had a good week in a village wants to fund.
The reasoning behind the restriction is not hard to follow. Homestay in Nepal is a programme as much as a business. It is a way of routing tourist spending into households that would otherwise see none of it, and it is regulated with that purpose in mind. Community homestays in Humla shows what that looks like at village level, where the whole point is that the money stays with the family holding the door open.
A foreigner who wants that money to reach those households has ways to do it that do not involve owning the business. Staying in them is one. Sending clients is another. Lending or granting money to a community operator is a third, though a loan into Nepal from abroad has its own regulatory treatment and is not a way around the schedule. What does not work is buying in quietly and calling it something else.
What is open: hotels, resorts and the capital-intensive end
Hotels and resorts are not on the restricted schedule and are open to foreign investment above the minimum threshold. That threshold is set in rupees and has been revised more than once, so the figure is not quoted here. The Department of Industry publishes the current one.
This is not a consolation prize. Accommodation at a standard a foreign visitor recognises is the largest single capacity gap in western Nepal, and it is a gap local capital has struggled to close because the sums are large and the earning season is short. Investing in a hotel or lodge in West Nepal covers what building or buying one actually involves, including the parts that make it hard. The West Nepal tourism investment landscape covers where the shortage sits and why.
Other tourism-adjacent activity is judged outside the tourism entries altogether. Manufacturing, food processing, transport and construction each have their own treatment, and some carry restrictions of their own. Do not assume that because a business serves tourists it is classified as tourism.
Why the restriction exists
It is worth understanding rather than resenting. Tourism is one of a very small number of sectors that reliably move foreign currency into rural Nepali households. Guiding and small-scale accommodation are the parts of that sector with the lowest barrier to entry for a Nepali citizen, and therefore the parts most exposed if foreign operators with deeper capital and better distribution could compete directly.
Whether the policy achieves that is arguable, and Nepali commentators argue it. What is not arguable is that it is the policy, and that it is enforced through registration rather than inspection. Nobody stops you at the door of the wrong business. You find out later that the thing you paid for cannot be registered in your name.
What happens if money goes in anyway
The first failure mode is not a fine. It is that the investment has no legal existence. Capital that did not enter through banking channels with foreign investment approval recorded against it cannot be repatriated later, because Nepal Rastra Bank approves repatriation against the record of what came in. Money that arrived informally is very hard to take out.
The second is ownership. If shares in a restricted business are held in a Nepali name on your behalf, the shares are theirs. There is no enforceable claim in Nepal on an arrangement structured to avoid a statutory restriction, and disputes of exactly this kind are common enough that any Kathmandu lawyer will have seen several. The arrangement holds for as long as the relationship holds, and no longer.
The approval sequence, step by step sets out how a permitted investment is recorded so that it can be brought out again.
How to check the current position before you commit
Four bodies matter and they do different jobs. The Department of Industry approves most foreign investment and holds the operative restricted schedule. The Investment Board Nepal handles large projects above a size threshold. The Office of the Company Registrar registers the company. Nepal Rastra Bank approves the movement of capital in and out.
Two things are worth asking the Department of Industry in writing before any money moves: whether the specific activity you intend is currently open to foreign investment, and what the current minimum threshold is. Then have a licensed Nepali lawyer read the answers against what you actually plan to do, because the gap between an activity as described in a schedule and a business as it will really operate is where the trouble lives.
If you are still working out where in the country any of this applies, our guide to the regions and districts of West Nepal covers the geography the rest of this cluster assumes.
This is not legal or financial advice. Nepal's foreign investment rules change by ordinance and budget, and the schedule of restricted sectors is amended from time to time. Confirm the current position with the Department of Industry, the Investment Board Nepal or Nepal Rastra Bank, and take advice from a licensed Nepali lawyer or auditor before committing money.
Frequently Asked Questions
Can a foreigner own a hotel in Nepal?
Hotels and resorts are not on the schedule of restricted industries, so foreign investment in them has been permitted above the minimum foreign investment threshold and subject to approval by the Department of Industry, or by the Investment Board Nepal for large projects. Confirm the current position before relying on it.
Can a foreigner own a trekking agency in Nepal?
Trekking and mountaineering guiding and travel agency have both been covered by the restricted schedule, so foreign equity in a trekking agency has not been permitted. Foreign names on Nepali operators generally reflect marketing arrangements, subcontracted ground handling or older structures rather than foreign ownership registered today.
Is homestay open to foreign investment in Nepal?
Rural tourism including homestay has been covered by the restricted schedule, so foreign equity in a homestay business has not been permitted. Staying in community homestays, sending clients to them, or supporting them without taking equity are the routes that do not run into the restriction.
What is the minimum foreign investment in Nepal?
There is a minimum foreign investment threshold, set in rupees and revised periodically by government decision. The figure is deliberately not quoted here because it has changed more than once and a stale number is worse than none at all. The Department of Industry publishes the current threshold.
Who approves foreign investment in Nepal?
The Department of Industry approves most foreign investment. The Investment Board Nepal handles projects above a size threshold. The Office of the Company Registrar registers the company itself, and Nepal Rastra Bank approves the inward remittance record and any later repatriation of profit or capital.
What happens to money put into a restricted activity?
It has no legal existence as foreign investment. It cannot be repatriated, because Nepal Rastra Bank approves repatriation against the record of capital that entered through banking channels with approval attached. Shares held in another person's name on your behalf are legally theirs.
Does the restricted schedule ever change?
Yes. The schedule under the Foreign Investment and Technology Transfer Act 2019 has been amended, and entries can be added or removed. Treat any published list, this one included, as a description of the categories rather than a current legal text, and verify with the Department of Industry.