Industrial Enterprises Act (IEA) 2016

Industrial Enterprises Act (IEA) 2016

New Legislation on Industrial Enterprises – Brief Highlights (revised)

Industrial Enterprises Act 2016 (2073 BS) has been introduced with effect from November 22, 2016 (7^{th Marga 2073)} repealing the Industrial Enterprises Act 1992 (2049 BS.

New IEA is enacted with following objective:

·       To create the conducive Industrial Environment of the country, with friendly investment policy, 

·        To create the increment of the national productivity and employment opportunities,

·       To  develop the effective, dynamic and production oriented economic policy in the nation

·        To make optimum use of available natural, physical and human resources of the country,

·        To give emphasis to promote export by replacing the import through the means of industrial development

·        To create production oriented dynamic economic policy in the nation 

In substance IEA is enacted for the promotion of industry, establishment, and promotion of investment, protection through their expansion with a view to speed up of the industrialization by making the simple policy.

The Department of Industries (the “DOI”) continues to operate as primary implementing agency under the Act. The key provisions of the Act are set out below:

Registration of Industry and their regulation (Chapter –II, Sec 3-14)

The Act makes it mandatory for all the business activities falling under the definition of “industry’ as per Section 15 to be registered as an industry.

1.     Thus Cottage and small industries is registered in Department of Cottage and Small industries.

2.     Medium and large invested from domestic persons and Foreign investment industries is registered in Department of Industries, and

3.     Special Economic Zone industries invested by national investors is registered by SEZ Authority formed under SEZ Act 2073.

For registration it has to fulfill all the requirements as similar to the registration of a company, by making an application either manually or online service with required documents and fees.

Section 3. No one can establish or cause to establish industry or operate it without its registration.

Section 4. Application to be made for registration of Industry:

(1) Any person desirous of establishing any industry under the Act, an application is required to be made to the concern register office for its registration setting out the nature, documents, particulars in a  prescribed manner.

(2) Pursuant to Sub-section (1) documents to be attached can be submitted with digital attestation through electronic means.

(3) Notwithstanding anything contained in Sub-section (1) above, in case of micro entrepreneur/ industry and Cottage Industry the application for their registration can be made within 6 months from the date of its operation.

Section 5. Grant certificate of registration:

                     On receipt of the application pursuant to Section 4 for the registration of industry the concern register office will, after making necessary examination regarding the compliance of required documents as per Act and regulation thereof, issue certificate registration as prescribed.

 While going through the examination of the application of registration, the concern is required to ask the applicant for the submission of the incomplete particulars or documents as required.

Where, it is found that the applicant has failed to comply required formalities as required by the Act and Rules or failed to submit the required documents the concern registered office can refuse to register the industry with reasons thereof.

   

Where, examination regarding the environmental impact thereof, is required after the registration of industry, the industry is to be operated, start production activities only after the examination of  environmental impact caused or to be caused thereof.

  Section 6: Environmental impact is to be resolved:

                  It is the responsibility of the concern applicant to resolve the environmental impact condition as stated in the certificate of registration.

Section 7. Permission to be obtained:

Notwithstanding anything mentioned in the Act prior permission is   required to be obtained from the Board through the registeration office before registration of the following industries:

a.   Industries mentioned in the Schedule One of the Act.

b.  Industries required prior permission to be registered under the Foreign Investment and Technology Transfer Act 2049. (fixed asset exceeding 500 million rupees vide Sec 3 of the FITTA except the industries mentioned in Annex of it)

Decision in this respect is required to be made within one month by the Board. Where the decision is made for the approval of it, letter of permission of it is to be given within 15 days from the date of acknowledgement of the decision of the prior approval for registration.

On receipt of the prior permission, the application for registration is to be made within the given time as specified in the permission letter.

Where, the board decided not to grant permission for the registration of industry, notice of refusal regarding permission must be given with seven days, from the date of decision, by the registered office.

Section 8. Information regarding the establishment of industry and commencement of production:

Industry is to be established, operated, or commenced transaction within time given in the certificate of registration and is to give  information thereof in this respect to the registered office.

