Table of Contents
The Industrial Enterprises Act, 2076 (2020) governs the registration, establishment, and operation of industries in Nepal. No person or entity is permitted to operate an industrial business without first registering under this Act. Even companies registered at the Office of Company Registrar (OCR) cannot conduct business transactions without obtaining industry registration from the appropriate authority.
This comprehensive guide explains the complete industry registration process in Nepal, including classification of industries, registration authorities, required documents, fees, timeline, and post-registration compliance requirements under the current legal framework.
Legal Framework for Industry Registration
Industry registration in Nepal is governed by:
- Industrial Enterprises Act, 2076 (2020) – Primary legislation for industry registration
- Industrial Enterprises Regulation, 2076 (2019) – Procedural rules and guidelines
- Foreign Investment and Technology Transfer Act, 2075 (2019) – For foreign-invested industries
- Environment Protection Act, 2076 (2019) – Environmental compliance requirements
The Act replaced the Industrial Enterprises Act, 2073 (2016), introducing streamlined procedures, enhanced investor protection, and alignment with Nepal's federal structure.
Classification of Industries in Nepal
Industries in Nepal are classified based on two criteria: (1) fixed capital investment, and (2) nature of goods and services produced.
Classification by Fixed Capital
| Industry Type | Fixed Capital Threshold | Key Characteristics |
|---|---|---|
| Micro Industry | Up to NPR 20 lakh (2 million) | Maximum 9 workers including entrepreneur, annual transaction below NPR 1 crore, power capacity up to 20 KW |
| Cottage Industry | Based on traditional skills | Labour-oriented, local raw materials, traditional technology, power capacity up to 50 KW |
| Small Industry | Up to NPR 15 crore (150 million) | Other than micro and cottage industries |
| Medium Industry | NPR 15 crore to NPR 50 crore | Fixed capital exceeding 150 million but not exceeding 500 million |
| Large Industry | Above NPR 50 crore (500 million) | Fixed capital exceeding 500 million rupees |
Note: Fixed capital calculation excludes land and building for micro industries. It includes machinery, equipment, and other fixed assets required for industrial operations.
Classification by Nature of Business
Industries are further classified based on the nature of goods and services produced:
| Industry Type | Description | Examples |
|---|---|---|
| Energy-Based Industry | Industries engaged in energy and power generation | Hydropower, solar, wind, biogas, electricity transmission and distribution |
| Manufacturing Industry | Industries processing raw materials into finished goods | Textiles, cement, steel, pharmaceuticals, electronics |
| Agriculture & Forest Product-Based | Industries using agricultural or forest raw materials | Food processing, dairy, poultry, fishery, animal feed, tea processing |
| Mining Industry | Industries excavating or processing minerals | Metal extraction, mineral processing, petroleum |
| Infrastructure Industry | Industries building and operating physical infrastructure | Roads, bridges, airports, industrial parks, SEZs, housing |
| Tourism Industry | Industries providing tourism-related services | Hotels, resorts, travel agencies, adventure tourism, casinos |
| IT & Communication Industry | Industries using information and communication technology | Software development, data centers, ISPs, BPO/KPO, digital services |
| Service Industry | Industries producing or providing services | Healthcare, education, e-commerce, printing, consultancy, workshops |
Cottage Industries (Schedule-2)
The following traditional industries qualify as cottage industries:
- Handloom, pedal-loom, weaving, dyeing, and traditional tailoring
- Hand-knitted woollen products (Radi, Pakhi), carpets, pashmina, hand-made paper
- Traditional sculpturing and handicrafts
- Hand-made metal utensils (copper, brass, German silver)
- Traditional iron tools (Khukuri, sickle, Kodalo)
- Hand-made gold and silver ornaments
- Stone carving and precious stone cutting
- Natural fiber products (jute, cotton, allo)
- Paubha, thanka art, traditional masks and dolls
Industry Registration Authorities
The Industrial Enterprises Act, 2076 aligns with Nepal's federal structure, assigning registration responsibilities to different levels of government:
Department of Industry (DOI) – Federal Level
The Department of Industry registers the following categories:
- Industries requiring prior approval (Schedule-1 industries)
- Industries with foreign direct investment (FDI)
- Industries related to matters in Schedule-5 of the Constitution of Nepal
- Industries operating in two or more provinces
- Industries providing academic consultancy services on diplomatic affairs
- Atomic energy and uranium-based industries (Government of Nepal only)
Provincial Government
Provincial authorities register industries that do not fall under DOI jurisdiction, including most medium and large industries operating within a single province. Until provincial laws are enacted, DOI continues to administer these registrations.
