Can Indian citizens invest in Nepal?

 Nepal and India have a lot in common such culture and language. We share interests in politics, social culture, tradition, and religion. The majority of the big businessmen have moved from India to Nepal. They are mostly from the Marwari Aggarwal community. 

The Marwari or Marwadi community in Nepal originated in Rajasthan, India. Banias from northern, central, and western India have settled in Nepal and are doing business there.

After many years of doing business in Nepal, they were granted Nepali citizenship. Many Indians are still attempting to do business in Nepal. Many Indians have made investments in power, hydropower, tourism, and the hotel industry.

India’s private/public power developers have reached agreements with Nepal’s Investment Board to build two mega hydropower projects, Upper Karnali and Arun III.

Indian citizen conducting informal business

Indian citizens, unlike other foreigners in Nepal, do not require a visa to enter the country. Due to the lack of visa requirements, it is common for Indians to conduct business in Nepal by registering their companies in the names of Nepali citizens. 

Foreigners are prohibited from trading in Nepal, or because foreigners are permitted to invest in businesses where foreigners cannot benefit from buying and selling the same, Indians open trading companies in the name of Nepalis and conduct business.

However, we do not recommend conducting business in such a risky manner.

Legal process of investment for Indian citizen

The following procedures must be followed in order for Indians to invest legally in Nepal.

The most common options for an Indian citizen  investor to establish business in Nepal are:

•  Open a new company,
•   Invest in an existing company, or
•   Register a branch office

  An Indian investor can register either a joint venture company, or a fully owned subsidiary company in Nepal upon obtaining foreign investment approval. The process, requirement and government fee has been detailed below:

•  APPLICATION FOR INVESTMENT on the Investment Board Nepal or the Department of Industry
•   APPROVAL OF INVESTMENT BY THE INVESTMENT BOARD OF NEPAL OR THE DEPARTMENT OF INDUSTRY
•   COMPANY REGISTRATION at the Company Registrar’s Office
• The Indian investor should apply for a name reservation at the online portal of the OCR [http://www.ocr.gov.np/index.php/en/]

   INLAND REVENUE DEPARTMENT TAX REGISTRATION

Every company is required to register for tax (PAN) with the IRD. It generally takes around 1-2 working days. The following documents need to be submitted to the IRD for tax registration.

 REGISTRATION IN THE INDUSTRY AT THE DEPARTMENT OF INDUSTRY

The local company also has to be registered as an industry with the DOI. It generally takes around 1-2 days.

 Nepal Rastra Bank’s CENTRAL BANK CLEARANCE (only for brownfield investments)

NRB approval is obtained, the Indian investor can transfer funds through proper banking channels to the local company. After the money is received by the local company, the money has to be capitalized and the shareholder register of the local company has to be recorded and certified at the OCR.

However, in the case of investment in an existing company, change in shareholding has to be recorded and certified at the OCR. Certification of share register reflects the capitalization of the foreign investment

 REGISTRATION/ PERMITS/APPROVALS

In order to get registration permission and approval certain requirements must be fulfilled.

• (For Visa, Trademark, Environmental Clearance, Land Acquisition, and others)
•  AGREEMENTS AND NEGOTIATIONS PPP Project Development Agreement (PDA) and
• Private Project Investment Agreement (PIA) (only for IBN Projects)
• ADDITIONAL SERVICES include any necessary approvals and clearance.

APPROVING AGENCIES FOR INVESTMENT:

Nepal Investment Board Estimated Project Cost: NPR above 5 Billion

Department of Industry Projected Cost: NPR 5 Billion

Submission of an Application Approval of the Project Memorandum of Understanding (MOU) for a Detailed Project Proposal (for project implementation)

 Permits/Approvals/Registration for Investment (for business establishment, visa, trademark, environmental clearance, land acquisition, et. al.)

PIA (Project Investment Agreement)

ESSENTIAL DOCUMENTS

• The name, nature, location, and concept of the project
• Information on the project’s estimated cost
• Details of proposed financial sources, including the percentage of debt and equity held by domestic and foreign investors
• Business Plan for the Project
• Timeline for project implementation
• The company’s share structure has been updated.
• 2 copies of the project proposal Agreement on Joint Venture (in case of more than 1 investor)
• Notarized copy of local partner’s citizenship certificate or, if the local party is a company,

• Certificate of Incorporation, Memorandum of Association, and Articles – 1 copy
•  Notarized copy of foreign partner’s passport or, if the foreign party is a company,
•  Certificate of Incorporation, Memorandum of Association, and Articles of Association- 1 copy
• 1 copy of foreign investor biodata or company profile Financial Credibility Certificate issued by a bank in the country of the foreign investor Authorization letter from the investor (if required)
• Any Indian citizen can start a new business in Nepal. Transactions between businesses are as simple as they are in India. Nepal is the ideal country for Indian nationals to invest in. The Nepalese government gives special consideration to Indians who want to invest small to large sums in business.
• If you want to invest in Nepal but are concerned about the legal process, legal counsel can help you get started quickly and easily. The business Nepal can provide you with comprehensive legal services.

Any Indian citizen can start a new business in Nepal. For that transactions between businesses are as simple as they are in India. Nepal is the ideal country for Indian nationals to invest in.

The Nepalese government gives special consideration to Indians who want to invest small to large sums in business.

Conclusion

 If you want to invest in Nepal but are concerned about the legal process, prime legal team can help you get started quickly and easily. The corporate Lawyer Nepal can provide you with comprehensive legal services. To legally conduct business in Nepal, a company must be formed. 

To complete the process, you must adhere to certain guidelines and instructions.  Upon completion a business operating license approval is granted. In order to complete the legal process, you should consult with a firm and an experienced lawyer. 

As long as you provide all required paperwork, you can register a company anywhere in the world.Any Indian citizen can start a new business in Nepal.

Transactions between businesses are as simple as they are in India. Nepal is the ideal country for Indian nationals to invest in. 

The Nepali government gives special consideration to Indians who want to invest small to large sums in business.

If you want to invest in Nepal but are concerned about the legal process, legal counsel can help you get started quickly and easily. The business Nepal can provide you with comprehensive legal services.

Should you have any questions, please do not hesitate to contact us at + 9745374671 or by email info@corporatelawyernepal.com