Where there if failure to establish as well as commence production and operate transaction, the applicant has to make an application to make an application the registered office for the extension of the due date of establishment with reasons one month before expiry of such date.

If the registered authority is satisfied with reasons claimed for the extension, it may be extended the date as specified.

Where time for establishment and operation of industry is extended it is to be carried out within the extended time. Where no application is made for the extension of  time to establish or failed to establish within the extended time, the registration of it will be ipso facto be cancelled and it is to be recorded accordingly in the register book.

Section 9.   Appeal

                   Dissatisfied party, pursuant to section 5 of the refusal of the registration of the industry by the registered authority may make an appeal in the MOI within thirty days from the receipt of issue of notice of refusal.

                   MOI, has to decide the matter after necessary examination against the appeal,  within thirty days of the receipt of it.

Section 10. Inspection:

                 Regular inspection can be made by the concerned registered office  regarding compliance or noncompliance of TOR of establishment of industry as specified in the certificate of registration.

Section 11. Prior Approval to be obtained from Registered office for transferring or shifting industry from one place to another by complying the EIA/EEA.

Section 12. Particulars regarding production and transaction after their commencement is to be submitted to the Registered authority within six month after the expiry of every fiscal year.

Section 13. Information regarding closure of industry is to be given within seven days of such closure or suspension of its operation.

Section 14. Application can be made for cancellation of registration with reasons in a prescribed format.

                

Approval and Compliance Requirement:

As per above provisions multiple approval requirements have been imposed under the Act. For example, approval requirements are applicable for

(a) extension of the time period for bringing the industry into operation,

 (b) transfer of location of the industry,

(c) liquidation of industry.

Further, approval from Registered authority and Investment Promotion Board is also required for the registration of industry in which foreign investment approval has been granted by such Board. These approval requirements appear to be applicable to all kinds of industries irrespective of investment or sector of operation such as micro industries.

The Act also has provided for ongoing reporting and filing requirements. For example, each industry is required to notify certain details to the authorities upon bringing industry into operation and submission production particulars within 6 months from the date of expiry of the fiscal year. A notification is also required to be given to the authorities when the industries stop or suspense their operation. These requirements are sure to add cost of registration of business and satisfying ongoing compliance.

 Classification of Industry  (Chapter-III)

The Act has given continuity to the general classification of industries on the basis of:

(a) size of fixed asset investment, and

(b) nature/sector of business.

However, on the basis of size of fixed assets investment, the Act has newly added "micro industries” within the classification.

Further, "Industries based on Information, Transmission and Communication Technology" has been added as a new classification on the basis of sector of business.

Classification of Industries on the basis of Fixed Assets

Section 15. Classification of Industries: For the purpose of this Act Industries have been classified as follows:

a.     Micro entrepreneur/Industries: following industries will be considered as micro entrepreneur/industries:

·        With fixed capital up to five lakh

·        Industries run by the proprietor himself

·        Not exceeding nine employees including proprietor

·        Having less than fifty lakh transaction annually

·        Machines, equipment or applying electrical energy having capacity less than 20 kilowatts  

However Industries mentioned in Schedule I required to obtain permission will not be considered as Micro Industries.

b.    Cottage Industries: Following industries will be considered as Cottage industries:

·        Traditional skill and technology based industries

·        Labour intensive and local resources and local technology and culture related industries

·        Industries which have been using machines equipments or up to 10 kilowatts

·         Industries prescribed in Schedule II

c.      Small Industries: It refers to the industries other than micro and small industries with fixed capital up to ten crores 

d.    Medium Industries: It refers to the industries with fixed capital more than ten crores not exceeding 25 crores.

e.      Large Industries: It refers to the industries having fixed capital more than twenty five crores 

Classification of above industries, on the basis of the nature as follows:

a.     Energy based Industry: Industries mentioned in Schedule III

b.    Manufacturing Industry: Industries producing goods using raw materials or semi or processed raw materials (Not prescribed schedule, but provided more facilities)

c.      Agro Forest based Industry: Industries based on agriculture or forest products: Industries prescribed in Schedule IV

d.    Mineral Industry: Other than Metal or Metallic mineral production through excavation or processing minerals thereof

e.      Construction Industry: Industries prescribed in Schedule V operated with Physical infrastructure production based

f.      Tourism Industry: Industries related to tourism services as prescribed in Schedule VI

g.     Information Technology, Information Transmission and IT service based industry: Industries prescribed in Schedule VII

h.    Service Oriented Industry: Service production or service provider based industries as prescribed in Schedule VIII

Nationally prioritized industries has been listed in Schedule IX of the Act.

