The Government of Nepal and the Government of India (hereinafter referred to as the “Contracting Parties”);
Desiring to create conditions favourable for fostering greater investments by investors of one State in the territory of the other State;
Have agreed as follows:
(the following version is an excerpt published by The
For the purposes of this Agreement:
(f) “territory” means:
(i) in respect of
(ii) in respect of
waters and the airspace above it and other maritime zones including the
Exclusive Economic Zone and Continental Shelf over which the Republic of
with its laws in force, the 1982 United Nations Convention on the Law of the Sea
and International Law.
Scope of the Agreement
This Agreement shall apply to any investment by investors of either Contracting Party in the
territory of the other Contracting Party admitted in accordance with its laws and regulations,
whether made before or after coming into force of this Agreement, but shall not apply to any
dispute concerning an investment which arose, or any claim which was settled, before its entry
Promotion and Protection of Investments
(1) Each Contracting Party shall encourage and create favourable condition for investors of
the other Contracting Party to make investments in its territory, and admit such
investments in accordance with its policies, laws and regulations.
National Treatment and Most-Favoured-Nation Treatment
(1) Each Contracting Party shall accord to investments of investors of the other Contracting
Party, treatment which shall not be less favourable than that accorded either to
investments of its own investors or investments of investors of any third State.
(2) In addition, each Contracting Party shall accord to investors of the other Contracting
Party, including in respect of returns on their investments, treatment which shall not be
less favourable than that accorded to investors of any third State.
(3) The provisions of paragraphs (1) and (2) above shall not be construed so as to oblige one
Contracting Party to extend to the investors of the other the benefit of any treatment,
preference or privilege resulting from:
(i) any existing or future customs unions or similar international agreement to which
it is or may become a party; or
(ii) any matter pertaining wholly or mainly to taxation.
(1) Investments of investors of either Contracting Party in the territory of the other
Contracting Party shall not be subjected to nationalisation, expropriation or any other
measure having similar effects (hereinafter “expropriation”) except for reasons of public
purpose in accordance with the law, on a non-discriminatory basis and against fair and
(2) It is understood that:
(a) Indirect expropriation results from a measure or series of measures of a Contracting Party having an equivalent effect to direct expropriation without formal transfer of title or outright seizure;
Compensation for Losses
Investors of one Contracting Party whose investments in the territory of the other Contracting
Party suffer losses owing to war or other armed conflict, a state of national emergency or
insurrection or riots in the territory of the latter Contracting Party shall be accorded by the latter
Contracting Party, treatment, as regards restitution, indemnification, compensation or other
settlement, no less favourable than that it accords to its own investors or to investors of any third
State. Resulting payments shall be freely transferable.
Repatriation of Investment and Returns
Each Contracting Party shall, in accordance with its laws, permit all funds of an investor
of the other Contracting Party related to an investment in its territory to be freely
transferred, without unreasonable delay and on a non-discriminatory basis.
Settlement of Disputes between an Investor and a Contracting Party
(1) Any dispute between an investor of one Contracting Party and the other Contracting
Party in relation to an investment of the former under this Agreement shall, as far as
possible, be settled amicably through negotiations between the parties to the dispute.
(2) Any such dispute which has not been amicably settled within a period of six months
may, if both parties agree, be submitted:
(i) for resolution, in accordance with the law of the Contracting Party which has
admitted the investment to that Contracting Party’s competent judicial, arbitral or
administrative bodies; or
(ii) to international conciliation under the Conciliation Rules of the United Nations
Commission on International Trade Law.
Entry and Sojourn of Personnel
A Contracting Party shall, subject to its laws in force, relating to the entry and sojourn of noncitizens,
permit natural persons of the other Contracting Party and personnel employed by
companies of the other Contracting Party to enter and remain in its territory for the purpose of
engaging in activities connected with investments.
(1) Except as otherwise provided in this Agreement, all investments shall be governed by the
laws in force in the territory of the Contracting Party in which such investments are
Denial of Benefits
(1) A Contracting Party may deny the benefits of this Agreement to an investor of the other
Contracting Party and to investments of that investor, if persons of a non-Party own or
control such investor and the denying Contracting Party:
(i) does not maintain diplomatic relations with such non-Party; or
(ii) adopts or maintains measures with respect to such non-Party that prohibit
transactions with the investor or that would be violated or circumvent if the
benefits of this Agreement were accorded to the investor or to its investments;
Duration, Termination and Amendment
(1) This Agreement shall remain in force for a period of ten years and thereafter it shall be
deemed to have been automatically extended unless either Contracting Party gives to the
other Contracting Party a written notice of its intention to terminate the Agreement. The
Agreement shall stand terminated one year from the date of receipt of such written
(2) Notwithstanding termination of this Agreement pursuant to paragraph (1) of this Article,
the Agreement shall continue to be effective for a further period of ten years from the
date of its termination in respect of investments made or acquired before the date of
termination of this Agreement.
(3) This Agreement may be amended by the mutual consent of the parties through the
exchange of diplomatic notes.
For the Government of
Anil Kumar Jha
Minister for Industry
For the Government of
Ministry of Finance