RESTRICTED  WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO  WT/ACC/NPL/2/Add.1 
18 September 1998 
 (98-3128) 
Working Party on the  
Accession of Nepal Original:   English 
  
 
ACCESSION OF NEPAL 
 
Memorandum On The Foreign Trade Regime
 
 
Addendum  
 
 As indicated in document WT/ACC/NPL/2,  the Annexes and Tables listed in the 
Memorandum are reproduced hereunder. 1 
 
 
 Groupe de travail de  
l'Accession du Népal 
 
 
ACCESSION DU NÉPAL 
 
Aide-mémoire sur le régime de commerce extérieur
 
 
Addendum  
 
 Comme il est signalé dans le document WT/A CC/NPL/2, les annexes et tableaux indiqués 
dans l'Aide-mémoire s ont reproduits ci-après.1 
  
 
Grupo de Trabajo sobre la 
Adhesión de Nepal  
  
ADHESIÓN DE NEPAL  
 
Memorándum sobre el régimen de comercio exterior
 
 
Addendum  
  A continuación se reproducen los anexos y cuadros enumerados en el Memorándum, 
conforme a lo indicado en el documento WT/ACC/NPL/2.
 1 
 
                                                      
1 English only/anglais seulement/Inglés solamente. 
 WT/ACC/NPL/2/Add.1
  Page i
Table of Contents
Page
Annex 1 Statistics and Publications 1
Annex 2 List of Laws and Legal Acts 13Annex 3 Information on Import Licensing Procedures 14
Annex 3.1 Products Banned or Restricted for Exports 20
Annex 3.2 Products Banned or Restricted for Imports 21
Annex 4 Information on Implementation and Administration of the Customs
Valuation Agreement22
Annex 5 Information on Technical Barriers to Trade 26
Annex 6 Information on State Trading 27Annex 7 Services Sectoral Classification List 29
Annex 8A Bilateral Foreign Trade Agreements Entered into by Nepal 82
Annex 8B Trade Agreements or Parts of Them which Contain Preferential
Trade Provisions83WT/ACC/NPL/2/Add.1
Page 1
ANNEX 1
STATISTICS AND PUBLICATIONS
I. FOREIGN TRADE  STATISTICS, RESPONSIBLE AGENCIES
There are two main institutional bodies involved in collecting, processing and publishing
foreign trade statistics.
Trade Promotion Center (TPC):
It collects and publishes country wise and commodity wise trade figures.
Central Bank or Nepal Rastra Bank(NRB):
It Publishes trade figures as well as other economic statistics collected form different
ministries. NRB is the sole agency in compiling, processing and publishing Nepal's foreign trade with
India.
Besides these there are other institutions like Department of Customs (DOC) Central Bureau
of Statistics (CBS), Ministry of Finance (MOF), Ministry of Commerce (MOC) who are involved indissemination of trade and economic figures.
II. PUBLICATIONS RELATED TO FOREIGN TRADE STATISTICS
- Quarterly Economic Bulletin-NRB
− Monthly Indicators-NRB
− Economic Report (Yearly)-NRB
− Statistical Pocket Book-TPC
− Statistical Year Book-TPC
− Economic Survey-MOF
III. STATISTICIAL DATA
Table 1:  Main Economic Indicators
Indicators 1992/93 1993/ 94 1994/95 1995/96 1996/97
Nominal GDP(in Million Rs.) 165,262 191,540 210,138 239,443
Agriculture 70,090 80,589 85,442 96,300
Non-Agriculture 95,172 110,951 124,696 143,143
Real GDP
(1984/85 Price) 64586 69,686 71,695 76,095 79,855
Agriculture 27896 30,017 29,917 31,535 32,567
Non Agriculture 36690 39,669 41,778 44,560 47,288
GDP growth
(% Change, Nominal) 14.03 15.90 9.71 13.95
1984/85 Price, Real (% Change) 3.29 7.90 2.88 6.14 4.94
GDP per capita (Rs.) 8,576 9,708
Rate of Inflation 8.9 8.9 7.6 8.1 8.0
Trade Balance (in million Rs.) -21,939.1 -32,277.4 -46,040.3 56,855.5 52,084.5WT/ACC/NPL/2/Add.1
Page 2
Indicators 1992/93 1993/ 94 1994/95 1995/96 1996/97
Fiscal Deficit (Financial by Internal
borrowing as % of GDP)1.1 0.9 0.8
Total Area 147,181
Sq. Km
Literacy Rate (1991 Census) 39.6
Percentage
Population (million) 18.88 19.27 19.67 20.08
Source  : Economic Survey, MOF Central Bureau of Statistics
Table 2:  Gross Domestic Product At Current Price
(Rs. in Million)
S. No. Organizing Sector 1992/93 1993/94 *1994/95 1995/96 1996/97
1 Agriculture, Fisheries &
Forestry70,090 80,589 85,440 96,300
2 Mining & Quarrying 921 990 1,070 1,230
3 Manufacturing 14,618 17,861 19,560 22,290
4 Electricity Gas & Water 1,437 2,107 2,810 3,310
5 Construction 17,318 19,621 22,420 25,860
6 Trade, Restaurants & Hotels 19,260 22,297 25,170 29,460