Local Government
Local authorities (municipalities and rural municipalities) register:
- Micro industries
- Cottage industries
- Small industries (as per provincial law thresholds)
Documents Required for Industry Registration
| S.N. | Document | Details |
|---|---|---|
| 1 | Application Form | Prepared in accordance with Schedule-1 of the Regulation |
| 2 | Project Details | Detailed project proposal as per Schedule-2 format |
| 3 | Identity Document | Citizenship certificate (Nepali nationals) or Passport (foreigners) |
| 4 | Company Registration Certificate | Attested copy from Office of Company Registrar (for companies) |
| 5 | Memorandum & Articles of Association | Approved MOA and AOA (for companies) |
| 6 | Partnership Deed | For partnership-based businesses |
| 7 | Location Map | Map details of the industry location |
| 8 | Land Documents | Land ownership certificate or lease agreement |
| 9 | Power of Attorney | Original copy with identification certificate (if applicable) |
| 10 | FDI Approval Letter | Original copy for foreign investment-based industries |
| 11 | Environmental Clearance | IEE or EIA approval as required |
| 12 | Local Authority Recommendation | Letter from ward/municipality |
Industry Registration Process
Step 1: Business Entity Registration
Before industry registration, establish your business entity:
- Private Limited Company: Register at Office of Company Registrar (OCR)
- Partnership Firm: Register at District Administration Office
- Proprietorship: Register at local municipality
- Cooperative: Register at Division Cooperative Office
Step 2: Obtain Tax Registration
- Apply for PAN registration at Inland Revenue Department
- Apply for VAT registration if annual turnover exceeds NPR 50 lakh
Step 3: Environmental Clearance (If Required)
Depending on the nature and scale of the industry:
- Initial Environmental Examination (IEE): For industries with moderate environmental impact
- Environmental Impact Assessment (EIA): For large industries with significant environmental impact
- Self-Declaration: For industries not requiring IEE/EIA, declaring commitment to mitigate environmental impact
Step 4: Prepare Application Documents
- Complete application form (Schedule-1 format)
- Prepare detailed project proposal (Schedule-2 format)
- Gather all required supporting documents
- Obtain local authority recommendation letter
Step 5: Submit Online Application
- Visit the Department of Industry online portal or relevant provincial/local portal
- Create account and login
- Fill application form with industry details
- Upload all required documents with digital signatures
- Pay registration fees
- Submit application
Step 6: Document Verification
The registration authority examines submitted documents:
- If documents are complete: Proceed to certificate issuance
- If documents are incomplete: Authority notifies applicant to provide required details within 90 days
- If applicant fails to comply: Application may be rejected with written reasons within 5 days
Step 7: Industry Registration Certificate Issuance
Upon successful verification, the registration authority issues the Industry Registration Certificate within 5 working days. The certificate includes:
- Date of issue
- Period for commencement of commercial production or transaction
- Terms and conditions to be complied with
- Industry classification and registration number
Micro Industry Exception: Micro industries may apply for registration within one year after the date of operation.
