Industrial Enterprises Act (Incl. Sec) Flashcards
What are the key functions of the Industrial and Investment Promotion Board?
Recommend: Policies (industrial, foreign investment, pollution).
Evaluate: Industrialization structure.
Assess: Industrial development.
Resolve: Industrialist problems.
Coordinate: Single-point service.
Facilitate: Implementation of industry laws.
How is the Industrial and Investment Promotion Board formed?
Minister or Minister of State for Industry, Commerce and Supply (Chairperson)
Presidents of FNCCI, Confederation of Nepalese Industry, Federation of Nepal Cottage and Small Industries, and Federation of Women Entrepreneurs.
Two industry experts nominated by the Ministry (one female).
National Planning Commission member (looking after industries).
Governor of NRB.
CEO of Investment Board Nepal.
Secretaries from various Ministries (Industry, Finance, Labor, Land Provision, Cooperative & Poverty Alleviation, Forest & Environment)
Joint Secretary, Industrial and Investment Promotion Division, Ministry of Industry.
Director General, Department of Industry (Member-Secretary).
What are the rules for managing industry records?
Responsibility (Section 16): IRB maintains records.
Records Kept: Registration, renewal, transmission, name/location/capacity/capital/objective changes, cancellations.
Access: Industry/owner can request records (with fees). Documents provided to courts/government offices when needed.
Format: Physical and electronic.
Record Loss: IRB reconstructs from other government bodies and industry submissions.
What are the rules for submitting industry details and informing about closures or cancellations?
Submit prescribed details within 6 months after each fiscal year’s end (and after commercial production starts), electronically.
Zero return if closed for >1 year or no production/transaction (unless closure info submitted).
Closure: Inform the registration body within 30 days of closure/suspension.
Cancellation: Apply to the IRB. Cancellation only after settling dues/liabilities. Insolvency follows insolvency laws; liquidator informs IRB.
Can an industry or owner demand records from the IRB?
Yes, by making an application in the prescribed form and paying the prescribed fees.
What happens if IRB records are destroyed?
The IRB can reconstruct records based on documents from other government bodies and submissions from the concerned industry.
What is the purpose of the Industrial and Investment Promotion Fund
To promote and protect industrial investment in Nepal.
What are the sources of the fund?
GON funds.
Funds from national associations, entities, or individuals.
Existing funds under IEA 2073.
Foreign government/international grants/assistance (with GON approval and Ministry of Finance involvement).
What is the mandatory CSR allocation?
At least 1% of annual profit (after tax).
Who does the CSR requirement apply to?
All medium and large industries.
Small and cottage industries with an annual turnover exceeding Rs. 15 Crores
How should CSR funds be utilized?
Through annual plans and programs in prescribed areas.
What reporting is required for CSR fund utilization?
A report including:
Programs executed in the fiscal year.
Expenses incurred in those programs.
Within 6 months after the fiscal year ends, submitted to the industry registration body.
Is the CSR amount tax deductible?
Yes, it is allowed as a deduction for income tax purposes.
Q: How is the Nepal Business Forum formed?
A: By the Government of Nepal (GON) with representation from the private sector.
Q: What is the purpose of Nepal Business Forum forum?
Effective implementation of industry-related laws and policies.
Promote dialogue and cooperation between public and private sectors.
Identify operational problems and recommend solutions to the government.
Coordinate for implementation and monitor recommendations.
Create a platform for regular dialogue between public and private sectors.
How can foreign nationals be appointed in an industry?
Obtain a work permit from the Department of Labour (after recommendation from the Department of Industry).
Maximum appointment period: 5 years.
Technical experts with specialized skills can be reappointed for an additional 2 years (5+2 total) after obtaining a work permit.
Note:
Efforts to employ Nepali citizens with required skills.
Only when unavailability of such human resources in Nepal.
Q: What is the maximum ceiling for repatriation of foreign nationals’ remuneration?
A: 70% in convertible foreign currency.
Q: What preoperative expense items can be capitalized as fixed assets?
Technical consultancy and supervision expenses.
Pre-investment and pre-operation costs.
