Industrial Policy, 2010

 Vision: To make remarkable contribution in national economy through

sustainable and broad-based economic growth.
 Main Objectives:
o To increase export of industrial product
o To increase contribution of industrial sector in national development
o To establish industrial entrepreneurship as sustainable sector
o To create strong basis of investment
o To protect industrial intellectual property rights

 Policies:
o Priority to develop or acquire new technology.
o Follow the no pay for no work principle.
o Additional facilities and concession such as incentives to export-
oriented industries, industries established in Special Economic Zone
(SEZ).
o Special emphasis to promote industries that use local resources, raw
materials, skills, labor and technology.
o Special measures to promote green industries.
o Technical and financial assistance to industries that use environment-
friendly and energy saving technology on their own costs.
o Reform in macro-economic policies, revenue policy, local tax and other
sectoral policies.
o Formation of industrial security force.
o Encouragement to the NRN to invest in Nepal.
o Protection of industrial intellectual property rights.
o Special promotion for production and market promotion of the
products of micro enterprises, cottage and small industries.
 Privatization Act, 1992

 The main features of this act are as follows:

 Formation of privatization committee:
A privatization committee is formed to organize the process of
privatization under the chairmanship of minister or state
minister of finance.

 Powers, functions and duties of committee:

The powers, functions and duties of committee are as follows:
- To recommend programs and priorities of privatization
- To conduct study and research for privatization programs
- To evaluate the enterprise and recommend to the
government
- To remove any hindrances faced in privatization programs
- To create sub-committee, as may be necessary.

 Process of privatization:
The process of privatization is specified as:
- Sale of shares
- Formation of cooperatives
- Selling assets of enterprise
- Leasing out assets of enterprise
- Involvement of private sector in the management of
enterprise
- Adopt any other modalities based on recommendations by
committee.

 Evaluation of proposal:
The proposal of privatization is evaluated on the following basis:
- Attractive price
- Management of enterprise without changing its nature
- Retention of service of present employees
- Management experience
- Expansion of enterprise to develop employment
opportunities.

 Settlement of disputes:
If any dispute arises, it is resolved through mutual consultation
among the concerned parties.

 Continuity of present workers:

The government may ensure the continuity of service of the
present workers of the enterprise to be privatized.
 Liquidation of enterprise:
- The government can dissolve the wholly owned enterprise
by publishing a notification in Nepal Gazette.
- All arrears due to enterprise liquidated are recovered as
government dues.
- The government may transfer the assets and liabilities of
enterprise liquidated to any other body.
- If all the liabilities cannot be fully settled from the
available assets of the enterprise, the residual liabilities
can be settled according to existing laws.
Trade Policy, 2015

 Goal: To achieve inclusive and sustainable economic growth through export

promotion.
 Objectives:
o To enhance supply related capacity, reduce trade deficit by increasing
exports.
o To increase assess of goods, services and intellectual property to the
regional and global markets.
 Strategies:
Strategy to strength supply related capacity and reduce trade deficit by
increasing exports:
- Role of the government as coordinator, facilitator and
regulator to enhance the participation of private sector.
- Enhance competitive capacity of the products of
competitive advantage.
- Reduce trade deficit by strengthening supply side
capacity.
- Enhance competitive capacity of exportable service
sectors
- Reduce transaction cost through trade facilitation and
institutional strengthening
- Mainstreaming trade in order to establish as major
component of economy

Strategy to increase access of goods, service and intellectual property to regional

and global markets:

- Expand market and enhance trade capacity by the means

of multilateral, regional and bilateral trade diplomacy.
- Link trade in goods in services to regional and global
production network.
- Increase access of Nepalese product to world market by
promoting and protecting trade related intellectual
property rights.
Tourism Policy, 2008

 Objectives:
o To develop tourism as an important sector of Nepalese economy by
developing linkages between tourism and other sectors
o To diversify tourism down to rural areas
o To improve natural, cultural and human aspects of nation in order to
develop and expand the tourism industry
o To maintain good image of nation in international community
o To develop and promote Nepal as an attractive tourist destination

 Characteristics:
o Emphasis on promotional activities to attract the tourists in Nepal
o Emphasis on Rural Tourism, Community based Tourism and Home
stays
o Priority to internal tourism
o Development of air services
o Leading role of private sector in tourism development
o Extensive use of information technology and data in tourism
management
o Focus on tourist security and crisis management
o Reforms in legal, administrative, managerial and structural aspects
o Formation of Tourism Coordination Committee and Crisis Management
Committee
o Activation of Tourism Council

