The government has removed the cap on foreign direct investment (FDI) approved through the automatic route. Earlier, FDI was only approved through the automatic route with a total capital of Rs 500 million.

The Cabinet meeting held on 28th Magh had decided to remove the upper limit of foreign investment through the automatic route. The Cabinet decision states that ‘the upper limit of foreign investment through the automatic route will be removed in the specified industrial and business sectors.’

On 15th Asoj 2080, a notification was published in the Gazette stating that the upper limit of foreign investment approval through the automatic route would be up to Rs 500 million in total capital investment. The government has removed the same limit. The upper limit of foreign investment and industrial and business sectors through the automatic route were specified by exercising the authority granted by Sub-section 2 of Section 42 of the Foreign Investment and Technology Transfer Act 2075.

Sub-section 2 of Section 42 of the said Act states that the government may provide services such as company registration, industry registration, foreign investment approval through the automatic route in accordance with the Act and prevailing laws to simplify and facilitate the foreign investment process.

Rule 8 ‘A’ of the Foreign Investment and Technology Transfer (First Amendment) Regulations 2077 was added to provide services through the automatic route. The Ministry of Industry, Commerce and Supplies inaugurated the electronic system prepared by the Department of Industry on the occasion of the Third Investment Summit and implemented it.

It had stated that foreign investors who wish to establish a new company with 100 percent share ownership or joint investment with a total capital of up to Rs 500 million through the automatic route or those who are established and operating with foreign investment can apply for capital increase in such a company and automatically receive approval through the automatic route.

It had stated that foreign investors who wish to apply for foreign investment approval through the automatic route can receive a letter of approval for foreign investment via email immediately after applying and can register the company on the same basis. Investments can be made in energy-based industries, agriculture and forest products-based industries, infrastructure industries, tourism industries, information technology-based industries, service-based industries, and manufacturing industries.

Former Chief Executive Officer (CEO) of the Investment Board Radhesh Pant said that it would be easier for investors and they would not have to carry files to the department. ‘It seems that the government has prioritized paperless and automated routes,’ he said. ‘When I said automated, it became digitized. I did not have to carry files for investment approval. After going online, it became automatic. Under-the-table work was also stopped.’

Pant said that an attempt was made to simplify the cumbersome process that foreign investors had to go through for approval. On the occasion of the third investment conference held in 2081 Baisakh, the government amended Section 17 of the Foreign Investment and Technology Transfer Act 2075 and gave the responsibility of FDI approval to the Department of Industries.

Earlier, the department approved only FDI of less than Rs 6 billion. Investments of more than Rs 6 billion were being made by the Investment Board. Now, the department is approving FDI of any amount. That is why the investment commitment is constantly increasing, according to employees.

Earlier, only up to Rs 500 million could be approved through the automated route The department's information officer Suresh Dahal said that the limit has been removed. 'Now, any investment can be approved through the automatic route,' he said. 'This will come into effect only after the notice is published in the Gazette.' Pant said that it will be easier for foreign investors as the government is trying to facilitate foreign investment under a single window.

According to the department, investment commitments of Rs 39.19 billion 61 million have been received in the first six months of the current fiscal year. Investment commitments of Rs 25.77 billion 64 million had been received in the same period of the last fiscal year. In the first six months of the current fiscal year, investment of Rs 36.42 billion 61 million has been approved in 161 industries through the automatic route, while Rs 2.80 billion 99 million has been approved in 314 industries through the automatic route. There is a provision that only industries with a total capital of up to Rs 500 million can be approved through the automatic route.

Foreign investors who want to get foreign investment approval through the automatic route can log in to the electronic system operated by the department, IMIS.DOIN.T.GOV.NP, and submit the information requested by the system. Details and documents must be entered into such a system. After entering the necessary details and documents for foreign investment approval in the electronic system, the details and documents entered by the concerned foreign investor should be checked and corrected if necessary before submitting them to the electronic system for such investment approval.

After the foreign investor checks the entered details and documents and corrects them as necessary, they can be submitted to the department's electronic system for foreign investment approval. After receiving an application for foreign investment approval in the department's electronic system, the foreign investor will be given information (confirmation) from such system to the email address entered by him along with the application number. In addition to such information, the foreign investor can also receive a letter of investment approval from the department's electronic system. The department has stated that after providing information about foreign investment approval, his foreign investment is automatically considered approved in accordance with the Act and Regulations.