Jayant Prasad, special secretary (public diplomacy) in the external affairs ministry and a former envoy to Afghanistan, is likely to succeed Sood in Kathmandu, well-placed sources said. Prasad had previously succeeded Sood in Kabul and as ambassador for disarmament in Geneva.
Alok Prasad, who is currently the country's deputy national secretary adviser, will go to Tokyo as New Delhi's ambassador.
These appointments have been finalized but will not be officially announced before next year. Once they are formally announced, the changes will take place in a couple of months.
Early this month, amid negative reports in a section of media, especially in Nepal, and speculation about his likely recall, the external affairs ministry had rallied to the defence of Sood, saying it had "full confidence" in him.
Sood is a "distinguished officer of the Indian Foreign Service who has served with dedication and commitment as India's ambassador to Nepal since April 2008", the ministry had said.
"During his tenure, bilateral development cooperation and dialogue between the two countries has progressed substantively," it said in a statement.