Government of Nepal can include any other industries in the above classification on the recommendation of the Board. 

The Act lists the industries falling within each classification and grants authority to the Industry and Investment Promotion Board to recommend to the Government of Nepal to alter the classification of industries.

The primary purpose of such classification appears to be the provision of fiscal and non-fiscal incentives on the basis of classification. However, such an approach is likely to create problem especially when a business in question does not fall under the category of “industries”. For example, previously the Government of Nepal has classified "investment business" as one of the categories of the industries and this category permitted foreign investment in Nepal. However, as the Act has not included such industry within the list, the DOI might take the view that foreign investment is not allowed in investment business; unless the same is notified by the Government of Nepal through Nepal Gazette.

Environmental Compliances

Pursuant to the Act, industries should commence activity related to establishment and operation of industries only after completion of applicable environment studies. This provision provides for much needed clarity as there were certain practical difficulties where environmental clearance required prior to registration of the industry.

Chapter IV

               Provision Relating to Industry and Investment promotion Board

Section 18: Constitution of Industry and Investment Promotion Board:

It has been prescribed provision of constitution of Industry and Investment Promotion Board as follows for the promotion of industry, establishment, and promotion of investment, protection through their expansion with a view to speed up of the industrialization by making the simple policy and coordination process. 

Government of Nepal will constitute an Industrial Promotion Board consisting of the following members:

(a)  The Minister for Industries   --       --                 --       –Chairman

(b)  The State Minister for Industries (When MOI Chairs) – Member

      (c)  The Assistant Minister for Industries -Member

(d) Member (looking after industries), National Planning

commission                                                                      -Member

(e) The Governor, Nepal Rastra Bank                                 -Member

(f) The Secretary, Ministry of Industry                               -Member

(g) The Secretary, Ministry of Finance                                –Member

(h) The Secretary, Ministry of Labour and employment    –Member

(i) The Secretary, Ministry of commerce                              –Member

(j) The Secretary, Ministry of Agriculture Development     –Member

(k) The Secretary, Ministry of Information and communication –Member

(l) The Secretary, Ministry of Energy                                  –Member

(m) The Secretary, Ministry of Forest and Geo-protection –Member

(n) The Secretary, Ministry of Culture, Tourism and

Civil Aviation                                                                  –Member

(o) Chief Executive Officer of Investment Board                – Member

(p) Director General of Department of Cottage and

small Industries                                                               - Member

(q) Joint Secretary, DoI Promotion Division, of MoI          - Member

(r) Chairman, Nepal Chamber of Commerce                     – Member

(s) Chairman, Nepal Industrial Association                        – Member

(t) Chairman, Nepal Cottage and Small Industry Federation – Member

(u) Chairman, Women’s Entrepreneurs Association          – Member

(v)  Two persons nominated by Government of Nepal, at

       least a woman from among the persons of high distinction

       in the field industry                                                        -Member

(w) The Director General, Department of Industries – Member-Secretary

Board may invite any Secretary of GON or Officer or any national or international expert or advisor in the Board’s meeting.

Board should submit its decisions and particulars of duties performed to the Chairman every month.

Section 19: Functions, Duties and Power of the Board:

In addition to the other duties mentioned in this Act the function, duties and powers of the Board will be as follows:-

(a)                  To decide policies related to industrial promotion, investment protection related to enhancement of  industrialization

(b)                 To resolve obstacles and confusions in respect of enforcement and implementation of law of industry

(c)                   To observe and examine regularly country’s overall industrial policy, legal structure and their system and to recommend GON for necessary reformation

(d)                 To decide policy matters on the basis of existing law regarding foreign investment and technology transfer

(e)                   To cause to follow the ways and means for the prevention of the

Environmental pollution by putting more emphasis on the avoidance of

(f)        To recommend GON regarding  examination and evaluation of position of industrial development in the country

(g)                  To resolve any difficulties or obstacles regarding the services, facilities by the industries to be provided to the industries under this Act.

