NEPAL: A PARADISE FOR FOREIGN INVESTORS
Nepal, which has just come out of a decade-long conflict, has the potential to become a paradise for foreign investors. Poverty is declining gradually and the middle class is expanding, thanks to remittances from more than two million Nepalis working abroad. Expansion in physical infrastructures – roads, telecommunication facilities, power projects, etc. – is creating favorable climate for investment and improvements in education and health services are helping to develop skilled and healthy workforce.
What is more, Nepal’s economy is getting a powerful boost from the rapid growth in the immediate neighborhood -- particularly in India and China. Nepal sits on enormous hydropower potential to meet the virtually insatiable demand for energy in those countries. It will also benefit from the growing incomes and galloping progress in the neighboring countries, in terms increased demand for its products and services to cater to their needs – balmy weather for tourism, production of fruit, vegetables and flowers, and need for product components and for services.
Foreign investment had started coming significantly into Nepal in the 1990s after democracy came along and the country embraced liberal economic policies. As of July 2004, there were about 905 foreign direct investment projects in Nepal with a cumulative investment of approximately US$ 1.65 billion. But the decade-long insurgency, started in 1996, frightened foreign investors and put a damper on investment. Now that the conflict has been resolved and peace restored, foreign private investors have begun to come back. And projects are flying off the shelf at an unprecedented speed.
For instance, FDI rose to 5-year high, to Rs.9.81 billion in 2007/08 from Rs.2.76 billion in 2003/4. This investment was committed to hydropower, tourism, housing, manufacturing and agriculture sectors, and came from 39 countries including India, South Korea, China, United Arab Emirates, United Kingdom, Spain, etc. Many foreign investors have made commitments to investing in several large projects of Nepal only in a matter of last couple of months.
Nepal offers one of the most foreign investment friendly institutional and policy frameworks. The following points, and the country’s laws governing foreign investment that are given in the annexes, speak for themselves.
1. Nepal’s Policy Framework
Emphasis on private sector involvement
Limit of state’s role to the creation of enabling environment
Emphasis on export led growth
Inevitability of private sector - well accepted across political lines
Commitment to globalization / liberalization
Foreign investment of up to 100% allowed in almost all sectors
Industrial Policy
Foreign Investment Policy
Industrial Enterprises Act
Foreign Investment and Technology Transfer Act
Sectoral Acts and Rules
2. Nepal’s locational advantage
Population of 27 million - already a sizable market
Location in between two most populous and fast growing economies
Preferential trade arrangement with India and Tibet (China)
Diverse topography and climates in a very narrow strip of land
As LDC, Nepal enjoys duty free and quota free access to major markets
Tripartite Agreement Between Nepal, China & India possible
Nepal could be a transit country for trade between India and China
3. Why invest in Nepal
Attractive Investment Features
Repatriation of foreign exchange allowed
Easy availability of foreign exchange
Low tax and duty rates
Fixed royalty payments
Concessionary import policy for investors
Special concessions for LDCs under WTO and SAFTA, the regional trade arrangement
Member of the Multilateral Investment Guarantee Agency
Increasing urbanization and growing middle class with purchasing power in the country
Location between India and China, two giants growing at a breakneck speed
Known but little tapped prospects to become a transit county between its two neighbors
High export potential in the region and beyond
Guarantee against nationalization of projects and businesses
Competitive wages
One-window policy for quick dispensation of facilities
Second largest hydropower potential after Brazil in an energy hungry region
4. Investment Attractions
Liberalized investment climate
Transparent legal & regulatory framework
Impartial judicial system
Established procedure
Emerging regional capital markets
Democratic polity
100% foreign ownership of project allowed
Risk insurance availability
Dispute resolution as per agreement allowed
5. Contribution to GDP (%) in 2007/08
Agriculture -- 32.12
Non-agriculture 67.88
6. Currency Regulations
Currency: Nepali Rupees (NRs) is freely convertible in current account
Exchange Rate
Currency Selling Rate in NRs.
US $ 1=67.65
UK ₤ 1=128.69
Indian Rupees 1.60
7. Repatriation of Foreign Exchange
Principal and interest on debt
Profit from equity
Sales of share equityAll at prevailing market rates
8. Incentives to Export Industry
Customs duty, sales tax, excise duty and premiums levied on raw materials and auxiliary raw materials etc utilized by any industry in connection with its production reimbursed on the basis of the quantity of export.
No tax, fee or charge of any kind levied on the machine, tool, equipment, machinery and raw materials to be employed by an export promotion industry as well as on the products of such industry.
No royalty shall be imposed if any industry generates electricity for its use
9. Other Facilities and Concessions
Foreign investment eligible for all the fiscal incentives available to domestic investment.
Foreign investment in firms located in Export Processing Zones (EPZ) and 100% export oriented firms eligible for duty free access to machinery and raw materials will also be eligible for tax holiday for seven years from the year of commercial production or ten years from the year of establishment which ever is earlier
10. Interest Rates
Lending Rates
Sector Rate in %
Priority sector (Agriculture) 7.5 – 10.0
Industry 10.25 – 12.0
Export 8.28-10.5
Importer’s Loan 8.25-8.75
Overdraft (corporate & multinational) 9.75
(Source: Nepal Investment Bank, Ltd.)
Interest rates may very from bank to bank.
11. Areas of Opportunity: Manufacturing
11.1 High value low volume products
Pharmaceuticals
Electric / electronic gadgets
Components making
Precision equipment
Textile and clothing
11.2 Area of Opportunity: Infrastructure Development
Power / Road / Airport / Bridges / Tunnels / Telecommunication, Real Estate, Housing etc.