Capitalized interest during construction.
Pre-operative environmental study and research expenses.
What are the fixed capital in an industry?
Physical infrastructure (above/underground, space, water).
Land improvements (sewerage, roads, water systems).
Industry buildings (offices, factories, godowns).
Employee housing.
Electricity supply and related systems.
Machinery, equipment, tools, and accessories.
Transportation means.
Capital office materials and equipment.
Communication materials, equipment, and systems.
Q: What are the rules for informing the IRB about the start of operation?
Start operation within the date on the RC and inform IRB within 30days.
If delayed, apply for an extension with reasons.
The IRB may grant extensions (with fees) based on progress and industry type.
Extensions more than 3 times require Board approval.
Q: How can an industry increase capital/capacity or change objectives?
Apply to the IRB (approval within 90 days if reasonable).
Micro
Cottage or Small industries (with fixed capital up to Rs. 1 Crore and not requiring permission u/s 8) are exempt.
Update the registration certificate if the change affects classification.
Capacity can’t be increased without altering existing machinery.
Q: How can an industry change its location?
Apply to the industry registration body.
If moving between provinces, permission from the Department is required.
The IRB grants permission based on the local body’s recommendation.
Q: When are EIA/IEE required for industries?
Before starting production if required by law.
After registration, if increasing capital/capacity, changing objectives/location, or transferring.
Q: When is IEE or EIA required after registration?
If the industry plans to:
Increase capital or capacity
Add or change objectives
Change location
Transfer to another place
Q: What types of industries are explicitly registered in the “Department of Industry”?
Large industry
Industries with foreign investment
Industries in Schedule-5 of the Constitution of Nepal
Industries spanning two or more Provinces
Industries offering academic consultancy on diplomatic affairs
Q: When is the industry registration certificate issued?
A: Within 5 days of application, if all documents are complete.
Q: What information is included in the registration certificate (Section 5)?
Date of issue
Date of commencement of production/transaction
Terms to be complied with
Other terms as specified by the registering body
Q: When can a registration body refuse to register an industry?
If applicant fails to submit details or documents
If it doesn’t appear that the procedures under the Act or rules are met.
The registering body provides a written explanation within 5 days of decision in case of refusal
Q: How can an applicant challenge a refusal to register?
By filing a complaint.
Within 30 days of the refusal decision.
Q: Who hears the complaint?
A: The Ministry of Industry or the Ministry of the concerned Province, depending on the registering body.
Q: How long does the complaint hearing body have to make a decision?
A: 30 days from the filing of the complaint.
Q: What is the process for obtaining permission for industries requiring it?
Application: Submit an application to the board via the body responsible for industry registration.
Opinion: The board consults with the relevant body for their opinion.
Decision: The board decides whether or not to grant permission within 30 days of application.
Granting Permission: If granted, the Department of Industries (DOI) issues a permission letter within 7 days.
Denying Permission: If denied, the applicant is informed within 7 days.
Information after Decision: The registering body must provide information to the applicant within 5 days of the board’s decision.
Q: How are industries classified based on the nature of goods they produce?
Construction Industry: (Examples: roads, bridges, buildings)
Manufacturing Industry: (Examples: using raw materials to create new products)
Energy-Based Industry: (Examples: atomic energy, uranium)
Agro & Forest-Based Industry: (Examples: dairy, sawmills)
Tourism Industry: (Examples: hotels, water rafting)
Service-Based Industry: (Examples: printing, consulting)
Mineral Industry: (Examples: mineral extraction)
Information Technology (IT) Industry: (Examples: IT parks, digital mapping)
Q: What is the fixed capital limit for a Micro Industry (excluding land and building)?
A: Up to Rs. 20 lakhs.
Q: What is the fixed capital limit for a Small Industry?
A: Up to Rs. 15 Crores.
Q: What is the fixed capital range for a Medium Industry?
A: More than Rs. 15 Crores to Rs. 50 Crores.
Q: What is the fixed capital requirement for a Large Industry?
A: More than Rs. 50 Crores.