(h)                 To give direction to the concern authorities resolving problem or cause to resolve  by going through the complaint of the entrepreneurs

(i)         To recommend GON in respect of level and classification nature of the industries

(j)                     To recommend GON relating to the promotion and encouragement of promotion of investment through research and survey of them

(k)                  To decide policy for ensuring the quality of the goods product

(l)                  To advise GON relating to the enforcement of integrated industrial management information

(m)          To do or cause to do for the development of effective competitive and coordinated performance between the public, private and cooperative sectors

(n)             To do or cause to do act to gain speed of industrialization in the country

(o)             To give directives to the concern authorities to provide facilities and on receipt of the complain in this regard.

(p)             To perform or cause to perform other acts as prescribed.

Before formulation of any policy or amendment of the policy, it is required to take advice of the Board.

Obligation of the Board:

Any information receive pertaining to the performance of duties by the Board, should maintain secrecy without disclosing them.

Failure to maintain the secrecy by members of the board it will be considered as non fulfillment of their duties and treated as misconduct.

Corporate Social Responsibility (Sec 48)

The Act makes it mandatory to allocate at least 1% of the annual profit (there is no clarity on whether it is to be calculated on pre-tax profit or post tax profit) to be utilized towards corporate social responsibility (the “CSR Requirement”) by the medium and large industries.

The CSR Requirement is applicable to all (i) medium industries; i.e. industries having investment in fixed assets exceeding NPR 100,000,000 but less than NPR 250,000,000; and large industries; having investment in fixed assets exceeding of NPR 250,000,000) and (ii) cottage industries and small industries having annual turnover more than NPR 150,000,000.

The fund created for CSR is to be utilized on the basis of annual plans and programs but in the sectors that are prescribed under the Act, however, such sectors are yet to be specified by the Act. The progress report of the utilization of the fund collected for CSR is required to be submitted to the relevant government authorities registered within three months from expiry of the financial year.

Contract Manufacturing  (Sec 46)

The Act clarifies that that the goods can be produced on the basis of the contract manufacturing arrangement entered between the producers of the goods. The concept also extends to supply of services.

This provision provides much needed regulatory clarity as the contract for manufacturing was undertaken on the basis of approval from the DOI on a case to case basis. The Act does not mandate prior approval of the DOI to enter into a contract manufacturing arrangement.

The Act also prescribes the provision where the contract manufactures can be provided exemption and benefit for providing of goods or services as per prescribed criteria to the export industries or export processing units. The Government is yet to issue notification related to such benefits and exemptions.

Incentives and Facilities to Industries (Chapter –V)

The Act has provided various fiscal incentives to industries.

 The manufacturing and export oriented industries enjoy most of the fiscal incentives. For example, the manufacturing industries (which excludes tobacco, alcoholic beverages, etc.) are entitled to 20% discount on the applicable tax rate (currently 20%) making the effective tax rate 16%. The export income from export of goods are entitled to 25% discount making the effective tax rate from export income 15%. The exhaustive description of benefits is provide in Annex-I below.

Assurance of concession and rebate: (Sec 31)

The Act provides statutory protection of changes in law in relation to benefits and exemption provided under the Act and other applicable laws. The stabilization provision states that no provisions shall be made to limit the benefits and exemptions prescribed under the Act and other applicable laws. This provision is introduced against the background that, stabilization provision was set-up mostly for infrastructure projects under the applicable laws but now all industries registered under the Act will be eligible to enjoy the benefits.(Section 31)

Offences and Sanctions (Chapter VIII)

The Act has defined various non-compliances as offences and has also imposed sanctions. Offences that include;

 (a) operation of industry without registration,

 (b) failure to meet the reporting/filing requirement as set out under the Act,

 (c) misuse of facilities and incentives as made available under the Act,

 (d) non-fulfillment of the CSR Requirement, etc.