BOOT / BOT principle accepted
First comers can themselves be part of the rules framing process
11.3 Area of opportunity: Information Technology
No handicap of land lockedness and high transport cost
Many graduates of the field
Fairly good command of English
Nepali people are easily trainable
Nepal could be a very good location for data entry and processing
11.4 Area of Opportunity: Services
Tourism
Holiday homes
Sanatoriums
Hospitals / Nursing Homes
Educational / Training Institutions
Financial Services / Off Shore Banking
11.5 Hydropower Potentials of Nepal
Average annual flow of water: 225 billion m3
Theoretical hydropower potential: 83000 MW
Techno-Economically feasible : 44000 MW
No. of feasible sites : 66Potential to meet national and regional needs
11.5.3 Major Planned and Proposed Projects of Nepal
Karnali Chicapani 10800 MW
West Seti 750 MW
Upper Karnali 300 MW
Arun III 402 MW
Pancheshower 6480 MW
Upper Tama Koshi 250 MW
Budhi Gandaki 600 MW
Other Major Hydropower Projects
Khimti Khola - 2 (27 MW)
Lower Arun (308 MW)
Kali Gandaki - 2 (660 MW)
Burhi Gandaki (600 MW)
Tila River (203 MW)
Naumure (245 MW)
Tama Koshi - 3 (287 MW)
Upper Trishuli (300MW)
Mai Loop (60 MW)
Tama Koshi - 2 (207 MW)
Upper Marshland - 3 (121 MW)
Some Hydropower Projects Identified for Development
Chameliya (30 MW)
Budhi Ganga (20 MW)
Kabeli - A (30 MW)
Arun - 3 (402 MW)
Kankai (60 MW)
Likhu - 4 (51 MW)
Dudh Koshi - 1 (300 MW)
Tamur - Mewa (101MW)
Rahughat Khola (27 MW)
Andhi Khola (176 MW)
Upper Arun (335 MW)
11.5.4 Department of Electricity Development (DoED): One Window
Issues surveys and project licenses
Recommends tax concessions and incentives
Assists in obtaining land
Assists in importing goods
Assists in obtaining all necessary permits, approvals, etc.
Regulates and monitors project functioning
11.5.5 Licensing Arrangements
Survey license issued within 30 days
Project license issued within 120 days
Validity of license up to 5 years
Exclusive water rights
11.5.6 Incentives
No tax, fee or charge of any kind levied on the machine, tool, equipment, machinery, and raw materials to be employed by an export promotion industry
No royalty imposed if any industry generates electricity for its own use
Foreign investment eligible for all the fiscal incentives available to domestic investment
11.5.7 Other facilities
Investment in generation and transmission of electricity eligible for the following fiscal concessions:
Import duty concession of 50% on import of machinery and equipment.
Green card at import terminals
11.5.8 Visa Facilities
Non-tourist visa up to six months made available to foreign nationals for investment prospecting in Nepal
Resident visa for investor and dependent family members in case of investment of an amount not less than US$ 200,000 as long as the investment is retained
11.5.9 Royalty Payments
Projects for internal consumption
Year 1-15 years Royalty Amount
Installed capacity 1-10 MW NRs. 100 / kW
Energy sold 1.75% Ave. Tariff / kWh
Installed capacity 10-100 MW NRs. 150 / kW
Energy sold 1.85% Ave. Tariff / kWh
Installed capacity 100-above NRs. 200 / kW
Energy sold 2% Ave. Tariff / kWh
Captive use NRs. 1500 / kW
Energy sold 2% Ave. Tariff / kWh
Projects for internal consumption
Year 1-15 years Royalty Amount
Installed capacity 1-10 MW NRs. 1000 / kW
Energy sold 10% Ave. Tariff / kWh
Installed capacity 10-100 MW NRs. 1200 / kW
Energy sold 10% Ave. Tariff / kWh
Installed capacity 100-above NRs. 1500 / kW
Energy sold 10% Ave. Tariff / kWh
Captive use NRs. 3000 / kW
Projects for Export
Year 15 years Royalty Amount
o Export oriented run off the river project NRs. 400 / kW
o Energy sold 7.5% Ave. Tariff / kWh
o Export oriented storage project NRs. 500 / kW
o Energy sold 10% Ave. Tariff / kWh
Projects for Export
Year 15 + years** Royalty Amount
o Export oriented run off the river project NRs. 1800 / kW
o Energy sold 12% Ave. Tariff / kWh
o Export oriented storage project NRs. 200 / kW
o Energy sold 15% Ave. Tariff / kWh
11.5.10 Marketing Opportunities
Domestic
Interconnection facilities with India
Huge power deficit in India
Attractive export oriented power projects in Nepal
Export of SAARC Nations through Regional grid (conceptual phase)
11.5.11 Existing Private Sector Initiatives with Foreign Participation
Foreign investors are involved in several hydropower projects. Main among them include:
Status Project Foreign Promoters
Khimti (60 MW) Commissioned Staatcraft, Norway
Bhote Koshi (36) Commissioned Harza, USA Commissioned
West Seti (750) To be launched soon Snowy Mountains, Australia
Middle Marsyangdi (70) NEA /Germany
(Under construction)
Arun 3 (402) - Licensed Satlej, India
Upper Karnali (300) -Licensed MGR, India
11.5.12 Highlights of the Power Trade Agreement HMG/N and Govt. of India (in
process)
Any party (govt. semi-govt., or private sector) of any country may enter into power trade agreement
Parties themselves determine the agreement parameters (including tariff)
Respective governments will assist the parties to implement agreements in accordance with existing laws and registration
Parties will be granted all incentives and concessions of their respective countries
12. Agriculture Scenario of Nepal (2001/02):
Agriculture
No. of farm households 4,174,374 (2001)
Economically active population (above age of 10 yrs and above) 9,900,196
Economically active population involved in agriculture 6,504,689
12.1 Nepal : unique with rich biodiversity :
Extreme altitudinal gradient of Nepal within a horizontal span of < 180 km (South to North)
10 bio-climatic zones from tropical to alpine .
118 ecosystems, 75 vegetation and 35 forest types.
12.2 Duties and Taxes :
Value Added Tax (VAT Ceiling): Rs. 2 million ( US$ 25,000)
General Import Duty Rates applicable to agricultural products are
Primary products: Mostly 10% (some 5% only like silk ,wool and cotton yarns)
Secondary and value added products: 15 to 25%, and with some exceptions of 40% on the ad valorem
Custom duties rebate on goods produced in PR China and imported through Tibet: 5% on the chargeable duty
Local Development Tax: 2.5 %
Agriculture Improvement Tax: 10% of the value on those items which do not attract custom duty
Special Surcharge:
o 1% for items with custom duty up to 5%
o 3.5% for items with custom duty above 5%
Excise Duty: levied on Molasses, Sakkhar, Fruit based drinks & Wine
Export Service Charge on agricultural products
o Export tariff levied on Edible oils, Cane molasses, Rice Bran is Rs. 0.25 per kg. And others to pay only 0.5% export service charge on f.o.b. price.
o Excise and custom duty on exported individual raw materials/auxiliary raw material will be refunded within 60 days of filing the claim.