 Policy:
o Participation of private sector for tourism product development and
diversification. The government role is directed towards infrastructure
development
o Involvement of Nepalese people in environmental conservation
programs
o Priority will be given to developing new tourist destinations,
particularly in rural areas
o Popular religious tourism sites will be improved and promoted in order
to develop religious tourism
o Tourist service and facilities will be encouraged to upgrade in quality.
o Due attention will be paid to improving regional imbalances while
developing tourism
o Linkages will be established between tourism and agro-based as well
as cottage industries.
 Monetary Policy, 2020/21
 Provisions:
o Commercial banks need to lend at least 15 percent to the agricultural
sector, 15 percent to micro, small and medium enterprises and 10
percent to hydropower sector of their total loans.
o Extension of deadline for paying loan installments up to one year.
o Provision of refinance funds up to five times to revive businesses
severely hit by Covid-19.
o Encouragement to merger among banks and financial institutions.
o The capital plus credit to deposit ratio (CCD) has been raised to 85%
from 80%.
o The issuance of license for new finance companies has been halted for
time being.
o Barred the BFIs from charging feeds on interbank ATM withdrawal.
o Provision of fund worth Rs 50 billion through which badly affected
sectors get loans at 5 percent interest rate.
o Ensure adequate foreign exchange reserves to cover seven months
worth of imports of goods and services.
 UNIT 3 ACTS

Private Firm Registration Act, 1958

 The main features of this act are as follows:
o Compulsory registration:
All the private firms must be registered to the concerned department.
The transactions carried out by the firm without registration under this
act are not valid.
o Application:
A person intending to register a private firm should submit an
application in the prescribed format along with prescribed fee to the
concerned department. The particulars may include the name,
address, objectives of the firm, goods and services to be transacted,
personal information of the owner like name, address, father’s name,
mother’s name.
o Issuance of certificate:
If the concerned department believes that the information provided in
application are valid or if it finds a reasonable reason to operate the
private firm, it issues a certificate.
o Approval to change particulars:
To change any particulars submitted in the application, the approval of
concerned department is required.
o Seek particulars:
The concerned department may seek the particulars of the accounts of
a firm registered under this act.
o Cancellation of registration:
The concerned department may cancel the registration of a private
firm in the following circumstances.
- If registration of a firm is not renewed within the
prescribed period.
- If a firm fails to submit the particulars within prescribed
period.
- If the owner submits an application to the concerned
department for the termination of registration.
- If an industry related private firm closes down operating
industry.

If registration of a private firm is cancelled, any other private

firm which carries similar objectives cannot be registered in
the name of such owner for a period of one year.

. Compulsory registration, Application, Issuance of certificate, Approval to change

particulars, Seek particulars, Cancellation of registration.
Partnership Act, 1964

 Features:
o Registration and issuance of certificate:
A firm should be registered in the concerned department within a
period of six months from the date of establishment by submitting
necessary details on the application form. The department then issues
certificate of registration.
o Renewal:
An application should be submitted in the prescribed format along with
the prescribed fee for the renewal of firm within a period of 35 days of
the expiry of fiscal year.
o Seek particulars:
The concerned department may seek particulars of the account of the
firm.
o Cancellation of registration:
The registration of the firm can be cancelled in the following
circumstances.
- If a firm is not renewed within stipulated time.
- If concerned department found the firm is registered
providing false information.
- If a firm fails to submit the particulars within prescribed
period.
- If the partners submit an application to terminate the
registration of the firm with reasonable reasons to the
concerned department.
- If an industry related firm closes down the operating
industry.
o Use of property:
The property of partnership firm can be used for the purpose of
partnership business only.
o Substitution of partners:
The partner is required to take consent of all other partners to keep
any other person as a partner instead of him/him.
o Entitlement to have copy of books:
Every partner is entitled to have copy of books of the firm.
o Liability of partner:
Every partner is jointly liable for all the acts or activities of the firm
conducted while he/she is a partner.
o Penalty:
The concerned department may impose penalty if the firm carries
business without registration, registered providing false particulars,
failed to provide notice relating to change in particulars.
 Company Act, 2006

 Features:
o Incorporation:
Any individual desirous of undertaking a company with profit motive
may either singly or jointly incorporate a company with objectives set
forth in memorandum of association. A public company need to have
minimum of seven promotors for the incorporation.
o Application:
Application is to be made for incorporation of company to Company
Registrar’s Office along with memorandum of association and article of
association.
o Registration:
The Company Registrar’s Office registers the company within 15 days
and grant company registration certificate to the applicant.
o Number of shareholders:
There should be maximum fifty shareholders in case of private
company. For the public company, there should be at least seven
shareholders and maximum of any number.
o Limited liability:
The liability of a shareholder of a company is limited to the number of
shares subscribed.
o General meetings:
The general meetings of the company should be as follows:
- Annual general meeting
- Extra-ordinary general meeting
o Board of Directors:
The appointment and number of board of directors of a private
company should be as provided in articles of association. Every public
company should have a board of directors consisting of minimum three
and maximum eleven directors.
o Appointment of auditor:
Every company should appoint an auditor to have its book of accounts
audited. The appointment of auditor is made by annual general
meeting.
 Industrial Enterprise Act, 2020