Trade 15,793 18,598 20,680 24,070
7 Transport, Communication &
Storages12,625 12,625 14,200 16,760
8 Financial & Real Estate 18,122 18,122 20,480 23,400
9 Community & Social Services 17,128 17,128 18,990 20,850
10 Public - - - NA
Extra Territorial - - - NA
11 Private Services - - - NA
12 GDP at Factor Cost 165,262 191,540 210,140 239,440
13 Less Imputed value of banking
Services3,578 4,473 5,590 6,700
 Total GDP at Factor Cost
excluding
Imputed Banking Services 161,684 187,067 204,550 232,740
Net Indirect taxes 9,702 12,149 15,040 17,160
GDP at Production Price 171,386 199,216 219,580 249,900
Sources : Economic Survey 1996-97.WT/ACC/NPL/2/Add.1
Page 3
Table 3:  Government Budgetary Operation
Rs. in million
1992/93 1993/94 1994/95 1995/96 1996/97
Total Expenditure 30,897 33,597 39,060 46,542
Regular Expenditure 11,484 12,409 19,265 21,561
Development 19,413 21,188 19,794 24,980
Expenditure
Receipts 18,941 21,974 28,512 32,718
Revenue 15,148 19,580 24,575 27,893
Foreign Grants 3,793 2,393 3,937 4,825
Overall Surplus (+) or Deficit (-) -11,956 -11,623 -10,547 -13,824
Other Sources of Financing Deficit
Foreign Loans 6,920 9,163 7,312 9,463
Internal Loan
(a) Banking System
(b) Non-Banking System1,620
920
7001,820
1,000
8201,900
1,300
6002,200
750
1,450
Changes in cash Balance(- Surplus)3,415 639 1,335 2,160
Sources: Ministry of Finance, HMG,  Nepal Rastra Bank
Table 4:  Production Of Basic Goods
S. No. Major Industry Group s Units 1992/93 1993/94 1994/95 1995/96 1996/97
1 Food Manufacturing
i. Noodles MT. 2304 2775 4043 4947 5000
ii. Biscuits MT. 6497 6278 6789 6057 5900
iii
.Sugar MT. 64416 34044 49227 67051 80000
iv
.Tea MT. 1636 1993 2351 2457 2400
v. Vegetable Ghee MT. 11790 20233 20800 19583 19000
2 Beverage Industries
i. Beer Th.  Litre 14382 14900 16776 18315 21497
ii. Liquor Th. Litre 3477 2100 2500 2608 2800
3 Tobacco Manufacturing
i. Cigarette Sticks Mill. Sticks 7846 6894 7430 8067 8067
4 Manufacturing Textile
i. Cotton Clothes Th. Meters 7139 5619 5060 5160 4000
ii. Synthetic Clothes Th. Meters 12795 16657 14700 18123 18000
iii Jute Goods MT. 18199 19315 20187 29908 33500
5 Leather and
Leather Products
Processed  Leather Th. Sq. ft. 8424 7950 10306 10977 8500
6 Footwear Manufacturing
Shoes Th. Pairs 823 700 685 649 550WT/ACC/NPL/2/Add.1
Page 4
S. No. Major Industry Group s Units 1992/93 1993/94 1994/95 1995/96 1996/97
7 Wood and Wood Products
i. Plywood Th. sq. ft. 411 570 450 383 100
ii. Stra Board MT. 574 714 831 936 850
8 Paper and Paper Products
Paper MT. 6775 8177 8863 11564 12500
9 Other Chemical Products
i. Soap MT. 22970 20648 23477 25111 27500
ii. Detergent Powder MT. 756 681 2400 6378 7000
Other Non-metallic Mineral
Products
11 Cement MT. 247891 315514 326839 309466 270000
Iron & Steel Based Industry
12 Iron Rod Angles etc. MT. 60316 71023 95118 91583 89500
Manufacturing andAppliances
i. Wires Cables 6574 5023 12000 13574 17146
a. GI/HB Wires mt 11930 7514 8000 9723 11000
ii. Dry Cell Battery Th. Nos. 12373 17102 17603 25597 30000
Source :  Ministry of Finance, Economic Survey
Table 5:  Production Of Principal Agricultural Commodities And  Live Stock
S. No. Items Unit 1992/93 1993/94 1994/95 1995/96 1996/97
1 Food Grains 000  MT.
Paddy 2,712 3,493 2,928 3,579 3,711
Maize 1,291 1,210 1,273 1,331 1,317
Wheat 765 873 914 1,013 1,062
Cash Crops
Sugarcane MT 1,366 1,431 1,500 1,569 1,629
Jute MT 10 11 11 15 14
2 Other Crops MT
Pulses 191 204 201 214 223
3 Fruits Th.  MT 519 535 565 367 428
4 Vegetable Th.  MT 1,197 1,197 1,256 1,327 1,350
5 Livestock
a. Meat Th.  MT 149 153 159 161 174
b. Milk and
Milk ProductsTh.  Mt 876 885 903 961 1,005
c. Fish Th.  MT 15 15 17 21 23
d. Egg Million 370 375 412 396 421
Source : Ministry of Finance, HMG.WT/ACC/NPL/2/Add.1
Page 5
Table 6 Total Consumption At Current Prices
Rs. in million
1992/93 1993/94 1994/95 1995/96 1996/97
GDP at Product  Prices 171,386 199,216 219,582 249,896 Coming
Plus Import of Goods and
NFS47,429 62,972 77,699 92,489
Total Resources available
= Uses218,815 262,188 297,281 342,385
Total Consumption 148,214 169,996 192,436 222,392
Private Consumption 133,314 154,009 174,394 200,917
Public Consumption 14,900 15,987 1,8042 2,1475
Source : Ministry Of Finance, HMG.