12.3 Duties and Taxes Relaxation:
100%Custom duty exemption on following agriculture products of China entering through Tibet land route:
All live animals; Fish (fresh/chilled); dairy products; bones; live plants, seeds/bulbs flowers / foliages; garlic; all edible vegetables / roots / tubers (with the exception of peas / beans, cassava); banana, coconuts, figs, pineapple, avocado, guava, mango, citrus grape, melons, apricots, strawberries, kiwi etc; fresh ginger/turmeric; all cereal grains, cereal flours, grits, meal & flakes; soybean / groundnuts; seeds of sunflower / cotton / castor / sesame / safflower / poppy; vegetable plaiting materials / products; shakkar / gur; oilseed cakes
50%Custom duty exemption on import of following agriculture related products
Packaging materials for fruits; agricultural implements; cotton thread; feed supplement; mustard/rapeseed; coconut copra
12.4 Duties and Taxes Relaxation:
Only 1% custom duty charged for:
Cold storage related machineries / equipments / spares; pesticides / insecticides / herbicides; odder cutting equipments; harvesting tools, pump sets for irrigation between 2 to 8 HP; cream separators, chilling vats for milk, industrial refrigeration, poultry feeding plants/equipments, coffee percolators, apiculture machines, fruit juice extractors, sprinkle/drip irrigation equipments / pipes, fishing nets; green house& equipments for agriculture, horticulture and floriculture farms, pasmina yarn.
VAT Exemption on:
Raw Wool, Carpet Cotton Thread, Jute products, Basic Agricultural products, Basic necessity items, livestock products and agricultural inputs (fertilizer and seeds) and basic agricultural tools/equipment, feeds, insecticides/pesticides
12.6 National Priority Industries
Integrated sericulture and silk production
Horticulture and related processing
Animal husbandry
Dairy industry
Poultry farming
Fishery
Tea / coffee plantation & processing
Mushroom production / processing
Herbs culture and processing
Vegetable seeds
Bee-keeping and honey
Floriculture
Agro forestry
Green-house / tissue culture production Ind.
Cold Storage
12.7 Reservation and Restrictions
Reserved for domestic investors only
All cottage industries (but T-T allowed)
Poultry Farming
Fisheries
Bee-keeping
Restricted for export
Raw hides and skins
Raw wool
Log and Timbers
12.8 New Agricultural Products Thrust for Export
Organic Black Tea and Coffee
Vegetable seeds
Fresh fruits & vegetables
Honey
Large cardamom
Herbs and medicinal plants
Cut flowers / flower seeds
Processed fruits, vegetables and cereal products
12.9 What challenges Nepal is facing?
Lacks know-how in production technology resulting in low productivity / quality and high cost of production
Very little investment in the area of pot harvest handling, grading & packaging and processing technologies
Production and marketing managements are done on a very small scale or below the economy of scale
12.10 Where collaboration is needed?
New /improved technology( inputs, farming tools/ equipments, water management, weed and insect pest control and green house techniques etc.) for large scale production & farm/orchard management; post harvest handling and processing equipments and machineries
On- farm trainings for Nepalese farmers, extension people and farm managers
Marketing, buy-back and brand promotion
Finance and business linkages
13. Entry Procedures :
13.1 Indian Nationals
Indian nationals do not require visa. However, effective from October 1, 2000, Indians travelling to Nepal by air have to show upon arrival at entry point either a passport, Voter's Identity card issued by the Election Commission of India, or an identity card with photograph issued by the Central or State Government of India. Temporary identity card with photograph issued by Nepal based Indian diplomatic missions for identification of Indian nationals will also be considered in case of exceptions. Children under 10 years need not show any identification.
13.2 Tourist Visa
Foreigners other than Indians need a valid passport and visa to visit and stay in Nepal. Visitors from most countries can also get the visa on arrival.
For more on visa information, check the relevant section in this document or visit :
http://www.welcomenepal.com13.3 Access to Nepal:
By Air
Easily accessible from different countries:The Nepal Airlines (NA) is the National Flag Carrier of Nepal with flights to/from Delhi, Hong Kong, Mumbai, Osaka, Shanghai and Singapore. More than 23 international airlines fly in and out of Kathmandu including Biman Bangladesh Airlines (Dacca), China South-West Airlines (Lhasa), Condor (Munich), Dragon Air (Hong Kong), Druk Air (Paro),Gulf Air (Abu Dhabi), Indian Airlines (Delhi, Calcutta, Varanasi), Pakistan International Airlines (Karachi), Silk Air (Singapore), Qatar Airways (Doha), Thai International (Bangkok), Bangkok Air (Bangkok), Ettihad (Dubai), Malaysian (Kuala Lumpur), Jet (New Delhi), Korean (Seoul),etc..
By Land
All visitors entering Nepal by land must use no other entry points other than (1) Kakarbhitta (2) Birgunj (3) Belhiya, Bhairahawa (4) Nepalgunj (5) Dhangadi and (6) Mahendra Nagar in the Nepal-India Border and (7) Kodari in the Nepal-China border. The overland tourists entering the Kingdom with their vehicles must possess an international carnet
14. Private Sector of Nepal
Always a pre-dominant player in Nepal
The overwhelming chunk of Nepal
’s national income is generated by the private sectorFarmers, artisans, unorganized traders and service providers - all part of the private sector
15. Nepal and its Position
Member of WTO
Member of the South Asian Association for Regional Cooperation and its South Asian Free Trade Agreement
16. Concessions Under WTO to LDCs
Besides the provisions applicable to other developing countries, under the AoA , no reduction commitment is required for:
o Tariff reduction
o Domestics support reduction
o Export subsidy reduction
o Integrated frame work for Trade-related Technical Assistance to LDC established in 1997 with joint efforts of WTO, WB, UNDP,IMF, UNCTAD etc. to enhance market access for LDC exports.
o Some selected LDCs like Nepal, along with LOME convention members, are exempted from tariff by EU for all products except arms and ammunition
o Many other countries like Japan, Norway, Singapore, Australia, etc are giving some tariff concessions to LDCs
17. Nepal
’s Weakness & ThreatsSmall economy / limited resources (chances of being overwhelmed)
Lack of capital, technology & expertise
Trips and numerous standards (e.g. SPS)
Weak implementation & Traditional approach
Weak complimentary institutions
Brain drain
How much you gain is based on your bargaining capacity
18. Nepal
’s Areas of High Potential and Comparative AdvantageHydropower and energy (second only to Brazil in hydropower potential)
Tourism (unmatched natural beauty and cultural riches including Flora, Fauna, Health, Sports, Religious, Education, SAARC Hub, and such Global Landmarks as Mt.Everest, Lord Buddha, Sita)
Horticulture and floriculture (amazing diversity of climatic zones)
Highland tea and coffee
Modern Farming (incredibly fertile plains in the Terai)
Intellectual Properties
Bio Diversity (Herbs, Forestry, Ayurved, Spices)
Financial & Offshore Center
Service Sector &
Information Technology
Human Resources
Manufacturing (high value, low volume products)
THE FOREIGN INVESTMENT AND
TECHNOLOGY TRANSFER ACT 1992
An Act Made to Provide for matters relating to Foreign
Investment and Technology Transfer
Published in Nepal Gazette 12 Nov. 1992 (049/07/27)
First Amendment Published in Nepal Gazette 24 January 1996 (2052/10/10)
Preamble: Whereas, in the process of industrialization of the country, it is expedient to promote foreign investment and technology transfer for making the economy viable, dynamic and competitive through the maximum mobilization of the limited capital, human and the other natural resources.
