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Types of Industries in Nepal

Industrial Enterprise Act that came into effect from 2076 B.S has classified industries into 5 different types.

1) Micro Enterprise: For any industry to be termed micro-enterprise, it must fulfill the following conditions:

  • Fixed Capital worth up to Rs. 2 million (20 lakhs) excluding land and building
  • Entrepreneur himself/herself is involved in the operation & management of the enterprise,
  • A maximum staff member of nine including entrepreneur himself/herself.
  • Annual turnover less than Rs. 10 million (1 crore)
  • Uses 20 Kilowatt or less powerful motors, in case, the enterprise uses plant, machinery or equipment 
2) Cottage Industry: For any industry to be termed as Cottage Industry, it must fulfill the following conditions:

  • Based on Traditional Skill and technology
  • Are labor-intensive and require specialized skill or local raw materials and based on local technology, art, and culture.
  • Uses 50 Kilowatt or less powerful motors, in case, the enterprise uses plant, machinery or equipment
  • Industries listed below in Annexure -2 of the Act
    • Handloom, Pedalloom, Semiautomatic loom, Warping, Dyeing and Printing, Tailoring (Other than Readymade Garments), and Knitting
    • Handknitted Woolen Mat and Blanket (Radi, Pakhi), Woolen Carpet, Pashmina, Woolen Garments, Hand Made Paper, and Goods made up thereof
    • Traditional Artistic Products
    • Traditional Sculptures
    • Handmade pottery and artisans products using brass, bronze copper, german silver
    • Handmade pottery and household items such as knives, dragger (khukuri), spades, and traditional tools made of iron.
    • Goods made up thereof, Gold, Philigiree Products including Silver, Brass, Copper Precious and SemiPrecious Stones
    • Leather Cutting and Tanning, Rural Tanning and Leather Goods-producing Works
    • Jute, Sabai Grass, Babio, Choya, Cotton Thread Products
    • Stone Carvings
    • Artistic Products made up of Bones and Horns, Ceramic and other soil-based pottery.
    • Fine Arts, Pauwa, and other traditional arts
    • Mask and other traditional Dolls and Toys
    • Musical instruments and artistic products representing tradition and culture
    • Handmade Brick Industry
3) Small Industry: For any industry to be termed as Small Industry, it must fulfill the following conditions:




  • Fixed Capital worth maximum of Rs. 150 million  (15 crores)
  • Must not fall under the category of Micro Enterprise or Cottage Industry
4) Medium Industry: For any industry to be termed as Medium Industry it must have capital above Rs.  150 million (15 crores) maximum up to Rs. 500 million (50 crores).

5) Large Industry: For any industry to be termed as Medium Industry it must have capital above Rs. 500 million (50 crores).



Act has further classified them into the following domains on the basis of the nature of the products and services being produced/provided through these industries. They are:

1) Energy Industry
2) Manufacturing Industry
3) Agro and Forest-based Industry
4) Minerals Industry
5) Infrastructure Industry
6) Tourism Industry
7) Information Technology and Communications based Industry
8) Service Industry

The question remains, how do we determine the Fixed Capital? Act, under Section 18, has defined the methodology. According to which, fixed capital shall include assets:

  • Physical Infrastructure constructed or improved in water or land/underground in earth or space.
  • Terrestrial physical infrastructure such as sewerage system, internal roads, drinking water system, and water supply system
  • Office, Manufacturing building, or Warehouse
  • Residential building for employees and labor
  • Equipment and system related to electricity supply
  • Plant, machinery, tools and their spare parts
  • Transportation Vehicles
  • Furniture & Fixture
  • Communication equipment and related systems
  • Office supplies and equipment of capital nature
  • Expenses incurred prior to the establishment of an industry or during the construction phase such as:
    • Technical and Supervision costs
    • Pre Investment and pre-operation costs
    • Capitalized Interest expenses
    • Research and Development cost 
    • Environmental Impact Study cost

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