Table 7:  Annual Change In  Price (Base Year –1983/84)
Month 1992/93 1993/94 1994/95 1995/96 1996/97
Mid August 261.6 282.4 300.6 327.4
Mid September 264.4 288.3 305.1 326.7
Mid October 264.9 289.3 309.3 329.4
Mid November 262.9 285.0 310.4 331.9
Mid December 254.9 287.1 303.3 323.9
Mid January ('93) 249.8 ('94) 273.8 ('95) 296.2 ('96) 317.7
Mid February 251.7 272.4 297.0 322.4
Mid March 256.3 278.0 298.7 325.0
Mid April 259.3 282.2 303.2 330.4
Mid May 261.9 287.7 306.7 -
Mid June 265.6 297.1 312.8 -
Mid July 270.9 295.5 321.2 -
Annual 260.4 283.7 305.4 283.7
Point to Point Increment %
(Mid July to Mid July)5.9 9.1 8.7
Annual % 8.9 8.9 7.6 7.8
Source:  Nepal Rastra Bank
Table 7a:  Employment Structure
Description Percent
Labour force (as % of total population) 1990-92 40
Women in labour force (as % of total labour force) 1990-92 34
Employment of labour in agriculture 1990-92 79
Employment of labour in industry 1990-92 11
Employment of labour in other activities 1990-92 4
Employment of labour in services 1990-92 6
Annual increase in labour force 1992-97 2.3
Rate of unemployment 1997 NA
Rate of underemployment 1997 NAWT/ACC/NPL/2/Add.1
Page 6
Table 8:  Balance Of Payments
Rs. in million
Description 1992/93 1993/94 1994/95 1995/96 1996/97
Exports. f.o.b. 17,286.4 19,316.0 17,680.3 19,875.3 -15,090.0
Imports c.i.f. 39,259.9 51,628.7 63,740.4 76,815.5 -61,040.2
Trade Balance -21,973.5 -32,312.7 -46,060.1 56,940.2 -45,950.2
Services, Net 5,064.4 17,476.5 23,565.2 20,922.7 25,252.6
Receipts 14,942.7 30,000.1 37,448.5 37,178.5 33,590.3
Travel 5,966.0 8,251.7 8,973.2 9,521.2 5,429.1
Investment Income 1,518.9 1,768.6 2,075.1 1,685.8 1,176.8
Payments 9,873.3 12,523.6 13,913.3 16,255.8 8,337.7
Transfers, Net 6,937.3 6,809.0 10,708.8 12,193.2 10,849.7
Receipts 7,075.5 7,003.9 11,227.2 12,766.3 11,762.5
private Remittances 2,994.3 3,469.1 5,063.6 4,283.6 4,001.0
Official Grants 3,498.5 3,039.9 5,339.1 7,582.8 7,108.0
Indian Excise Refund 561.8 494.2 819.0 899.9 653.5
Others 20.9 0.7 5.5 NA NA
Payments 138.2 194.9 518.4 573.1 912.8
Current Account balance -9,971.8 -8,027.2 -11,786.1 -23,824.3 -9,847.9
Official Capital Net 5,474.2 10,723.3 8,804.7 7,401.0 3,387.3
Amortization 1,485.9 2,251.4 2,591.2 2,883.7 1,837.4
Foreign  Loans 6,960.1 12,974.7 11,395.9 10,284.7 5,224.7
Miscellaneous Capital 11,971.3 3,935.9 2,501.0 15,373.2 7,059.1
Change in Reserve Net 7,473.7 6,632.0 -480.3 -1,050.1 598.5
Source:  Nepal Rastra Bank
Table 9:  Foreign Exchange Reserves
Rs. in million
Years Convertible Non-convertible Total
1990/91 Mid July 15,939.3 1,919.7 17,859.0
1991/92 Mid July 21,691.5 1,011.9 2,273.4
1992/93 Mid July 30,281.4 2,900.6 33,182.0
1993/94 Mid July 36,541.2 4,045.0 40,586.2
1994/95 Mid July 35,875.4 6,946.2 42,821.6
1995/96 Mid July 37,934.5 6,503.8 44,438.3
1996/97 Mid July 38,502.3 10,039.1 48,541.4
Source : Nepal Rastra Bank, Economic Survey, MOF
Note : Nepalese rupee is pegged with Indian rupee which has fixed rate and exchange rates are fixed on the
basis of a basket of currencies. Indian currency is available on unlimited scale.WT/ACC/NPL/2/Add.1
Page 7
Table 10:  Export Of Selected Commodities To India
Value in '000 Rs.