Be it enacted by Parliament in the twenty-first year of the reign of His Majesty King Birendra Bir Bikram Shah Dev.
1. Short Title and Commencement:
1) This Act may be called "The Foreign Investment and Technology Transfer Act, 1992.
2) It shall come into force at once.
2. Definitions:
Unless the subject or Context otherwise requires, in this Act, -
a) "Industry" means and industry as referred to in Section 3 of the Industrial Enterprises Act, 1992.
b) "Foreign Investment" means the following investment made by a foreign investor in any industry:
1) Investment in share (equity),
2) Reinvestment of the earnings derived from the investment as referred to in sub-section (1) above,
3) Investment made in the form of loan or loan facilities.
c) "Technology Transfer" means any transfer of technology to be made under an agreement between an industry and a foreign investor on the following matters:
1) Use of any technological right, specialization, formula, process, patent or technical know how of foreign origin.
2) Use of any trademark of foreign ownership.
3) Acquiring any foreign technical, consultancy, management and marketing service.
d) "Foreign Investor" means any foreign individual, firm, company or corporate body involved in foreign investment or technology transfer including foreign government or international agency.
e) "Board" means the Industrial Promotion Board constituted under Section 12 of the Industrial Enterprises Act, 1992.
f) "Department" means the Department of Industries or Department of Cottage and Small Industries of His Majesty's Government or any other department, office or agency as specified by His Majesty's Government.
g) "Prescribed" or "As Prescribed" means prescribed or as prescribed in rules made under this Act or in an order issued by His Majesty's Government by notification published in the Nepal Gazette.
3. Permission to be Obtained:
1) Permission of the Department shall be required to be obtained for foreign investment or technology transfer.
2) A person desiring to avail the foreign investment or technology transfer shall be required to make an application to the department in the prescribed form along with the prescribed particulars for obtaining permission in that behalf.
3) #If an application is made pursuant to sub section (2) above, the Department shall in the case of an industry with fixed assets up to five hundred million rupees, itself, and in the case of an industry with fixed assets in excess thereof, in accordance with the decision of the Board, grant permission within thirty days from the date of application. The Department shall communicate the decision made in regard to such permission to the applicant.
4) #Notwithstanding anything contained in sub-sections (1) and (2) above, no permission shall be granted for making foreign investment in the industries set forth in the Annex.
Provided that permission may be granted for the transfer of Technology in such industries.
4. !………………..
5. Facilities and Concessions:
1) +……………………………………………………………
1a) !……………………………………………………………
2) A foreign investor making investment in foreign currency shall be entitled to repatriate the following amount outside the Kingdom of Nepal:
a) The amount received by the sale of the share of foreign investment as a whole or any part thereof.
b) The amount received as profit or dividend in lieu of the foreign investment.
c) The amount received as the payment of the principal of, and interest on, any foreign loan.
3) A foreign investor shall be entitled to repatriate outside the Kingdom of Nepal the amount received under an agreement for the transfer of technology in such currency as set forth in the concerned agreement.
Provisions Relating to Visa:
1) A foreign national visiting the Kingdom of Nepal in connection with undertaking any study or carrying out any research with the objective of making investment in the Kingdom of Nepal shall be provided a non-tourist visa for up to six months.
2) #A foreign investor or dependent family or authorized representative of such a foreign investor, and dependent family of such authorized representative shall for the purpose of stay in the Kingdom of Nepal be provided a business visa until the foreign investment is retained.
Provided that a foreign investor who, at a time, makes investment in an amount no less than one hundred thousand United States Dollar or in convertible foreign currency equivalent thereto, and his dependent family shall be granted a residential visa until such investment is retained.
Settlement of Disputes:
1) If any dispute arises between a foreign investor, national investor or the concerned industry, the concerned parties shall be required to settle the dispute by mutual consultations in the presence of the Department.
2) If the dispute could not be settled in the manner as referred to in sub-section (1) above, it shall be settled by arbitration in accordance with the prevailing arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL)
--------------------------------------------------------------------------------------
# Amended by the First Amendment.
! Repealed by the First Amendment.
+ Deleted (Published in the Nepal Gazette, Part 2, July 2000)
! Deleted by Income Tax Act 2002.
3) The arbitration shall be held in Kathmandu. The laws of Nepal shall be
applicable in the arbitration.
4) *Notwithstanding anything contained in sub-section (1), (2) and (3) above,
disputes arising in regard to foreign investment made in the industries with investment as prescribed may be settled as mentioned in the foreign investment agreement.
Power to Frame Rules:
His Majesty's Government may frame necessary rules for carrying out the objectives of this Act.
This Act to Prevail:
Notwithstanding anything contained in the existing laws, matters stipulated under this Act and rules made there-under shall be dealt accordingly.
4A. Power to Make Alteration or Amendment in Annex:
His Majesty's Government may, by notification the Nepal Gazette, make necessary alterations or amendments in Part (B) of the Annex.
Repeal and Savings:
1) The Foreign Investment and Technology Act, 1981 is hereby repealed.
2) All acts performed or actions taken under the Foreign Investment and Technology Act, 1981 shall be deemed to have been performed or taken under this Act.
---------------------------------------------------------------------------------------------
# Amended by the First Amendment.
* Inserted by the First Amendment.
Annex
[Relating to sub-section (4) of Section (3)]
Industries not to be granted Permission for Making Foreign Investment
Part (A)
1. Cottage Industries.
2. Personal Service Business (Business such as Hair Cutting, Beauty Parlour, Tailoring, Driving Training, etc).
3. Arms and Ammunition Industries.
4. Explosives, Gunpowder.
5. Industries related to Radio-Active Materials.
6. Real Estate Business (Excluding Construction Industries).
7. Motion Pictures Business (Produced in national languages and the language of the
nation).