The sanctions under the Act include:

 (a) closure of industry, and

 (b) fine on the basis of types of industry.  For example, a large scale industry is liable to fine ranging from NPR 100,000 to NPR 300,000 for operating without registration. Similarly, an industry is liable to fine amounting to 0.75% of the annual transactions for non-compliance with CSR requirement.

The sanctions are levied either on, (a) industry, or (b) responsible officer of the industry. The time limitation for filling an appeal against the imposition of sanctions is thirty-five (35) days. Such appeal can be filed at the concerned High Court. (Section 42)

Annex I

Fiscal Concessions for Different Industries

A. Income Tax Concessions  (Section 22)
Industry	Concessions
Manufacturing Industries	20% exemption on the rate of tax imposed on the income earned from such industries.
Industries investing in construction of roads, bridge, tunnel, Ropeway, Railway, Tram, Trolleybus, Airport, Industrial Structure and Infrastructural Complex and bringing such constructions into operation	40% exemption on the rate of tax imposed on the income earned from operation of such infrastructures.
Manufacturing industries except those producing fruits based cider, brandy or wine established in Under Developed, Undeveloped and Less Developed Region	90%, 80% and 70% exemption on rate of the income tax for up to 10 years from the date of commencement of commercial production or transaction
Manufacturing industries producing fruit based cider, brandy or wine established in any Under Developed Region	40% exemption on the income tax for up to 10 years from the date of commencement of business
Manufacturing Industries set up with the investment of at least 1 billion rupees and providing direct employment to more than 500 individuals throughout the year	100% income tax exemption for first five years from the date of commencement of business. 50% exemption on the income tax for next 3 years. Industries already in operation are entitled to the above stated exemption in case such industries enhance their installed capacity by at least 25%, increase investment to 1 billion and provide direct employment to 500 individuals throughout the year.
Individuals or entities obtaining approval to commercially generate transmit or distribute Hydroelectricity by mid-April 2024 A.D. (Chaitra 2080 B.S.)	100% income tax exemption for first 10 years 50% income tax exemption for next 5 years. Such exemption is entitled to Solar, Wind and Bio Mass energy as well. In case of industries that have already begun commercial production at the time of commencement of this Act, the exemptions applicable at the time of receiving approval would be applicable.
Industries conducting research and excavation of natural gas and fuel commercially, if commence the commercial transaction by mid April 2019 A.D. (Chaitra 2075 B.S.)	100% Income tax exemption for first 7 years from the date of commencement of transaction; 50% exemption on the income tax for next 3 years..
Industries relating to Tourism Sector established with the investment of above 2 billion rupees	100% Income tax exemption for the first 5 years from the date of commencement of commercial transaction 50% exemption on rate of Income Tax for next 3 years Such Industries already in operation are entitled to the above stated exemption in case such industries enhance their installed capacity by 25%, increase investment to 2 billion.
Tourism Industry including hotel, resort etc. established outside the metropolitan or sub-metropolitan area with the investment of more than 50 million	100% Income tax exemption for the first 5 years from the date of commencement of commercial transaction 50% exemption on rate of Income Tax for next 3 years
Industries related to software development, data processing, cyber café and digital mapping established inside technology park, bio-tech park and information technology park specified by Nepal Government by publishing notice in Nepal Gazette.	50% exemption on tax imposed on income of such industries
Manufacturing Industries and Information and Communication Technology Industries employing 300 or more Nepalese throughout the years	15% exemption on tax imposed on income of such industries on that year (Additional 15% exemption on income tax on that year in case the industry has 50% of its employees from among Women, Scheduled Caste and Disabled person)
Manufacturing Industries and Information and Communication Technology Industries employing 1200 or more Nepalese throughout the year	25% exemption on tax imposed on income of such industries on that year (Additional 15% exemption on income tax on that year in case the industry has 50% of its employees from among Women, Scheduled Caste and Disabled person)
Manufacturing Industries exporting goods or commodities produced	25% exemption on the rate of tax imposed on the income earned.
All industries	Expenses made by industries for long term welfare and benefit of employees or workers such as housing, life insurance, health facility, education and training, child care, sports etc. can be deducted for purpose of income tax. Expenses made for equipment & technology used to reduce or control the pollution or re-processing or reuse of wastages can be deducted up to 50% of the adjusted taxable income of the same fiscal year. In case the expenses cannot be deducted in full the remaining amount is allowed to capitalize the depreciation on which may be claimed in the subsequent fiscal year. Expenses incurred for the machine or equipment used for reducing power consumption can be deducted for the purpose income tax. The costs incurred for increasing entrepreneurship, research and development and creation of new technology for enhancing the productivity of the industry can be deducted while calculating taxable income for an income year from business provided that such deduction does not exceed 50% of the adjusted taxable income from all business of the industry. In case the expenses cannot be deducted in full the remaining amount is allowed to capitalize the depreciation on which may be claimed in the subsequent fiscal year.
	Costs incurred in market promotion, survey and advertisement relating to the business can be deducted for the purpose of income tax. Costs incurred for the security of the physical assets as prescribed and actual premium paid for insurance can be deducted for the purpose of income tax. Costs incurred for the protection of industrial property in Nepal which is registered in Nepal can be deducted for the purpose of income tax. 25% exemption on the rate of income tax on royalty received from export of Intellectual Property created and registered in Nepal. 50% exemption on the rate of income tax on income earned from transfer or sale of intellectual property created by the industry. Government of Nepal may reimburse the registration fee paid to register the intellectual property in foreign country for its protection in the manner as prescribed by Nepal Government. Gifts or donations given to tax exempted organization can be deducted up to Rs. 100,000 or 5% of adjusted taxable income of the industry, whichever is less The Government of Nepal may also provide other exemptions by publishing a notice in Nepal Gazette.
Industries established inside Industrial Estate	Local Taxes including Unified Property Tax is not levied