S. No. Commodities F. Y. 1994/95 F. Y. 1995/96 F. Y. 1996/97
1 Pulses 398,400 1,313,200 500,000
2 Ghee 15,300 12,600 59,900
3 Herbs 25,300 31,300 47,400
4 Ginger 74,900 105,700 121,600
5 Dried Ginger 69,500 28,100 40,600
6 Mustard & Linseed 58,600 46,300 33,400
7 Cotton Seed 12,300 105,700 7,100
8 Raw Jute 85,300 28,100 3,200
9 Jute Goods 231,100 46,300 564,900
A Hessian 15,300 11,900 69,200
B Sackings 200 31,600 74,700
C Twines 215,600 453,200 421,000
10 Live Animals 65,800 76,100 56,100
11 Linseed Oil 47,500 28,400 105,200
12 Salseed Oil 41,900 348,700
13 Ricebran Oil 121,200 63,100
14 Turpentine 5,100 - 9,100
15 Cinnamon 3,200 100 10,100
16 Cardamom 105,800 129,300 187,600
17 Vegetables 9,200 20,600 -
18 Catechu 7,200 5,800 55,400
19 Stone & Sand 24,100 171,000 27,100
20 Rosin 81,500 700 56,600
21 Brooms 9,900 16,200 30,600
22 Noodles 41,600 17,600 140,200
23 Biscuit 18,400 121,200 46,600
24 Marble Slabs 19,800 21,000 36,500
25 Cattle Feeds 36,400 63,700 55,000
26 Brans 2,650 31,300 45,200
27 Oil Cakes 98,300 41,800 97,500
28 Hides & Skins 159,300 29,300 100,900
29 Tooth Paste 197,900 93,600 384,500
30 Polyester Yarn 251,500 176,800 326,300
31 Readymade Garments 4,800 309,200 2,900
32 Handicraft Goods 5,500 238,000 16,500
33 Others 784,900 1,500 2,280,300
Total 3,369,100 3,978,600WT/ACC/NPL/2/Add.1
Page 8
Table 11:  Export Of Major Commodities To Countries Other Than India
Value in Rs.
S.No. Commodities Unit 1994/95 1995/96 1996/97
Quantity Value Quantity Value Quantity Value
1 Carpet(Handknotted Woollen) Sqm. 2,896,090 7,703,760 2,617,645 8,032,233 2,891,225 9,144,635
2 Readymade Garments Pcs. 33,505,181 5,357,029 27,969,250 5,414,746 29,953,917 5,617,478
3 Goatskin Sq. ft. 8,568,582 355,499 6,949,250 347,569 4,872,901 274,328
4 Hides Sq. ft. 1,801,200 67,977 1,374,560 40,012 696,105 34,850
5 Tea M. T. 72.3 13,574 72.7 15,516 81.4 22,617
6 Essential Oil M. T. 7.4 4,821 4.9 5.217
7 Medicinal M. T. 42.8 5,464 57.2 8,362
8 Herbs M. T. 3,847 86,885 12,501 412,552 69.7 12,051
9 Nigerseeds M. T. 2,117 51,488 10,963 375,169 8,388 267,905
10 Pulses(Lentils) Metres. 37,588 2,138 25,576 4,847 15,443 496,845
11 Fabric(Polyester & Cotton 128,096 163,005
12 Handicrafts 101,408 110,367 217,564
13 Woollen goods 198,965 146,015 - 217,947
14 Towel 65,203 218,878 - 363,174
15 Wooden & Bamboo  Goads 10,477 12,955 - 9,936
16 Nepalese   paper & Paper
Products35,833 52,385 - 59,085
17 Leather Goods 33,005 71,914 31,527
18 Micro-Transformer 25,730 25,727 28,877
19 Blanket 17,727 127 -
20 Miscellaneous 23,233 68,880 75,864
Total 14,288,312 15,526,476WT/ACC/NPL/2/Add.1
Page 9
Table 12:  Nepal's Exports To SAARC Member Countries
Value in '000 Rs.
Direction F. Y. 1993/94 F. Y. 1994/95 F. Y. 1995/96 F. Y. 1996/97
India 2,408,900 3,369,100 3,978,600 5,448,300
Bangladesh 21,524 6,633 358,535 497,948
Bhutan 389 140 47 566
Maldives 0 1
Pakistan 1,493 5,063 3,032 19,898
Sri Lanka 140,458 47,085 17,117 6,243
Total 2,572,764 3,428,021 4,384,331 5,972,956
Total Exports 19,077,495 17,926,053 20,054,388 23,084,051
% in Total Exports 19.1 21.9 25.9
Source :  Nepal Rastra Bank,  Trade Promotion Center.
Table 13:  Imports Of Selected Commodities From India
Rs. in million
S. No. Commodities F. Y. 1994/95 F. Y. 1995/96 F. Y. 1996/97
1 Live Animal 36,100 35,100 72,300
2 Textiles 1,646,000 1,944,400 1,405,000
3 Readymade Garments 130,400 153,000 252,500
4 Raw Cotton 18,100 40,600 79,800
5 Threads 553,000 775,600 756,600
6 Fruits 85,200 100,800 104,300
7 Vegetables 271,200 276,700 344,400
8 Milk Product 297,400 422,800 473,700
9 Coffee 17,800 23,000 25,300
10 Tea 63,300 46,800 86,800
11 Cumin Seed & Pepper 185,800 213,700 200,800
12 Salt 59,200 85,300 119,100
13 Sugar 73,700 202,500 468,400
14 Rice 391,400 462,000 360,800
15 Pulses 40,800 37,800 37,800
16 Tobacco 310,900 338,700 393,900
17 Bidi Leaves 2,400 600
18 Chemical 208,000 549,000 1,004,500
19 Enamel & Other Paints 41,000 37,900 57,000
20 Cement 525,800 898,900 1,038,400
21 Pipe & Pipe Fittings 184,900 185,500 184,400
22 Sanitary Wares 51,400 40,200 56,600
23 Bitumen 63,400 90,900 98,200
24 Electrical Equipment 514,600 540,100 416,300
25 Medicines 1,752,900 1,930,800 2,119,700
26 Writing & Printing Papers 236,600 247,900 265,500
27 Book & magazines 163,300 200,700 343,200
28 Cosmetic  Goods 24,900 24,200 26,000
29 Chemical Fertilizers 22,800 152,800 137,200
30 Insecticides 48,100 54,500 80,100
31 Hand Tools 27,400 22,600 24,200WT/ACC/NPL/2/Add.1
Page 10
S. No. Commodities F. Y. 1994/95 F. Y. 1995/96 F. Y. 1996/97
32 Agri-Equipment and Parts 291,800 385,200 314,600
33 Vehicles & Spare Parts 1,853,500 10,764,700 1,548,700
34 Tyre, Tube & Flapes 64,300 50,600 57,100
45 Coal 215,100 268,700 308,200
36 Machinery & Parts 1,253,900 2,151,000 2,345,000
37 Glass-Sheet & Glassware 124,600 134,700 129,700
38 Other 8,939,100 10,697,800 10,107,800
Total 25,588,100 25,843,900
Table 14:  Import Of Major Commodities From Countries Other Than India
Value in '000 Rs.