8. Security Printing.
9. Currencies and Coinage Business.
Part (B)
1. Retail Business.
2. Travel Agency.
3. Trekking Agency.
4. Water Rafting.
5. Pony Trekking.
6. Horse Riding.
7. Cigarette, Bidi (Tobacco), Alcohol (excluding those exporting more than 90%).
8. Internal Courier Service.
9. Atomic Energy.
10. Tourist Lodging.
11. Poultry Farming.
12. Fisheries.
13. Bee-keeping.
14. Consultancy Services such as Management, Accounting, Engineering and Legal Services.
The Industrial
Enterprises Act 1992
An Act Made to Provide for the Industrial Development
Published in Nepal Gazette 12 Nov. 1992 (049/07/27)
Industrial Enterprises (First Amendment) Act, 1997 22 Aug. 1997 (2054/05/06)
Preamble: Whereas, for the overall economic development of the country, it is expedient to make arrangements for fostering industrial enterprises in a competitive manner through the increment in the productivity by making the environment of industrial investment more congenial, straightforward and encouraging.
Be it enacted by Parliament in the twenty first year of the reign of His Majesty King Birendra Bir Bikram Shah Dev.
1. Short Title and Commencement:
1) This Act may be called "The Industrial Enterprises Act, 1992".
2) It shall come into force at once.
2. Definitions:
Unless the subject or context otherwise requires, in this Act,-
a) "Industry" means any industry as referred to in Section 3.
b) "Cottage Industry" means any industry as referred to in Section 4.
c) "Small Industry" means any industry as referred to in Section 5.
d) "Medium Industry" means any industry as referred to in Section 6.
e) "Large Industry" means any industry as referred to in Section 7.
*e1) "Export Promotion Industry" means any prescribed industry established with the objective of exporting eighty or more than eighty percent of its product.
*e2) "Export Processing Zone" means a zone prescribed by His Majesty's
Government where an export promotion industry is to be situated.
f) "Fixed Asset" means movable an immovable properties of any industry as referred to in Section 8.
g) "Board" means the Industrial Promotion Board constituted under Section 12.
h) "Committee" means the One Window Committee constituted under Section 17.
i) "Operation Date" means the date from which the concerned industry either
starts its commercial production or provides its service.
j) "Department" means the Department of Industries or the Department of Cottage and Small Industries or any other Department or Office as His Majesty's Government may, by notification published in the Nepal Gazette, specify.
k) "Prescribed" or "As Prescribed" means prescribed or as prescribed in rules made under this Act or in an order issued by His Majesty's Government by notification published in the Nepal Gazette.
3. Classification of Industries:
For the purpose of this Act, industries are classified as follows:
a) Manufacturing Industries: Industries which produce goods by utilizing or processing raw materials, semi-processed materials, by-products or waste products or any other goods.
b) Energy-Based Industries: Industries generating energy from water resources, wind, solar, coal, natural oil, gas, bio-gas or any other sources.
c) Agro and Forest – Based Industries: Business mainly based on agriculture or forest products such as integrated sericulture and silk production, horticulture and fruit processing, animal husbandry, dairy industry, poultry farming, fishery, tea gardening and processing, coffee farming and processing, horticulture and herb processing, vegetable seed farming,* mushroom, vegetable farming or vegetable processing, tissue-culture, green house, bee-keeping, honey production, rubber farming, floriculture and production, and forestry related businesses such as leasehold forests, agro-forestry, etc.
d) Mineral Industries: Mineral excavation or processing thereof.
e) Tourism Industries: Tourist lodging, motel, hotel, restaurant, resort, travel agency, skiing, gliding, water rafting, cable car complex, pony-trekking, trekking, hot air ballooning, parasailing, golf-course, polo, horse-riding, etc.
f) Service Industries: Workshop, printing press, consultancy service, ginning and baling business, cinematography, construction business, public transportation business, photography, hospital, nursing home, educational and training institution, laboratory, air services, cold storage, etc.
g) Construction Industries: Road, bridge, ropeway, railway, trolley bus, tunnel, flying bridge and industrial, commercial and residential complex construction and operation.
4. Cottage Industries:
The traditional industries utilizing specific skill or local raw materials and resources, and labour intensive and related with national tradition, art and culture mentioned in Annex 1 shall be named as cottage industries.
5. #Small Industries:
Industries with a fixed asset of up to an amount of thirty million rupees shall be named as small industries.
6. #Medium Industries:
Industries with a fixed asset between thirty million rupees and one hundred million rupees shall be named as medium industries.
7. #Large Industries:
Industries with a fixed asset of more than one hundred million rupees shall be named as large industries.
8. Fixed Assets of Industries:
1) The fixed asset of an industry shall consist of following movable and immovable assets:
a) Land and land improvement (works such as land levelling, filling and fencing)
b) Physical infrastructures (such as sewerage internal road),
c) Office, factory building, godown, electric distribution, water distribution system and residential buildings,
d) Machinery, equipment and tools
e) Means of transportation,
f) Electrical equipment and office equipment,
g) Furniture, fixture, communication system and equipment.
2) In addition to the assets referred it in sub-section (1) above, expenses incurred or to be incurred in connection with technical consultancy and supervision prior to the making to investment in any industry or during different stages of construction, and which is to be capitalized, pre-investment and pre-operation costs as well as the amount of interest during the construction period, which is to be capitalized, shall be considered as the fixed assets of any industry.
9. Permission:
Industries other than those as set forth in Annex 2 which any significantly cause adverse effect on the security, public health and the environment, shall not be required to obtain permission for their establishment, extension and diversification.
Whoever desires to establish an industry for which a license is required to be obtained by virtue of sub-section (1) shall, for obtaining permission, be required to make an application to the Department in the prescribed form along with the prescribed particulars.
If an Application is made pursuant to sub-section (2) above, the Department shall, as per the decision of the Board, grant permission in the prescribed format within thirty days from the date of application. If the Board decides not to grant permission for the establishment of the industry, the Department shall inform the applicant of such decision.
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* Inserted by the First Amendment.
#Amended by the First Amendment
Industry to be Registered:
1) #In establishing any industry which requires permission to that effect pursuant to this Act, registration in the Department as prescribed shall be required to be made.