 Features:
o Industry registration:
This act restricts the operation of industry without registering through
the procedure provided.
o Classification of industry:
This act has classified industry on the basis of size of investment on
fixed assets and nature/sector of business.
o Government only industries:
This act specifies certain industries (such as industry based on atomic
energy, industry producing radioactive material, atomic energy and
uranium energy related industries) which can only be established and
operated by Government of Nepal.
o Environmental compliance:
According to this act, industry should commence activity only after
completion of applicable environmental studies.
o Corporate Social Responsibility (CSR):
This act has made provision to allocate at least 1% of annual net profit
to be utilized towards CSR. It is applicable to all industries having
annual turnover more than NPR 0.15 billion.
o No work no pay:
It has also incorporated no work no pay provision, which is helpful in
addressing illegal strikes.
 Foreign Investment and Technology Transfer Act, 2019

 Provisions:
o Approvals requirement:
This act requires that foreign investment and technology transfer
should be approved by approving authority (Department of Industry
and Investment Board of Nepal).
o Minimum investment:
The minimum investment has been set at NPR 50 million.
o Forms of investment:
This act considers the following as foreign investment:
- Investment in shares of an industry
- Investment through purchase of share or asset
- Investment through lease of airplanes, ships, machineries
and equipment
- Technology transfer
- Investment in capital investment funds
- Investment in secondary stock market
o Repatriation of earnings:
The FITTA allows investors to repatriate dividends, profits, earnings,
proceeds of sale of share and also proceeds of liquidation and amount
recovered from legal proceeding.
o Obligations of investors:
Investors have obligations to:
- Notify change in ownership of holding company’s
shareholders
- Bring investment amount in prescribed time period
- Comply with the act, regulations, other laws, or any
conditions imposed when providing approval.

o Provision of visa:
Business visa is available to the investor and his/her family members,
or one authorized representative and his/her family members.
Maximum of two person and their family members can obtain business
visas if the investor is a company. Non-business visa are only available
for high-skilled and technical workers after evidencing that equivalent
workers are not available in Nepal after undergoing vacancy
procedure.
 Income Tax Act, 2002
 Features:
o Broadened tax base:
This act has broadened the tax base. Tax rates are spelled out in the
act.
o Deduction of related expenses:
All real expenses incurred in generating incomes from business or
investments are allowed for deductions.
o Block base depreciation:
It has introduced a block based depreciation. It has the provision of
charging depreciation on intangible assets as well.
o Method of tax accounting:
Tax accounting methods have been clearly specified for different
persons under different income heads.
o Minimize tax evasion:
This act has made a strong mechanism to discourage the tendency of
tax evasion. For this there are provisions for General Anti-Avoidance
Rule (GAAR), income splitting, thin capitalization and dividend
stripping.
o Self tax assessment:
This act has followed a full-fledged self-tax assessment system to
establish a taxpayer friendly environment.
o Capital gain tax:
A detailed provision related to taxation of capital gain has been made.
o International taxation:
This act has introduced the provision for international taxation. The
foreign source income of a resident has been brought into the tax net.
Value Added Tax Act, 1996

 Features:
o Registration:
A business with annual taxable turnover or transaction of more than 5
million rupees should register for VAT. However, small vendors having
less than 5 million annual turnover may also register voluntarily.

o Obligations of VAT registrant:

- Submit VAT return and pay the collected VAT amount
within the 25 days of the following month
- Provide tax invoice to their customer
- Maintain purchase and sales book separately for the VAT
purpose.
- Keep their VAT record for the period of 6 year.
- Allow tax officers to enter the business to examine the
business records and the stock on the hand.
- Put their certificate of registration in the premises where
customers may easily see and read it.

o Administrative review:
A tax collector who is not satisfied with the tax assessment made by
tax officer may submit an application to the director of Inland Revenue
Department (IRD) for review within 30 days from the time of receiving
such decision.
o Penalty:
Following acts are considered offence and fine and penalties will be
imposesd.
- No registration within 90 days from the commencement
of act.
- No publication of registration certificate within the
business premises publicly.
- Not giving information regarding transfer of location or
area of business to the authority within 15 days from
such transfer.
- Not issuance of bill
- VAT collection without registration
- Not filing of tax statement within the prescribed period
o VAT exemption:
The following goods and services are VAT exempt:
- Basic agricultural product
- Basic necessity
- Livestock and their products
- Agriculture related products and equipment
- Medicines, medical treatment and other health services
- Education
- Culture, arts and craftmanship related services
-
Labor Act, 2017