S. No. Commodities F. Y. 1994/95 F. Y. 1995/96 F. Y. 1996/97
1 Machinery  & Parts 1,140,753 1,642,230 2,301,204
2 Fertilizer 1,439,463 1,481,455 1,390,351
3 Raw Wool 1,359,548 2,333,572 2,179,597
4 Transport Equipment 1,289,559 1,707,295 1,574,870
5 Aircraft & Spare Parts 445,164 649,524 520,333
6 Textiles 198,567 692,091 898,170
7 Thread 517,264 540,395 523,031
8 Office Equipment & Stationary 285,667 505,596 482,653
9 Electrical Goods 115,193 2,503,170 1,721,252
10 Medicines & Medical Equipment 516,450 680,851 644,071
11 Steel Rod & Sheet 379,981 197,822 119,619
12 M. S. Wire Rod 3,139 11,449 5,248
13 M. S. Billet 101,807 84,698 208,634
14 Polythene Granules 679,168 1,225,016 890,006
15 P. V. C. Compound 49,233 35,015 33,843
16 Telecommunication Equipment Parts 1,323,879 1,968,648 946,154
17 Edible Oil # 27,713 2,003,368 1,355,194
18 Copper Wire Rod. Scrapes & Sheet 265,227 20,439 312,733
19 Video, Television & Parts 278,615 334 166,510
20 Agriculture Equipment & Parts l0,704 47,300 5,752
21 Readymade Garments 309,451 389,617 401,917
22 Pam Oil1 478,583 466,674 410,411
23 Computer Parts 1,157,637 1,113,856 647,146
24 Coconut Oil 132,680 137,729 120,868
25 Textile dyes(Including other dyes) 73,696 118,964 86,304
26 Gold 12,692,009 12,618,341 30,206,826
27 Silver 808,537 749,097 867,703
28 Clove 137,269 106,103 123,802
29 Betel Nut 550,382 255,857 501,048
30 Petroleum Product * 5,609,274 6,102,372 6,956,781
31 Other 7,887,699 9,629,780 10,063,575
Note:  # Edible Oil includes Soybean Oil, Vegetable Oil, Rapeseed Oil, Crude Oil and etc.
*  As provided by Nepal Oil Corporation.WT/ACC/NPL/2/Add.1
Page 11
Table 15:  Nepal's Imports From SAARC Me mber Countries  F. Y. 1991/92 To 1993/94
Value in '000 Rs.
Direction F. Y. 1993/94 F. Y. 1994/95 F. Y. 1995/96 F. Y. 1996/97
India 17,035,400 20,791,200 25,588,100 25,843,900
Bangladesh 731,634 877,304 679,647 439,918
Bhutan 18,307 343 29,936 28,040
Maldives 3 36 0 0
Pakistan 204,527 114,538 135,091 208,025
Sri Lanka 13,898 15,373 26,934 92,920
Total 18,003,769 21,798,794 26,459,708 26,612,803
Total Imports 50,735,639 64,500,140 77,085,806 93,865,271
Source :  Nepal Rastra Bank,  Trade promotion Center.
Table 16:  Major Trading Partners Of Nepal - Exports
Value in '000 Rs.
S. No. Commodities F. Y.
1992/93F. Y.
1993/94F. Y.
1994/95F. Y.
1995/96F. Y.
1996/97
1 Germany 6,549,562 6,751,331 6,549,562 6,751,331 7,651,707
2 United States 5,141,639 5,672,768 5,141,639 5,672,768 5,930,202
3 India 3,369,100 3,978,600 3,369,100 3,978,600 5,448,300
4 Switzerland 464,451 445,187 464,451 445,187 346,450
5 Bangladesh NR 385,535 NR 385,535 497,948
6 Italy 356,742 356,641 358,742 356,641 348,283
7 Belgium 270,108 309,868 270,108 309,868 231,230
8 United Kingdom 330,529 289,400 330,529 289,400 297,710
9 Austria 201,657 196,415 201,657 196,415 309,152
10 Spain NR 182,922 NR 182,922 NR
11 Canada 157,976 NR 157,976 NR NR
12 France 140,923 NR 140,923 NR 241,933
13 Sri Lanka NR NR
Total 16,984,687 18,568,667 21,302,915
NR:  Not in the rank in that Particular Year.
Source:  Nepal Rastra Bank,  Trade Promote Center.WT/ACC/NPL/2/Add.1
Page 12
Table 17:  Major Trading Partners Of Nepal - Imports
Value in '000 Rs.
S. No. Countries F. Y.
1993/94F. Y.
1994/95F. Y.
1995/96F. Y.