1a) *In establishing any industry not requiring permission under the Act, an application shall be required to be made to the Department for its registration setting out the nature, the classification of the industry, the place where the industry is to be situated, the machinery to be employed by the industry, raw materials, auxiliary raw materials, chemicals, packaging goods and the name of the industrialist.
2) #Notwithstanding anything contained in sub-section (1a) above, a Cottage Industry shall be required to get registered within 6 months from the date of operation.
3) #The Department shall, within twenty-one days from the date of application for registration pursuant to sub-sections (1), (1a) or (2) above, register such industry and issue an industry registration certificate to the applicant as prescribed.
4) The registration of a Cottage and Small Industry shall be made in the Department of Cottage and Small Industries or any district level office under the Department or any office designated by the Department on its behalf and the registration of a Medium and Large Industry shall be made in the Department of Industries or at such office as may be designated by the Department.
5) The registration of a Cottage and Small Industry shall be made in the Department of Cottage and Small Industries or any district level office under the Department or any office designated by the Department on its behalf and the registration of a Medium and Large Industry shall be made in the Department of Industries or at such office as may be designated by the Department.
Matters to be Contained in a License or Registration Certificate:
A Licence or Registration Certificate shall clearly contain matters relating to the facilities and concessions to be enjoyed by the industry and the prescribed terms and conditions to be observed by the industry.
12. Constitution of Industrial Promotion Board:
1) His Majesty's Government shall constitute and Industrial Promotion Board consisting of the following members:
a) The Minister or State Minister for Industries Chairman
b) The Assistant Minister for Industries Member
c) Member (looking after industries), National Planning Commission Member
d) The Governor, Nepal Rastra Bank Member
e) The Secretary, Ministry of Industry Member
f) The Secretary, Ministry of Finance Member
g) The Secretary, Ministry of Commerce Member
h) The Secretary, Ministry of Tourism Member
i) The Director General, Department of Cottage and Small Industries Member
j) Representative, Federation of Nepalese Chambers of Commerce
and Industry Member
k) Two persons, nominated by His Majesty's Government, either from
among the industry, commerce and tourism sector organizations or
from among the persons of high distinction in the same field. Member
l) The Director General, Department of Industries Secretary
2) His Majesty's Government may, by notification published in the Nepal Gazette, make necessary alteration or change in the membership of the Board.
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# Amended by the First Amendment.
* Inserted by the First Amendment
3) The Board may, if it deems necessary, invite any national or foreign expert or consultant at any meeting of the Board to participate therein as an observer.
4) The procedures relating to the meetings of the Board shall be as determined by the Board.
13. Functions, Duties and Powers of the Board:
The functions, Duties and powers of the Board shall be as follows:
a) To render necessary cooperation in formulating and implementing policies, laws and regulations pertaining to the industrialization of the country.
b) To give guidelines in attaining the objectives of liberal, open and competitive economic policies pursued by the country so as to make the industrial sector competitive.
c) To maintain coordination between the policy level and the implementation level of the industrial policy.
d) To cause to follow the ways and means for the prevention of the environmental pollution by putting more emphasis on the avoidance of effects on the environment and the public health.
e) To make recommendation to His Majesty's Government for the inclusion of any industry in the classification of industries.
f) To make recommendation to His Majesty's Government to introduce changes in the Areas mentioned in Annex – 3 by making evaluation thereof from time to time.
g) To give directives to the concerned body after making inquiries into the application submitted by any industry complaining that the industry has not received the facilities and concessions to be made available by the Committee.
h) Other functions, duties and powers of the Board shall be as prescribed.
14. Change in the Classification and Areas:
His Majesty's Government may, on the recommendation of the Board any by notification published in the Nepal Gazette, include any industry in the classification of industries or make timely changes in the Areas mentioned in Annex – 3.
15. Facilities and Concessions to be Accorded to Industries:
Notwithstanding anything contained in the laws relating to income tax, sales tax, excise duty and customs duties and in any other existing laws, an industry shall be entitled to received the following facilities and concessions:
a) No cottage industry shall be levied sales tax, excise duty and income tax.
b) @…………
c) !…………….
d) !…………….
e) !…………….
f) #Any industry, established in any Remote, Undeveloped, and Underdeveloped Areas as enlisted in Annex – 3, other than cigarettes, bidi, cigar, chewing tobacco, khaini industries and industries producing other goods of a similar nature utilizing tobacco as their basic raw material, and industries producing alcohol or beer, shall be granted a rebate, !……………. thirty-five, twenty-five and fifteen percent of the excise duty respectively for a period of ten years from the date of operation.
g) Fruit based fruit processing and cider and wine industries with a fixed asset of up to two million five hundred thousand rupees established in Mugu, Humla, Jumla, Dolpa, Kalikot, Bajura, Darchula, Bajhang, Achham, Mustang, Manag, Solukhumbu, Sankhuwasabha and Taplejung districts shall be entitled to an excise duty and sales tax exemption for a period of ten years, and fruit based alcohol industries shall be entitled to excise duty and sales tax exemption for a period of five years. On completion of such exemption period, His Majesty's Government may grant excise duty and sales tax exemption to the fruit based alcohol industries for up to an additional period of three years.
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@ Deleted by the First Amendment.
! Deleted by Income Tax Act 2002.
# Amended by the First Amendment.
h) While calculating depreciation on the fixed assets, industries shall be entitled to add one-third to the rate of depreciation allowed under the existing income tax laws.
i) @…………….
j) !…………….
i) @…………….
j) !…………….
k) Permission shall be granted for a reduction of up to 50 percent from the taxable income for the investment of any industry on process or equipment, which has the objective of controlling pollution or which any have a minimum effect on the environment. Such remission may be deducted on a lump-sum or on a installment basis within a period of three years.
l) !…………….
m) @…………….
n) After an industry comes into operation, 10 percent of the gross profit shall be allowed as a deduction against taxable income on account of expenses related with technology, product development and efficiency improvement.
o) +…………….
p) !…………….
q) !…………….
r) !…………….
s) !…………….
t) +…………….
u) The customs duty, sales tax, excise duty and premium levied on raw materials and auxiliary raw materials, etc. utilized by any industry in connection with its product during its production shall be reimbursed on the basis of the quantity of the export. Such reimbursement shall be made to the exporter within sixty days after an application to that effect has been duly submitted.
Provided that no reimbursement will be made if an application to that effect is not submitted within one year from the date of export.
v) #In cases where any industry sells its products in the Export Promotion House, the customs duties and sales tax levied on the raw materials imported for producing the products so sold as well as the sales tax and excise duty levied on the products so produced shall be reimbursed to the concerned industry on the basis of the quantity of sale and export.