Industries Requiring Prior Approval (Schedule-1)
The following industries require approval from the Industrial and Investment Promotion Board (IIPB) before registration:
| S.N. | Industry Type |
|---|---|
| 1 | Industries producing arms, ammunition, gunpowder, or explosives |
| 2 | Security printing, bank notes, and coin industries |
| 3 | Cigarette, bidi, cigar, chewing tobacco, and electronic cigarettes |
| 4 | Microbrewery, beer, alcohol, or alcoholic substances producing industries |
| 5 | Stone, ballast, sand excavation and processing industries |
| 6 | Industries producing radio communication equipment |
| 7 | Excavation of precious minerals and petroleum products |
| 8 | Liquefied Petroleum Gas (LPG) refilling industries |
| 9 | All industries producing drone products or providing services through drones |
| 10 | Other industries requiring permission under prevailing laws |
Prior Approval Process
- Submit application to IIPB through the industry registration body
- Registration body forwards application with opinion to IIPB within 7 days
- IIPB makes decision within 30 days
- DOI issues permit with notification within 5 days of IIPB decision
- Applicant must apply for industry registration within the timeline specified in permit
Industry Registration Fees and Costs
| Industry Type | Registration Fee | Estimated Total Cost |
|---|---|---|
| Micro Industry | NPR 500 - 1,000 | NPR 5,000 - 15,000 |
| Cottage Industry | NPR 1,000 - 2,000 | NPR 10,000 - 25,000 |
| Small Industry | NPR 2,000 - 5,000 | NPR 25,000 - 75,000 |
| Medium Industry | NPR 10,000 - 25,000 | NPR 100,000 - 300,000 |
| Large Industry | NPR 50,000 - 100,000 | NPR 200,000 - 500,000+ |
Note: Total cost includes registration fees, documentation, environmental clearance (IEE/EIA), consultant fees, and other administrative expenses. Actual costs vary based on industry type, location, and complexity.
Industry Registration Timeline
| Process Stage | Timeline |
|---|---|
| Company registration at OCR | 3-5 working days |
| PAN/VAT registration | 1-2 working days |
| IEE approval (if required) | 1-3 months |
| EIA approval (if required) | 3-6 months |
| Document preparation | 1-2 weeks |
| Application submission and verification | 7-10 working days |
| Industry registration certificate issuance | 5 working days |
| IIPB approval (for Schedule-1 industries) | 30 days additional |
Total Estimated Timeline:
- Standard industries: 15-30 working days
- Industries requiring IEE: 2-4 months
- Industries requiring EIA: 4-8 months
- Industries requiring IIPB approval: Additional 30-45 days
Post-Registration Compliance Requirements
Commencement Notification
The registered industry must notify the registration authority about commencement of operation, commercial production, or transaction within 30 days from the date of such commencement.
Industry Operation Extension
If the industry fails to commence operation within the timeline specified in the registration certificate:
- Apply for extension at least 30 days before the expiry of the operation timeline
- Additional 6-month grace period available upon payment of delay fee
- Extension may be granted based on construction progress and industry nature
- More than 3 extensions require IIPB approval
- Failure to obtain extension results in the industry becoming automatically inactive
Annual Reporting Requirements
- Progress Report: Submit annual progress report within 6 months of each fiscal year end
- Production Details: Submit details as prescribed in registration certificate
- Zero Details: Submit if industry is closed for more than a year or has no production/transaction
- CSR Report: Submit Corporate Social Responsibility plans and activities (for medium and large industries)
Approval for Changes
Prior approval from the registration authority is required for:
- Increase in existing capital
- Enhancement of production capacity
- Addition of new objectives
- Change in existing objectives
- Relocation of industry (provincial approval for within-province; DOI approval for inter-province)
Exception: Micro industries and cottage/small industries with fixed capital below NPR 1 crore are exempt from approval requirements for capital and objective changes.
Corporate Social Responsibility (CSR)
Mandatory for:
- Medium and large industries
- Cottage and small industries with annual turnover exceeding NPR 15 crore
Requirement: Allocate at least 1% of annual net profit for CSR activities in prescribed sectors including community health, education, environment protection, and local infrastructure.
Penalties for Non-Compliance
| Offence | Micro | Cottage/Small | Medium | Large |
|---|---|---|---|---|
| Operating without registration | NPR 5,000 | NPR 25,000 | NPR 50,000 | NPR 100,000 |
| Activities against objectives | Up to NPR 2,000 | Up to NPR 50,000 | Up to NPR 100,000 | Up to NPR 500,000 |
| Failure to notify operation | NPR 2,000/6 months | NPR 10,000/6 months | NPR 25,000/6 months | NPR 25,000/6 months |
| Unauthorized changes | NPR 5,000 | NPR 25,000-50,000 | NPR 100,000-300,000 | NPR 100,000-300,000 |
| Failure to submit annual details | NPR 1,000 | NPR 5,000 | NPR 10,000 | NPR 25,000 |
| CSR non-compliance | Fine equivalent to 0.5% of gross profit | |||
Note: Additional 50% fine applies to industries requiring IIPB approval. Misuse of incentives and exemptions may result in confiscation and recovery of equivalent amounts.