1996/97
1 India 17,035,400 20,791,200 25,588,100 25,843,900
2 Hong Kong, China 7,353,866 10,899,471 11,706,114 20,242,505
3 Singapore 9,401,668 10,889,998 10,563,261 943,400
4 Japan 2,737,591 3,196,411 4,551,150 3,955,267
5 China P. R. 1,822,081 2,295,909 3,094,379 3,005,400
6 Germany 786,158 1,747,360 2,454,995 NR
7 New Zealand 1,808,334 1,395,232 2,357,200 2,203,242
8 Republic of Korea 831,141 NR 1,099,584 NR
9 Saudi Arabia NR NR 1,041,964 NR
10 Thailand 616,360 NR 1,030,331 1,631,341
11 Bahrain NR 1,034,122 NR NR
12 United Arab Emirates NR 983,453 NR 5,572,399
13 Bangladesh 731,634 877,304 NR NR
14 United Kingdom NR NR 3,147,046
15 Switzerland NR NR 2,321,224
Note :
NR:  Not in the rank in that particular year.Source:  Nepal Rastra Bank, Trade Promotion Center.WT/ACC/NPL/2/Add.1
Page 13
ANNEX 2
LIST OF LAWS AND LEGAL ACTS
1. Foreign Investment and Technology Transfer Act (1992)
2. Industrial Enterprises Act (1992)
3. Customs Act (1962)
4. Customs Rules (1970)
5. Nepal Seeds Act, 2045 (1988)
6. The Seeds Regulation, 2054 (1997)
7. Company Act (1997)
8. Plant Protection Act, 2029
9. The Food Act, 2023
10. Export and Import Control Act (1957)
11. Export and Import Rules (1978WT/ACC/NPL/2/Add.1
Page 14
ANNEX 3
INFORMATION ON IMPORT LICENSING PROCEDURES
I. OUTLINE OF SYSTEMS
The Kingdom of Nepal has one licensing system.  The system applies to goods originating in
and coming from all countries. The same system is applied also to exports from Nepal to all countries.The licensing system is automatic in the cases where there are no quotas or bans on imports. At
present, all items except a few under prohibition or quantitative restrictions are free for export or
import and there are no quotas. The Treaties of Trade and Transit with India require licenses for
products specified in the Treaties. For trade with other countries licenses are not required at present.
However, letters of credit (LCs) have to be opened for the imports and exports of goods and copies of
them are used for customs purposes.
Goods that are at present restricted or banned  for exports are listed in Annex 3.1. Goods that
are at present restricted or banned for imports are listed in Annex 3.2.
II. PURPOSES AND COVERAGE OF LICENSING
1. There is only one licensing system.  According to Export and Import Rules 1978, a license is
required for the exports or imports of prescribed goods. They are also required for the personal baggage
exceeding allowance.  Prescribed goods mean goods the export or import of which without license isprohibited by His Majesty's Government under the 1957 Export and Import (Control) Act by notification
in the Nepal Rajapatra (Nepal Gazette).
2. This system applies to goods originating in and coming from all countries.
3. The licensing system is primarily introduced for information purposes. The licensing system is
not intended to restrict either the quantity or the value of imported goods.  As to the exception mentionedin Annex 3.2, it is simply to protect public health, consumer and environment welfare and national
security.  Alternative methods in the form of the requirement to present to the competent authorities the
LCs have been introduced in order to obtain the necessary information and simplify the procedures.
4. Import licensing is authorized and maintained under Export - Import (Control) Act, 1957, Export
-  Import Rules, 1978, Customs Act, 1962, Customs Regulation, 1969, Annual Finance Act based onannual Budget Speech of Finance Minister, and the order made by the Ministry of Commerce pursuant to
the Export and Import (Control) Act, 1957 and Rules, 1978. Import licensing is statutorily required.  The
designation of products to be licensed and the licensing of products to be imported is not left to
administrative discretion.  The government may abolish the system of licensing only by statutory action.
5. At present, the automatic licensing system as described below has been relaxed and the
submission of application for obtaining a licenses is not required. However, the letters of credit opened
for imports and exports must be presented at the customs office during the time of export and import. For
the restricted products in Annexes 3.1 and 3.2 an import license is required.
III. PROCEDURES
1. The restrictions, which are applied at present, are applied globally and on a unilateral basis by
HMG. The Export and Import (Control) Act 1957 gives the right to the government to introduce importWT/ACC/NPL/2/Add.1
Page 15
controls in the case of BOP problems and in specific cases of governmental assistance to economic
development. The government may specify whether to apply them by value or quantity.
2. (a) There is no requirement as to how far in advance an application for a license must be
made.  A license can be obtained within a shorter time limit or for goods arriving at the
port without a license, if all papers are in order.
(b) A license can be granted immediately upon request, if all papers are in order.(c) There are no limitations as to the period of the year during which applications for
licenses and/or importation can be made.
(d) Import licenses are, in most cases, issued by a single administrative organ which is the
Department of Commerce.  Applications for licenses are submitted to the DOC.
Application may also be reviewed by experts of another agency. In certain cases
involving goods where assessment of conformity with standards and technical
regulations is required. In this case, the Department of Commerce coordinates withconcerned agencies.
3. There are no circumstances under which an application for a license may be refused other than
for failure to meet the basic requirements.  When a license is refused the applicant is advised of the
reasons.  He may appeal to the Ministry of Commerce, within 35 days of the notice issued to him of such
refusal.  The Applicant should clearly mention in his complaint his name and address, subject-matter tocomplaint, claims and reasons of claims.  He must submit copies of all the relevant documents along with
the complaint for evidence and a copy of the complaint should also be sent to the licensing authority.