Q: What are the five types of industries in Nepal, as per the Industrial Enterprises Act 2076?
A: Micro, Cottage, Small, Medium, and Large Industries.
Regarding Micro Industries?
Micro industries may be registered with the body for registration within 1 year from operation. [Section 5(3)]
What are the conditions for an industry to be classified as a Cottage Industry in Nepal?
Based on traditional skills and labor-oriented
Uses local materials and technology
Energy consumption: Up to 50 KW
Specified in Schedule 2 (Examples: Handloom, stone carving, traditional metal utensils, Pauba/Thangka art).
Q: What are the conditions for an industry to be classified as a Micro Industry in Nepal?
Fixed capital: Up to Rs. 20 lakhs (excluding land and building)
Annual turnover: Less than Rs. 10 million
Employees: Maximum 9 (including entrepreneur)
Energy consumption: Up to 20 KW
Q: What are the key provisions related to import duty and raw materials for industries in Nepal?
Industries can import raw/packaging materials not produced in Nepal by depositing customs duty instead of paying cash.
Recommendation from the Department of Industry is required for importing packaging materials using this facility.
One level lesser rate of import duty on raw and packaging materials compared to finished goods.
Minimum customs duty rate applied on imported machinery, generators, and scientific equipment for labs.
Additional Facilities for female entrepreneurs
35% rebate for industries registration fees
20% rebate on registration fees for any industrial fixed assets.
More preference is given for area allocation in Industrial Areas or Industrial Grams.
Ease in loan processing for exports
Q: Can an entrepreneur purchase land for their industry?
Yes
The industry registration body shall make necessary coordination and facilitation on the purchase or provision of land, if the concern industry requests.
What is the process for obtaining land on lease from the government?
Make an application to the IRB specifying the required land area.
IRB forwards the matter to the Ministry for further action.
The government may provide such land on lease subject to prevailing laws.
Lease rental and other terms shall be in accordance with the rental agreement between the government and the concern industry.
Q: What happens if an industry fails to operate after obtaining land on lease?
A: The land is considered to be automatically returned to the Government of Nepal.
Q: How can an industry acquire land exceeding the maximum ceiling?
A: Any industry requiring land in excess of the maximum ceiling must furnish an application to the IRB.
Process:
Industry applies to the IRB.
IRB examines the application and submits a report with an opinion to the Ministry of Industry.
The government may allow holding land in excess of the limit for the project, conditional on “use of land for the purpose for which exemption is granted.”
Strict prohibition on selling, distributing, or using the land as collateral to obtain loans.
Q: Can an industry be nationalized?
A: No nationalization of industry.
Unless for public purpose only with appropriate compensation.
Q: Who can declare an industry as a “sick industry”?
A: The Government of Nepal.
Q: What are the criteria for an industry to be declared “sick”?
Operated for at least 5 years after commencement of commercial production.
Operating at 30% or less of its production capacity for the last 3 consecutive years.
Incurred losses for 3 consecutive years.
Reasons for underutilization and losses are due to circumstances beyond the industry’s control (not intentional default or managerial weakness).
Q: What types of sick industries are recognized?
A: Fully sick, sick, and oriented to be sick.
Q: What facilities, concessions, and exemptions are available to sick industries?
The Government of Nepal may provide:
Full or partial rebate on duties, fees, and taxes
on the import of machinery, plants, tools, or devices
for extension, diversification, and reconstruction of the industry.
Cooperatives proposing to operate as a sick industry may be allowed to do so.