Explanation: For the purposes of this clause, the words: "Export Promotion House" mean a company, firm, or cooperative body established as prescribed with the objective of gathering the products of the industries established in the Kingdom of Nepal and exporting them to foreign countries.
w) If an industry sells its product within the Kingdom in any foreign currency, the excise duty, sales tax and premium levied on such product and customs duty, excise duty and sales tax levied on the raw materials, auxiliary raw materials, etc. utilized in such product shall be reimbursed. The revenue to be so reimbursed shall be refunded to such industry within sixty days after an application to that effect has been duly submitted.
Provided that no reimbursement will be made if an application to that effect is not submitted within one year from the date of sale.
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@ Deleted by the First Amendment.
! Deleted by Income Tax Act 2002.
# Amended by the First Amendment.
* Inserted by the First Amendment.
x) #The customs duties, sales, tax, excise duty and premium levied on the production materials of intermediate goods to be utilized for the production of exportable industrial goods, and the sales tax and excise duty levied on the product shall be reimbursed to the concerned industry producing the intermediate goods, on the basis of the quantity of export, within sixty days from the date of sale.
Provided that no reimbursement shall be made if an application for the same is not made within one year from the date of export.
y) #No tax, fee or charge of any kind shall be levied on the machine, tool, equipment, machinery and raw material to be employed by an Export Promotion Industry as well as on the products of such industry.
Provided that if, for any reason, any product of such industry is required to be sold within the country, tax, fee or charge thereof shall be required to be paid on the basis of the quantity of sale.
z) *An industry will be entitled, for the purpose of the income tax, to deduct the amount of expenses incurred by it for the long-term benefit provided to its workers and employees including housing, life insurance, health facilities, education and training.
*z1) The rate of customs to be levied on the basic raw materials which are not produced in Nepal and are required for the production of industrial machinery or of any other goods may not be more than the rate of import duty that may be levied on the import of industrial machinery or ready made goods as is produced with the use of such raw materials.
*z2) If an industry producing intermediate goods sells its products to any other industry producing finished goods, the sales tax and excise duty to be levied on such products will be allowed to be adjusted on the basis of the quantity utilized by the industry producing the finished goods.
Provided that such a finished goods producing industry shall be required to have been registered for the purpose of sales tax and excise duty.
16. Other Facilities and Concessions:
The following industries, in addition to the facilities and concessions as set forth in section 15, may be granted further facilities and concessions as below:
a) Forest-based industry may be made available any forest on a leasehold basis.
b) No royalty shall be imposed if any industry generates electricity for its use.
c) His Majesty's Government may, be notification published in the Nepal Gazette, grant additional facilities to the *Export Promotion Industry, and prescribed industries established in the Export Processing Zone and in the government or non-government industrial estate.
d) On the recommendation of and with the decision of the Council of Ministers, and by notification published in the Nepal Gazette, additional facilities may be granted to any National Priority Industry or any industry established in Nepal by the way of invention therein.
e) @…………….
f) Double sales tax shall not be levied on the raw materials and products of any industry.
17. Constitution of the One-Window Committee:
1) His Majesty's Government shall, for the purpose of making available the facilities and concessions to be enjoyed by any industry under this Act in time from a single place, constitute a One-Window Committee consisting of the following:
a) The Director-General, Department of Industries Coordinator
b) The Director-General, Department of Customs Members
c) The Director-General, Department of Excise Duty Member
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# Amended by the First Amendment.
* Inserted by the First Amendment.
* Inserted by the First Amendment.
@ Deleted by the First Amendment.
d) The Director-General, Tax Department Member
e) The Director-General, Sales Tax Department Member
f) The Director-General, Department of Commerce Member
g) The Chief Controller, Nepal Rastra Bank Member
h) Representative, Federation of Nepalese Chambers of Commerce and Industry Member
i) One expert in the field of industry and commerce as designated by
His Majesty's Government or one representative from the Federation Member
2) His Majesty's Government may, by notification published in the Nepal Gazette, make alterations or changes in the members of the Committee.
3) The Committee may, if it deems necessary, invite any national or foreign expert or consultant to participate in the meetings of the Committee as an observer.
4) The procedures relating to the meetings of the committee shall be as determined by the Committee.
18. Function, Duties and Powers of the Committee:
1) The functions, duties and powers of the committee shall be as follows:
a) To make necessary decisions for making available the facilities and concessions to be enjoyed by any industry under this Act.
b) To perform such functions as may be delegated by the Board under its functions, duties and powers.
*b1) To make recommendations as may be required for making time-bound provisions on making available infrastructural services such as electricity, water, means of telecommunications, land, road, and so on required for the industries.
c) Other functions, duties and powers of the Committee shall be as prescribed.
2) Any decision made by the Committee in pursuance with clause (a) of sub-section (1) above, shall be required be implemented by the concerned body.
3) *The Committee may, as required, delegate some of its powers to the subcommittee constituted under sub-section (4): Provided that the powers specified in clause (b) of sub-section (1) of section (18) will not be delegated.
4) *The Committee may constitute sub-committees as may be required for the transaction of its business and the functions, duties and powers of the subcommittees so constituted shall be as fixed by the Committee.
19. Prohibition on the Misuse of Facilities and Concessions:
No Misuse of the facilities and concessions to be enjoyed by any industry under this Act shall be allowed.
20. Guarantee of Facilities:
10.. An industry which is operated by obtaining permission or by getting registered under the Industrial Enterprises Act, 1981 shall continue to enjoy the time bound facilities and concessions under the Act and with regard to the facilities and concessions for which no time has been fixed, it shall enjoy the facilities and concessions under this Act.
2) An industry which has been registered or has obtained permission before the commencement of this Act but which has started its commercial production only after the commencement of this Act shall enjoy the facilities under this Act.
Provided that if the time bound facilities and concessions to be enjoyed under the Industrial Enterprises Act prevailing at the time of registration or obtaining permission by such industry are for more than the period as granted by this Act or if the facilities and concessions are not to be made available under this Act, nothing shall prevent from enjoying the facilities and concessions under the prevailing Industrial Enterprises Act.
* Inserted by the First Amendment
3) *An industry which has been registered or has obtained permission before the commencement of this sub-section shall be entitled to enjoy such time-bound facilities and concessions as are being enjoyed by it at the time of registration or obtaining permission in accordance with the law and with regard to the facilities and concession for which not time has been fixed, it shall enjoy facilities and concessions under this Act.