IV. ELIGIBILITY OF IMPORTS TO APPLY FOR LICENCE
Generally, all persons, firms, companies and institutions are eligible to apply for an import
license under schedule 2 of Export - Import Rules, 1978 (Application form for import license. There areseparate forms for the application depending on the purposes of the import e.g. government procurement,
commercial purposes, personal use) before Director General of Department of Commerce, HMG. But an
import license for trading purpose is issued only to the registered companies, firms and corporate bodies.
The registration requirements depending on the main activities of these judicial persons are explained in
Section IV. 1 (a) of Memorandum.
V. DOCUMENTATION AND OTHER REQUIREMENTS FOR APPLICATION FOR 
LICENCE
An application form has to be filled by the applicant for an import license and has to be
submitted to the Director General of the Department of Commerce under Schedule 2 of Export - Import
Rules, 1978. The application form should certain information as to the name and address of the applicant,name and address of the office registering the applicant company or firm or corporate body; registration
number and date; the date and place of last registration; name of director; partner or owner; type, quantity
and value of the goods to be imported; a copy of contract agreement if concluded with the foreign seller if
not, the other relevant particulars; country of manufacture of goods to be imported; name of the country
dispatching the goods to be imported; date of shipment of goods to be imported; name of the customs
office to which the goods are to be imported; probable  date of arrival of the goods at the customs office
of importation, source of foreign currency needed for importation; and other particulars.
As mentioned above, import licenses are issued for the following purposes according to Rule
6(b) of Export - Import Rules, 1978: issued in the name of Government, Government owned corporations
and boards, and the projects thereunder; issued in the name of contractors for accomplishing projectsWT/ACC/NPL/2/Add.1
Page 16
under government, government owned corporations and boards, and the projects thereunder; issued in the
name of commercial firms, companies, corporations for commercial purposes; issued in the name of
certain non-profit-making institutions or centers established for philanthropic, social, religious,
educational and other similar purposes; issued for personal purposes; issued for the use of firms or
companies relating to industries, tourism industries, travel agencies or similar business; issued for the
objective of sample, gift or publicity.
Therefore, there are slight variations in the import licenses so issued.  A sample form of
application for Import License for commercial purpose is presented below (English translation):WT/ACC/NPL/2/Add.1
Page 17
Form B
SCHEDULE 2
(Relating to sub-rule (1) of Rule 4)
To be filled for Importation for Commercial Purpose
An Application Form
Date:.......
The Director General
Department of Commerce
Kathmandu
1. Full Particulars of Applicant
a) Name of the Applicant:-
b) Full Address:-
c) Name and Address of office of Registration:-d) Registration No.......Date......
e) Last renewal date.....place.....
f) Name of Director, Partner or Owner:-
2. Particulars of good(s) desired to import
a) Type:-
b) Quantity:-
c) Value:-
3. Copy of Contract agreement if concluded with the foreign seller, if not the other relevant
particulars:-
4. Country of manufacture of good(s) to be imported:-5. Name of country shipping the good to be imported:-
6. Date of shipment of good(s) for importation:-
7. Name of customs office of importation:-
8. Approximate time of arrival at the customs office of importation:-
9. Source of foreign currency needed for importation .... the letter no. … and date....10. In case of recommendation for good(s) to be imported, the name of the recommending office, the
letter number and date of such recommendation letter:-WT/ACC/NPL/2/Add.1
Page 18
11. Others:-
I/We hereby confirm that the particulars given herein above are true and correct to my/our
knowledge.  In case the particulars given herein above are found to be incorrect, I/We agree for
cancellation of the license issued to me/us for this reason.  I/We am/are ready to submit any documents insupport of the above bond if called so by the licensing authority.  Nothing remains payable to this office
on my/our part.
Signature and designation
of the Applicant
Dated:........
The following documents are required to be supplied with the applications form for commercial purposes:
the registration certificate; the import contract to purchase with the foreign seller if any; foreign exchange
clearance given by a bank; in case of recommendation for good(s) to be imported, copy of such
recommendation letter.  In addition to this, licensing fee at the rate of 1% of the total value of the goods tobe imported shall also be submitted along with the application.WT/ACC/NPL/2/Add.1
Page 19
2. Upon actual importation of goods, the owner of the goods or his agent must submit to the
customs office two copies of Import Declaration form as provided under Schedule 3 of Customs
Regulation, 1969 – along with the following documents: income tax registration certificate; letter of
credit; certificate of insurance; packing list; airlines delivery order or of railways; invoice; bill of loading;
certificate of origin; authorization from importer if an agent is handling the clearance; copy of original
purchase contract.  In addition, a copy of import license, a certification as to conformity of standards andquality of certain goods. Rule 6 of the Export - Import Rule, 1978 also requires the Importer to send in the
format of its schedule 6 copies of particulars of goods imported to the local district administration office,
the Director General of Department of Commerce and the authority or office as specified by HMG.  The
importer is also required not to sell or supply the goods so imported without furnishing these particulars.
3. The licensing fee shall be as specified by the government from time to time in the official
Gazette.  The licensing fee which is enforced since 1992 is one per cent of the total value of the goods
imported.  There are no other administrative charges except the nominal application fee (Rs. 10-60).Alterations in the import licenses so issued may be made by paying ten percent fee of the total license fee.
4. There is no deposit or advance payment required in association with the issuance of a license; the
fees noted in point 3 above are to be deposited along with the application for license.