Tax Incentives for Industries
Income Tax Exemptions
- Micro Industries: 100% income tax exemption (currently operating)
- Cottage and Small Industries (above NPR 1 crore): 50% income tax exemption
- Local tea, dairy, and clothing industries: 50% exemption on income from sales
- Large manufacturing industries (NPR 1 billion+ investment, 300+ employees): 100% exemption for 5 years, 50% for next 3 years
- Mining and petroleum industries: 100% exemption for 7 years, 50% for next 3 years
- IT and software industries: 50% exemption on income
Custom Duty Benefits
- Minimum duty on import of machinery and industrial equipment (10 KW+ capacity)
- Duty drawback provisions for export-oriented industries
- Special concessions for industries in special economic zones
Foreign Investment in Industries
Foreign investors must obtain approval before industry registration:
- Investment below NPR 6 billion: Approval from Department of Industry
- Investment above NPR 6 billion: Approval from Investment Board Nepal
The Foreign Investment and Technology Transfer Act, 2075 governs permissible sectors, minimum investment thresholds, and repatriation provisions.
Industry and Investment Promotion Board (IIPB)
The IIPB is the apex body for industrial policy and investment promotion, comprising:
- Minister for Industry, Commerce and Supplies (Chairperson)
- NPC Member, NRB Governor, relevant Ministry Secretaries
- Investment Board Nepal CEO
- FNCCI, CNI, FNCSI, Women Entrepreneurs Federation Chairpersons
- Director General, Department of Industry (Member Secretary)
IIPB functions include policy advice, investment protection, foreign investment facilitation, and resolution of entrepreneur grievances.
Contact Information
Department of Industry (DOI)
- Location: Tripureshwor, Kathmandu
- Website: www.doind.gov.np
- Online Portal: industryregistration.doind.gov.np
Cottage and Small Industries Development Board
- Location: Tripureshwor, Kathmandu
- Website: www.csidb.gov.np
Related Services
Complete your business setup with these related registrations:
- Company Registration in Nepal
- PAN Registration in Nepal
- VAT Registration in Nepal
- Trademark Registration in Nepal
- Foreign Direct Investment in Nepal
- Environmental Law in Nepal
Need Legal Assistance?
Industry registration involves complex legal and regulatory requirements. Our team can assist with company formation, industry registration, environmental clearance, and ongoing compliance. Contact us for professional guidance.
Frequently Asked Questions
The Industrial Enterprises Act, 2076 (2020) aims to facilitate easy, predictable, and effective management of the industrial sector in Nepal. Key objectives:
- Provide legal framework for industry registration and operation
- Classify industries based on capital and nature of business
- Establish registration authorities at federal, provincial, and local levels
- Define incentives, exemptions, and facilities for industries
- Set compliance requirements and penalties for violations
- Promote industrial development and employment generation
Any person, firm, or company intending to establish an industry in Nepal can apply. This includes:
- Individual proprietors (Nepali citizens)
- Partnership firms
- Private limited companies
- Public limited companies
- Cooperatives
- Foreign investors (with prior FDI approval) The applicant must have a registered business entity before applying for industry registration. Companies registered at OCR cannot operate without industry registration.
Industries are classified on two bases under the Act:
By Fixed Capital:
- Micro Industry: Up to NPR 20 lakh
- Cottage Industry: Traditional skill-based
- Small Industry: Up to NPR 15 crore
- Medium Industry: NPR 15-50 crore
- Large Industry: Above NPR 50 crore
By Nature of Business: Energy-based, Manufacturing, Agriculture & Forest-based, Mining, Infrastructure, Tourism, IT & Communication, and Service industries.
Required documents include:
- Application form (Schedule-1 format)
- Project details (Schedule-2 format)
- Citizenship certificate or passport
- Company registration certificate and MOA/AOA
- Land ownership documents or lease agreement
- Location map of the industry
- Power of Attorney (if applicable)
- FDI approval letter (for foreign investment)
- Environmental clearance (IEE/EIA as required)
- Local authority recommendation letter
- Partnership deed (for partnerships)
Timeline varies by industry type:
- Standard industries: 15-30 working days
- With IEE requirement: 2-4 months
- With EIA requirement: 4-8 months
- Schedule-1 industries (IIPB approval): Additional 30-45 days
The Act mandates certificate issuance within 5 working days of receiving complete documents. Document verification may take 7-10 working days.