Note:

i. Industries based on tobacco, liquor and kachha or kattha are not entitled to any of the exemptions or facilities listed above. However, such industries may deduct actual expenses incurred in business promotion activities including long-term welfare and benefit of employees or workers, in reducing or controlling pollution, re-processing of waste materials, in technologies and devices used reducing environment effects, in machine or equipment used for reducing power consumption, research and development expenses.

ii. In case an industry qualifies for more than one exemption in respect to similar income from among those listed above, the industry is only entitled to one exemption. Such industry is entitled to select the applicable exemption.

B. VAT  Exemptions (sec.23)
Industry	Benefits
All Industries	VAT imposed on production is reimbursed if such goods are exported, based on the quantity of export.

C . Customs duty Exemption (Sec  23)
Industry	Benefits
Industries not having Bonded Warehouse or Passbook facility	The Government of Nepal may refund the amount of Duty Draw Back in export of goods after determining the aggregate of costs incurred in import (Samadar) as prescribed in Nepal Gazette.
Industries not having Bonded Warehouse approval exporting goods through existing Banking Channel or Letter of Credit or selling such goods in domestic market in convertible currency	Raw materials or auxiliary raw materials as well as packaging materials that are not produced in Nepal can be imported by furnishing the required guarantees under prescribed conditions and procedures. However, in case of packaging materials not produced in Nepal, a recommendation is required from IRD to enjoy stated benefit. The Custom Duty levied in the import of such raw materials, auxiliary raw materials and packaging materials required for production shall be one level below the existing Custom Duty rate in import of finished goods using such materials.
Laboratories for Quality Assurance	Custom Duty is levied in the minimum rate for the import of machinery and scientific devices that re being imported to ensure quality as well as such machinery and equipment imported by industries for research and development.
All Industries	Custom duty is levied in the minimum rate on import of machinery, transformers, generators having a capacity of 10 Kilowatt and other industrial devices imported by an industry for commercial purpose.

D . Customs duty Exemption (Sec. 23)

Notwithstanding anything mentioned in existing acts, no fees or charges is levied on registration of micro industry pursuant to this Act.