 Provisions:
o No work no pay:
Employees will not be paid when no work is done.
o Allows strike:
This act has allowed employees to hold strikes for their demands, and
urges employers to address them by conducting bilateral talks.
o Payment during strike:
Workers who hold protests within the legal framework will be paid half
a day’s wages even if no work is done.
o Formation of tribunal:
If the contentious issues put forth by the employees cannot be
resolved through bilateral talks, the government can form a tribunal to
find a solution.
o Performance evaluation:
This act has made provision regarding work performance evaluation of
employees, and a worker can be fired if performance does not appear
satisfactory during three successive assessments.
o Firing:
An employer cannot fire workers without a valid reason and without
fulfilling lawful obligations.
o Compulsory retirement:
The age for compulsory retirement has been increased to 58 from the
previous 55.
o Probation period:
The probation period has been shortened to 6 months from the
previous 1 year.
o Working hours:
Working hours continue to be 8 hours a day and 48 hours a week.
Overtime has been increased to 24 hours per week from 20 hours per
week.
 Mines and Minerals Act, 1985

 Provisions:
o Property of the government:
All minerals lying or discovered on the surface or underground in any
land are the property of government of Nepal.
o Classification of minerals:
For the purpose of this act, the minerals are classified as follows:
- On the basis of the nature of minerals(metallic, non-
metallic)
- On the basis of importance of minerals(very precious
metals, precious, ordinary)

o Power to carry out mining operations:

Government of Nepal has the exclusive power to carry out mining
operations. The Department of Mining may undertake mining operation
by itself or it may be done by any person having a license.

o Environmental effect:
The mining operations should be undertaken without causing adverse
effect on environment. Protective measures should be adopted as
prescribed on environmental protection.
o No export of minerals:
Government of Nepal may, with a view to national security or ensure
supply to meet the internal demand, impose necessary restrictions on
the export of any minerals abroad.
o Penalty:
The Government of Nepal may impose the following penalty if any
person undertakes mining operations without obtaining a license.
- Stop such mining operation
- Seize the machinery equipment, instruments and goods
used for such mining including minerals explored in an
unauthorized manner.
- Punish such a person with a fine not exceeding one
hundred thousand rupees.
- Recover compensation for the property lost or damage
resulting from such operations.
Consumer Protection Act, 1998

 Provisions:
o Formation of consumer protection council:
A Consumer Protection Council is formed under the chairmanship of
Minister/Minister of State for Supplies to formulate policies relating to
the protection of the rights and interests of consumers.
o Protection and promotion of consumer rights:
For the purpose of protecting the rights and interests of consumers,
every consumer has the following rights:
- Right to be protected from the sale and supply of harmful
products
- Right to be informed about the prices, attributes,
quantity, purity, quality, etc. of consumer goods and
services.
- Right to be assured of an opportunity to select consumer
goods and services at competitive prices as far as
possible.
- Right to be assured that an appropriate agency will hear
matters concerning the protection of the rights and
interests of consumers.
- Right to be heard and compensated against exploitation
and hardships resulting from unfair trading practices.
- Right to consumer education.
o Power to systematize and control supply of consumer goods and
services:
For the purpose of protecting the rights and interests of consumers,
the government exercises the following powers:
- To formulate policies relating to the quality, price and
supply system of consumer goods or services.
- To formulate action plans in connection with the
monitoring, prevention and control of unfair trading
practices.
- To make necessary arrangements for checking any
undesirable increase in prices by producers, vendors or
distributors of consumer goods.
- To discourage unfair trading practices.

o Particulars to be mentioned in consumer goods:

A producer must mention the following particulars on the labels of
consumer goods on a mandatory basis:
- Name and address of producer, and registration number
of the industry
 - In the case of consumer goods such as food and
medicines, their ingredients as well as their quantity and
weight.
- Method of consuming consumer goods
- Price, batch number, production date and expiry date.
- In the case of consumer goods which are inflammable,
dangerous or fragile, precautions for their safety.

o Actions which must not be taken in respect to consumer goods:

No one can take or instigate others to take any of the following actions in
respect to any consumer good or service.
- To produce, sell, supply, export or import sub-standard
consumer goods.
- To imitate any consumer goods in such a manner as to
mislead consumers.
- Misleading publicity and advertisements relating to the
use, usefulness, or efficiency of any consumer goods or
service.
- Produce, sell or supply any consumer goods or service
which is likely to harm consumers’ health.

o Price lists to be kept:

Every vendor must keep a price-list of every consumer goods sold and
supplied by him, explicitly mentioning its wholesale and retail prices.
o Central Market Monitoring Committee:
A Central Market Monitoring Committee shall be formed for the protection
of the rights and interests of the consumers or for making coordination
among the bodies involved in the monitoring or inspection of the supply
system, price, quality and purity of the goods or services.