Registration fees by industry type:
- Micro Industry: NPR 500-1,000
- Cottage Industry: NPR 1,000-2,000
- Small Industry: NPR 2,000-5,000
- Medium Industry: NPR 10,000-25,000
- Large Industry: NPR 50,000-100,000
Total costs (including documentation, clearances, and professional fees) range from NPR 5,000 for micro industries to NPR 500,000+ for large industries.
Industries requiring Industrial and Investment Promotion Board approval include:
- Arms, ammunition, gunpowder, and explosives
- Security printing, bank notes, and coins
- Cigarettes, tobacco products, and electronic cigarettes
- Microbrewery, beer, alcohol, and alcoholic substances
- Stone, ballast, and sand excavation
- Radio communication equipment manufacturing
- Precious minerals and petroleum excavation
- LPG refilling industries
- Drone manufacturing and services
- Other industries specified under prevailing laws
Environmental requirements depend on industry impact:
- IEE (Initial Environmental Examination): For industries with moderate environmental impact
- EIA (Environmental Impact Assessment): For large industries with significant environmental impact
- Self-Declaration: For industries not requiring IEE/EIA, declaring commitment to environmental protection
Industries must complete environmental studies before commencing establishment and operation activities.
Registered industries must:
- Notify commencement of operation within 30 days
- Submit annual progress reports within 6 months of fiscal year end
- Submit zero details if no production/transaction for a year
- Obtain approval for capital, capacity, or objective changes
- Allocate 1% of net profit for CSR (medium and large industries)
- Comply with inspection and monitoring requirements
- Maintain production and transaction records
If the industry doesn't commence within the timeline in the registration certificate:
- Apply for extension 30 days before expiry
- 6-month grace period available with delay fee
- Extension granted based on construction progress
- More than 3 extensions require IIPB approval
- Failure to obtain extension: industry becomes automatically inactive The Act no longer cancels registration for operational delays but renders the industry inactive.
Penalties for operating without registration:
- Micro Industry: NPR 5,000
- Cottage/Small Industry: NPR 25,000
- Medium Industry: NPR 50,000
- Large Industry: NPR 100,000 Plus immediate closure of the industry. Additional 50% fine applies to industries requiring IIPB approval. Other violations have separate penalty scales based on industry size.
Key tax incentives:
- Micro Industries: 100% income tax exemption
- Cottage/Small Industries (above NPR 1 crore): 50% exemption
- Large manufacturing (NPR 1 billion+, 300+ employees): 100% exemption for 5 years, 50% for 3 years
- Mining/petroleum industries: 100% exemption for 7 years
- IT/software industries: 50% exemption
- Local tea, dairy, clothing: 50% exemption on sales income
- Minimum customs duty on machinery imports
- Duty drawback for export industries
Yes, foreign investors can register industries with prior approval:
- Investment below NPR 6 billion: Approval from Department of Industry
- Investment above NPR 6 billion: Approval from Investment Board Nepal
Foreign investment is governed by the Foreign Investment and Technology Transfer Act, 2075. Certain sectors have restrictions or minimum investment requirements. Technology transfer agreements may also require approval.
CSR is mandatory for:
- Medium and large industries
- Cottage and small industries with annual turnover above NPR 15 crore
Requirements:
- Allocate minimum 1% of annual net profit
- Utilize funds in prescribed sectors (health, education, environment, infrastructure)
- Submit CSR plans within 6 months of fiscal year end
- Implement in coordination with local authorities
- CSR expenses are tax-deductible Non-compliance penalty: Fine equivalent to 0.5% of gross profit.
Registration authorities under federal structure:
Department of Industry (DOI):
- Schedule-1 industries (requiring IIPB approval)
- Foreign investment industries
- Industries in Schedule-5 of Constitution
- Multi-province industries
- Diplomatic consultancy services
Provincial Government:
- Medium and large industries within single province
- Until provincial laws enacted, DOI administers
Local Government:
- Micro industries
- Cottage industries
- Small industries (as per provincial thresholds)
