South Asia is an increasingly attractive region for foreign businesses seeking new markets, affordable operations, and access to high-growth sectors. But one key question for investors is: Should you choose Nepal or India for company incorporation?
While India often steals the spotlight with its massive economy, company incorporation in Nepal offers surprising strategic advantages for specific industries and investment styles. This guide compares Nepal and India on key incorporation metrics—costs, regulations, taxes, labor, and investor experience—so you can make an informed decision for your South Asia expansion.
| Factor | Nepal | India |
|---|---|---|
| Ease of Incorporation | Moderate (requires FITTA approval) | High (fully digital, single-window) |
| Foreign Ownership | 100% allowed in many sectors | 100% allowed in most sectors |
| Minimum Capital Requirement | NPR 20 million (~USD 150,000) for FDI | No minimum for most private companies |
| Tax Rate | 20–25% Corporate Tax | 22–30% Corporate Tax |
| Repatriation Rules | Allowed under FITTA with NRB approval | Allowed under FEMA regulations |
| Land Ownership | Not allowed (lease only) | Allowed under company name |
| Setup Time (Avg) | 4–8 weeks | 2–4 weeks |
| Labor Cost | Lower | Higher |
| Labor Skill in Tech/BPO | Competitive | Advanced |
| Operational Costs | Lower | Moderate to High |
| Bureaucracy/Compliance Load | Moderate | High |
Incorporation requires approvals under the Foreign Investment and Technology Transfer Act (FITTA).
A two-step process: First, investment approval; second, company registration.
Certain sectors are restricted or conditional for foreign investment.
Online registration portal (MCA 21) simplifies company setup.
FDI allowed in most sectors under automatic route, except defense, real estate, and print media.
Single-window clearances in startup hubs like Bangalore, Mumbai, and Hyderabad.
Verdict: India has a faster and more digitalized incorporation process, but Nepal offers flexibility for long-term investors willing to navigate approval stages.
Corporate Tax Rate: 20% (general), 25% (financial institutions and tobacco/alcohol)
VAT: 13%
Tax Holidays for investments in Special Economic Zones (SEZs) and certain export industries
Profit repatriation allowed with proper documentation and Nepal Rastra Bank approval
Corporate Tax Rate: 22% for domestic companies (without exemptions), 30% for others
GST: 5% to 28% depending on sector
Special reduced rates for new manufacturing companies (15%)
Extensive Double Taxation Avoidance Agreements (DTAAs)
Verdict: Nepal offers a lower corporate tax baseline for many sectors, especially for SEZ or export-oriented businesses. However, India's tax framework is broader with more DTAAs.
Average monthly salary for skilled labor: USD 250–400
Growing IT, finance, and accounting talent pool
Strong English proficiency, especially among the younger generation
Favorable outsourcing destination
Higher wages, especially in metro cities
Access to top-tier talent in IT, engineering, and financial services
Mature startup and innovation ecosystems
Verdict: Nepal is more cost-effective and ideal for labor-intensive services like BPO, accounting, and software development, whereas India offers deeper specialization.
Foreigners and foreign companies cannot own land
Long-term leases available for up to 50–75 years for approved business projects
Office rentals significantly lower than in Indian cities
Foreign companies can own land, subject to sector-specific rules
Higher property and rental costs in Tier-1 cities
Verdict: If land ownership is critical (e.g., for manufacturing or real estate), India is more favorable. For leased office or industrial space, Nepal offers better value.
Strong in hydropower, tourism, IT/BPO, agro-processing, and education
Untapped markets and favorable government policies for early entrants
SEZs with tax holidays and import/export facilitation
Dominant in fintech, pharmaceuticals, manufacturing, and e-commerce
Large, scalable market with a strong consumer base
Global supply chain integration
Verdict: Choose Nepal for lean operations, outsourcing, or sector-specific projects. Opt for India if you're targeting large-scale production, mass retail, or tech innovation.
Must repatriate via formal banking channels with NRB approval
Requires tax clearance and proof of profit distribution
Governed under FEMA (Foreign Exchange Management Act)
Repatriation is allowed for dividends, interest, and capital gains with fewer bureaucratic steps
Verdict: India offers more predictable and structured repatriation, though Nepal permits it with documentation under FITTA.
| Choose Nepal If You: | Choose India If You: |
|---|---|
| Want cost-effective operations | Need access to a large, scalable customer base |
| Are entering outsourcing, education, or tourism | Are entering manufacturing, e-commerce, or pharma |
| Prefer long-term strategic positioning | Want quick growth and mass market reach |
| Can navigate layered approvals | Need faster registration and scale |
| Want to explore underdeveloped sectors | Are building a high-tech, venture-backed model |
Company incorporation in Nepal is increasingly worth considering in 2025 for foreign businesses that prioritize cost-efficiency, niche markets, and sustainable growth. While India remains a powerhouse for mass-scale and high-tech operations, Nepal presents unique advantages for BPOs, education, energy, and tourism—especially for early movers.
Choosing between Nepal and India doesn’t always have to be either/or. In fact, many savvy investors incorporate in both, using Nepal as a cost-efficient base and India as a scaling destination.