Industrial Enterprises Act, 2076 - Section 5
Registration of Industry
Industrial Enterprises Act, 2076 - Section 8
Prior Approval Required for Registration of Certain Industries
Industrial Enterprises Act, 2076 - Section 13
Transfer of Ownership of Industry
Industrial Enterprises Act, 2076 - Section 17
Classification of Industries
Industrial Enterprises Act, 2076 - Section 18
Fixed Assets (Permanent Capital) of Industry
Industrial Enterprises Act, 2076 - Section 19
National Priority Industries
Industrial Enterprises Act, 2076 - Section 20
Industrial Promotion Board
Industrial Enterprises Act, 2076 - Section 21
Functions, Duties and Powers of the Board
Industrial Enterprises Act, 2076 - Section 22
Income Tax Concessions to Industries
Industrial Enterprises Act, 2076 - Section 23
VAT and Customs Duty Exemptions
Industrial Enterprises Act, 2076 - Section 25
Additional Facilities and Concessions to Certain Industries (including women entrepreneurs)
Industrial Enterprises Act, 2076 - Section 31
Provision of Land on Lease for National Priority and Large Industries
Industrial Enterprises Act, 2076 - Section 39
Criterions for Classification of any Industry as Sick Industry
Industrial Enterprises Act, 2076 - Section 41
Facilities, Concession and Exemptions Related to Sick Industries
Industrial Enterprises Act, 2076 - Section 43
Provision of Special Economic Zone
Industrial Enterprises Act, 2076 - Section 44
Supply of Industrial Human Resource
Industrial Enterprises Act, 2076 - Section 48
Corporate Social Responsibility
(Sec) Registration of Industry
Industrial Enterprises Act, 2076 - Section 5
(Sec) Prior Approval Required for Registration of Certain Industries
Industrial Enterprises Act, 2076 - Section 8
(Sec) Transfer of Ownership of Industry
Industrial Enterprises Act, 2076 - Section 13
(Sec) Classification of Industries
Industrial Enterprises Act, 2076 - Section 17
(Sec) Fixed Assets (Permanent Capital) of Industry
Industrial Enterprises Act, 2076 - Section 18
(Sec) National Priority Industries
Industrial Enterprises Act, 2076 - Section 19
(Sec) Industrial Promotion Board
Industrial Enterprises Act, 2076 - Section 20
(Sec) Functions, Duties and Powers of the Board
Industrial Enterprises Act, 2076 - Section 21
(Sec) Income Tax Concessions to Industries
Industrial Enterprises Act, 2076 - Section 22
(Sec) VAT and Customs Duty Exemptions
Industrial Enterprises Act, 2076 - Section 23
(Sec) Additional Facilities and Concessions to Certain Industries (including women entrepreneurs)
Industrial Enterprises Act, 2076 - Section 25
(Sec) Provision of Land on Lease for National Priority and Large Industries
Industrial Enterprises Act, 2076 - Section 31
(Sec) Criterions for Classification of any Industry as Sick Industry
Industrial Enterprises Act, 2076 - Section 39
(Sec) Facilities, Concession and Exemptions Related to Sick Industries
Industrial Enterprises Act, 2076 - Section 41
(Sec) Provision of Special Economic Zone
Industrial Enterprises Act, 2076 - Section 43
(Sec) Supply of Industrial Human Resource
Industrial Enterprises Act, 2076 - Section 44
(Sec) Corporate Social Responsibility
Industrial Enterprises Act, 2076 - Section 48
(Industrial Enterprises Act, 2076) - Industry:
Cannot be operated or established without registering as per this Act.
(Industrial Enterprises Act, 2076) - Micro Industry:
Fixed capital up to Rs. 20 lakhs excluding land and building, annual turnover less than Ten million rupees.
(Industrial Enterprises Act, 2076) - Cottage Industry:
Based upon traditional skill, labour oriented, using local material, technology etc., use of equipment consuming energy upto 50 KW.
(Industrial Enterprises Act, 2076) - Small Industry:
Fixed (Permanent capital): Up to 15 Crores.
(Industrial Enterprises Act, 2076) - Medium Industry:
Fixed (Permanent) capital: More than 15 Crore to 50 Crores.
(Industrial Enterprises Act, 2076) - Large Industry:
Fixed capital more than 50 Crores.
(Industrial Enterprises Act, 2076) - Sick Industry:
Any industry operated for at least 5 years continuously and incurring losses with production level of thirty percent or less of the total production capacity in the last three years due to circumstances beyond management control.
(Industrial Enterprises Act, 2076) - One Stop Service Centre:
Established to provide smooth services to investors and make available incentives and concessions to industries from a single place.
