Nepal Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in Nepal, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals.
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Investment Climate Statement (ICS)
Last published date:

The U.S. Department of State’s Investment Climate Statements help U.S. companies make informed business decisions by providing up-to-date information on the investment climates of more than 170 countries and economies. They are prepared by our embassies and consulates around the world and analyze each economy’s openness to foreign investment. Topics include:

  • Openness to, and Restrictions upon, Foreign Investment, 
  • Investment and Taxation Treaties,
  • Legal Regime,
  • Industrial Policies,
  • Protection of Property Rights,
  • Financial Sector,
  • State-owned Enterprises,
  • Corruption,
  • Labor Policies and Practices,
  • Political and Security Environment, and
  • U.S. International Development Finance Corporation (DFC) and Other Investment Insurance or Development Finance Programs


Each statement provides a starting point for U.S. firms and offers a point of contact at the relevant U.S. embassy or consulate abroad.

These reports are also a resource for foreign governments to create business environments that ensure fair treatment for the United States and our companies and investors. 

To access the full Investment Climate Statement, visit the U.S. Department of State Investment Climate Statements website.

Executive Summary - Nepal

Nepal’s annual GDP is approximately $54.81 billion, with trade totaling $17.5 billion. Despite significant potential in sectors like:

  • Energy,
  • Tourism,
  • ICT,
  • Infrastructure, and
  • agriculture,
  • Political instability,
  • Corruption,
  • Bureaucracy, and
    Inconsistent laws deter investment.
     

The government aims to attract foreign investment, but practical implementation is lacking. Political instability has slowed reforms, though foreign direct investment (FDI) has increased. The United States is among the top 10 foreign investors, contributing 3.25 percent of total FDI.

The Millennium Challenge Corporation’s (MCC) $500 million Compact with Nepal, ratified in February 2022 and entered into force on August 30, 2023, focuses on electricity transmission and road maintenance, with an additional $197 million funded by Nepal. The Compact aims to boost economic growth, create jobs, and enhance cross-border trade opportunities.

Nepal’s strategic location between India and China and its natural resources offer investment opportunities. As of 2024, Nepal generates approximately 2,700 megawatts of electricity, primarily via hydropower. The Government has a plan to generate up to 28,500 megawatts by 2035, and experts assess the economically feasible hydropower potential to be 43,000 megawatts.

Investment opportunities also exist in agriculture, tourism, ICT, and infrastructure. However, investors face challenges such as:

  • Corruption
  • Laws limiting foreign banks
  • Profit repatriation issues
  • Controlled currency exchange
  • Prohibition of FDI in certain sectors
  • Minimum foreign investment threshold of NPR 20 million (approx. $154,000)
  • Government monopolies in sectors like electricity transmission and petroleum distribution
  • Political uncertainty and internal power struggles
  • Lack of understanding of international business standards
  • Inconsistent tax regime
  • Talent drain due to overseas employment
  • Cumbersome immigration and visa policies
  • Inefficient bureaucracy and high turnover among civil servants
  • Poor transportation infrastructure
  • Trade unions and general strikes
  • Intimidation and extortion risks
     

Despite these barriers, Nepal offers opportunities for resilient investors with a long-term perspective. View the U.S. Department of State’s Nepal Investment Climate Statement. 

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