21. Industries not be Nationalized:
No industry shall be nationalized.
22. Industrial Manpower:
1) The manpower required for any industry shall have to be recruited from among Nepali citizens.
2) Notwithstanding any anything contained in sub-section (1) above, if any industry can not be operated without person living outside his own country expatriate manpower, foreign nationals may be appointed in such industry with the prior approval of the Department of Labour for a maximum period of five years. If a person so appointed happens to be a technician of a special category but not available within Nepal, such person may, with the approval of the Department of Labour, be appointed for up to an additional period of five years.
3) A foreign national who is working in any industry pursuant to subsection (2) above and who is from a country wherein convertible foreign currency is in circulation, may repatriate his salaries, allowance, emoluments, etc in convertible currency in an amount not exceeding seventy five percent of such salaries, allowances and emoluments.
23. Duty to Furnish Particulars:
It shall be the duty of the concerned industry to furnish the industry related particulars as prescribed to concerned department on a regular basis.
24. Duty to Inform in case of Closing down of Industry:
If an industry is closed down after fulfilling the formalities as envisaged in the existing laws, information thereof shall have to be provided the concerned department within seven days from the date of closing down.
25. Power of His Majesty's Government:
His Majesty's Government shall take any of the following actions against any person for establishing any industry without obtaining permission required to be obtained under this Act or for non-compliance with the terms and conditions set forth in the license or certificate of registration or for violating any other provision of this Act.
a) #To impose a fine in an amount not exceeding five hundred thousand rupees,
b) To cancel the registration or permission of the industry,
c) To cause to close down the industry,
2) Before taking any action under sub-section (1), the concerned industry shall be given a reasonable time either to submit the explanation or to correct the mistake.
3) If any industry is not satisfied with the decision made by His Majesty's
Government under sub-section (1) above, it may file an appeal to an Appellate Court within thirty-five days of the notification thereof.
25a) Provisions relating to Sick Industries:
1) If an industry is being operated in loss for a consecutive period of five years and its production level is twenty percent or less than twenty percent of the total production capacity, His Majesty's Government may, if it deems necessary, declare it a sick industry by notification published in the Nepal Gazette.
2) No duty, fee and tax of any kind shall be levied on the machinery imported by any industry as referred to in sub-section (1) for the extension and diversification of such industry.
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* Inserted by the First Amendment.
# Amended by the First Amendment
26. Delegation of Power:
1) The Board may delegate any or all of its power conferred upon it by this Act or rules made there-under to the concerned department, office, official, committee, any member of the Board or any other committees or sub-committees constituted by the Board as necessary.
2) The Department may delegate any or all of its power conferred upon it by this Act or rules made there-under to any other department, office or official as necessary.
27. Power to Frame Rules:
His Majesty's Government may frame necessary rules to carry out the objectives of this Act.
28. Power to Remove Difficulties:
If any difficulty arises in connection with the implementation of this Act, His Majesty's Government may issue orders to remove such difficulty by notification published in the Nepal Gazette.
29. This Act to Prevail:
Notwithstanding anything contained in the existing laws, the matters stipulated in this Act and rules made there-under shall be dealt with accordingly.
30. Repeal and Savings:
1) The Industrial Enterprises Act, 1981 is hereby repealed.
2) All acts performed or actions taken under the Industrial Enterprises Act, 1981 shall be deemed to have been performed or taken under this Act.
31. *Consequences after the Industrial Enterprises (First Amendment) Ordinance, 1997 becomes ineffective:
After the Industrial Enterprises (First Amendment) Ordinance 1997 becomes ineffective, unless the contrary appears from its intention, such ineffectiveness
a) Shall not give rise to any of the matter not existing at the time of being the ordinance ineffective.
b) Shall not affect any matter that continued to exist or any act duly done or sentence served before by virtue of the Ordinance.
c) Shall not affect any right or privilege acquired by virtue of the Ordinance, nor shall it affect any duty or liability accrued there-form.
d) Shall not have any affect on any fine, punishment or confiscation imposed in accordance with the Ordinance.
e) Shall not affect any proceeding or means initiated with regard to any of the above mentioned rights, privileges duties, obligations or punishment and such legal proceeding or means may be initiated, continued or made operative in the same way as if the Ordinance is still in force.
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* Inserted by the First Amendment.
Annex-1
(Relating to Section 4)
COTTAGE INDUSTRIES
With the exception of cigarettes, bidi, cigar, chewing tobacco, Khaini industries and industries producing other goods of a similar nature utilizing tobacco as the basic raw material, alcohol and beer producing industries, * Handloom, Pedalloom, Semi-automatic loom, Warping, Dyeing and Printing, Tailoring (Other than Readymade Garments), Knitting, Handknitted Woollen, Mat and Blanket (Radi, Pakhi), Woollen Carpet, Pashmina, Woollen Garments, Carpentry, Wooden, Artistic Product, Cane and Bamboo Works, Natural Fibre Products, Hand Made Paper and Goods made up thereof, Gold, Philigiree Products including Silver, Brass, Copper Precious and
Semi-Precious Stones, Ornaments, Sculptures and Pottery, Honey, Chyuri, Cardamom
Processing, Clay or Ceramic Pottery, Leather Cutting and Tanning, Rural Tanning and Leather Goods producing Works, Jute, Sabai Grass, Babio, Choya, Cotton Thread Products, Artistic Products made up of Bones and Horns, Stone Carving, Ceramic Fine Arts, Pauwa, Boutique, Incense Stick (Dhup), Dolls and Toys Industries and cottage industries with the fixed asset of up to two hundred thousand rupees*
Notes:
1. Unless otherwise mentioned specifically, machines of the above mentioned industries should not employ through electric motors of diesel or petrol or crude oil engine more than a total of five kilowatt. Power looms shall not be included under Cottage Industries.
Permission shall be required for the establishment of mechanised woolen spinning and mechanised woolen carpet manufacturing.
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* Inserted by the First Amendment.
#Annex-2
(Relating to Section 9)
INDUSTRIES REQUIRING PERMISSION
1. Industries producing explosives including arms, ammunition and gunpowder, security printing, back notes and coin industries.
2. Cigarettes, bidi, cigar, chewing tobacco, khaini industries and industries producing goods of a similar nature utilizing tobacco as the basic raw material and alcohol or beer producing industries.
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# Amended by the First Amendment.
C. Manufacturing