Micro Industries already under operation at the time of commencement of this Act are entitled to 100% income tax exemption for at least 5 years from the date of commencement of this Act.

Micro Industries registered and operating pursuant to this Act are entitled to 100% income tax exemption for at least 5 years from the date of commencement of commercial transaction.

E . Additional benefits for Female Entrepreneurs : Industries registered under the ownership of Female Entrepreneurs only are entitled to following additional benefits and concessions:  (Sec 25).

35% exemption in existing Industry Registration Fees

20% exemption in existing rate of registration of Industrial property used inside the industries

Female entrepreneur shall be prioritized while allocating the areas inside Industrial Estate

In case such industries require loan for exporting produced goods, export loan will be provided to the industry depending upon the financial status of the transaction of the industry.

F. Other Exemptions and facilities

Industries based on forest products can be given possessory right pursuant to existing laws over forest in any region through lease or other promissory guarantee under prescribed conditions.

No fees or royalty pursuant to the existing laws shall be applicable in electricity produced by industry for its own consumption. Such industry willing to sell surplus electricity to any other industry, may sell so pursuant to existing laws in the rate agreed upon by both parties.

Government of Nepal may provide additional exemptions and facilities to export based industries and prescribed industries established inside Special Economic Zone or inside Government or Private Industrial Estate by publishing notice in Nepal Gazette.

Government of Nepal may provide additional exemptions and facilities by publishing a notice in Nepal Gazette to National Priority Industries or industry making optimum use of domestic raw materials, labor or skill or industries established by inventing new technology or goods inside Nepal upon recommendation of Industries and Investment Promotion Board.

Government of Nepal may provide exemptions in Demand Charge added in Electricity cost under prescribed conditions and procedures.

Government of Nepal may provide aid assistance as seed capital to cooperatives, micro industry, small and cottage industries to establish industries inside Under Developed Region under prescribed conditions.

Industries operating under Foreign Investment may be given approval to import goods produced by the head office located in foreign countries for production, market development and promotion of new goods for a prescribed period under prescribed terms and conditions.

No nationalization of industry  (Sec 33)

No Industry shall be nationalized registered under this Act.

GON assures the industrial security for the industries registered under it as prescribed. (Sec 33)

Prohibition on the Misuse of Facilities and Concessions (Sec 34): No Misuse of

the facilities and concessions to be enjoyed by any industry under this Act shall

be allowed other than the purpose for which it is provided.

Provision of One Window system Chapter VI

Act prescribes the provision regarding the establishment of One Window system for the timely regulation and implementation of the provisions of the Act. For the separate provision regarding the right and duties has been prescribed (Sec. 36).

Sick Industries Chapter VII

Sec 37.: If any industry is being operated for a consecutive period of five years and in loss its production level is thirty percent or less than thirty percent of the total production capacity, in the last three years, without any default on the part of the management,

Government of Nepal may, if it deems necessary, declare it a sick industry by notification published in the Nepal Gazette.

On the basis of identification of the sickness and industry will be classified on the grounds prescribed as totally sick industry, sick and about to be sick for their appropriate arrangement.

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.

Provision of Special Economic Zone (Sec. 43): For the promotion of export with proper management and operation of the industries GON may declare Special Economic Zone to any place or region for the establishment  and promotion of export oriented industries or tourism industries. In this respect GON may declare some places as Industrial corridor, or industrial village and Industrial cluster.

Supply of Industrial Human resource: (Section 44)

Human resources required for the industry are to be fulfilled from Nepalese citizens only.

However, if a Nepalese citizens could not be available for any skilled technical post or for Senior level management post, even after publishing an advertisement in national level public newspapers and journals, the management may by submitting an application to the Department of Labour along with the evidence of such for the approval can appoint a non Nepalese citizen

The DOL after examining the fact of the application and is satisfied thereof may grant approval to engage a non Nepalese citizen at work for a maximum period of five years, not exceeding two years at a time.

Department may extend further two years in a specialized kind of skilled technical post. A non Nepalese citizen can repatriate in foreign currency upto 75% of the salary, allowance he received.

Similar provision is there in Labour Act 1992 Sec 4A