VI. CONDITIONS OF LICENSING
1. The period of validity of import license is normally up to six months and it is one year in special
situations as indicated in the license itself.  The goods for importation should be shipped within the period
of validity of the license.  The license may be renewed for up to six months upon the importer applying
for extension showing the reason of failure of shipment of goods within the period of license.
2. There is no penalty for non-use or only partial use of a license.  If the license is not used during
the established period, it is provided to be automatically cancelled.
3. A license is not transferable between importers, because they are issued to particular persons and
for specific purposes.
4. For products under quantitative restrictions listed in Annex 3.2 specific conditions have been laid
down published in the National Gazette. There are no other conditions attached to the issuance of a
license for products not subject to quantitative restrictions.
VII. OTHER PROCEDURAL REQUIREMENTS
1. There are no other administrative procedures required prior to importation.
2. Commercial Banks make foreign exchange available at the rate fixed by the market mechanism
for the payment of all imported goods including industrial raw materials, spare parts and services and for
payments of foreign loans and interests of the non-government sector.  The Central Bank will not make aseparate foreign exchange provision for this purpose.
A license is not required as a condition to obtain foreign exchange.  Foreign exchange is always
available to cover licenses issued.  The importer has only to provide to the commercial bank the import
contract with the sum he has to pay for the imported goods in order to obtain foreign exchange.WT/ACC/NPL/2/Add.1
Page 20
ANNEX 3.1
PRODUCTS BANNED OR RESTRICTED FOR EXPORTS
A. PRODUCTS BANNED FOR EXPORTS:
1. Article of archaeological and religious importance:
1.1 National and foreign coins of archaeological value;
1.2 Idols of gods and goddesses, palm leaf inscription (Bhojpatra);
1.3 Scroll (Thanka Paintings) of historical importance.
2. Conserved wildlife and related articles:
2.1 Wild animals;
2.2 Bile any part of wild animals;
2.3 Musk;
2.4 Snake skin, lizard skin.
3. Drugs:
3.1 Marijuana, opium, hashish (as defined in the single convention on Narcotics, 1961).
4. Articles of industrial importance:
4.1 Explosive materials and the related fuse or materials needed for fuse;
4.2 Materials used in the production of arms and ammunition.
5. Industrial raw materials:
5.1 Raw hides and skin (including dry salted);
5.2 Raw wool;
5.3 All imported raw materials, parts and capital goods.
6. Other products:
6.1 Mamira;
6.2 Log and timber.
B. UNDER QUANTITATIVE RESTRICTIONS:
Products as notified by His Majesty's Government in the Nepal Gazette form time to time.
Currently, there are no such restrictions.WT/ACC/NPL/2/Add.1
Page 21
ANNEX 3.2
PRODUCTS BANNED OR RESTRICTED FOR IMPORTS
1. Products injurious to health banned for imports:
(a) Narcotic drugs like opium and morphine;
(b) Liquor containing more than 60 percent alcohol.
2. Arms an ammunition, and explosives (except under import license of His Majesty's 
Government):
(a) Materials used in the production of arms and ammunition;
(b) Guns and cartridges;
(c) Capes without paper;
(d) Arms and ammunition, and other explosives.
3. Communication equipment:
(a) Wireless, walkie talkie and similar other audio communication equipment's (except under
import license of His Majesty's Government).
4. Valuable metals and jewellery (except quantities permitted under bag and baggage 
regulations).
5. Beef and beef products.WT/ACC/NPL/2/Add.1
Page 22
ANNEX  4
INFORMATION ON IMPLEMENTATION AND ADMINISTRATION
OF THE CUSTOMS VALUATION AGREEMENT
1. Questions concerning Article 1:
(a) Sales between related persons:
(i) Are sales between related person s subject to special provisions?
No.
(ii) Is the fact of intercompany prices prima facie considered as grounds for
regarding the respective prices as being influenced?
No.
(iii) What is the provision for givi ng the communication of the afore-
mentioned grounds in writing if the importer so requests? (Article 1.2(a))
Not applicable.
(iv) How has Article 1.2(b) been implemented?
In a contract between related persons the transactional value shall be accepted, in case such
value is unacceptable, the method mentioned in point 2 below is followed
(b) Price of lost or damaged goods:
1. Are there any special provisions or practica l arrangements concerning the valuation of
lost or damaged goods?
No.
2. How has the provision of Article 4 to allow the importer an option to reverse the order of
application of Articles 5 and 6 been implemented?
If the price can not be determined under transaction value, the price shall be fixed on the basis
of recorded price of identical goods at the customs office, price list, or the price of similar goods. A
reversal of the application of the order of Article 5 and 6 at the request of the importer may give rise
to real difficulties to the customs authority of Nepa l, in view of their administration capabilities. That
is why, a reversal is not applied
3. How has Article 5.2 been implemented?
The price is primarily fixed in the transactional value; if such value is not acceptable, then the
price list will be taken into the consideration by the customs authorities for fixing such prices with
adjustments to determine the price on CIF basis. The customs may also the take into account recorded
prices of previous transactions.WT/ACC/NPL/2/Add.1
Page 23
4. How has Article 6.2 been implemented?
The computed valuation method is, as point above shows, not applied.
5. Questions concerning Article 7:
(a) What provisions have been made for making value determinations pursuant to
Article 7?
As mentioned above, when the customs authorities do not apply the provisions of Articles 1
through 6, the customs may fix the price of the goods on the basis of records, if any, in the possession
of the customs officer, relating to collection of customs duty on similar goods or commodities
previously subject to valuation (Art. 13.3 of the Customs Act (Seventh Amendment 1997)). Whilefixing the price from the above mentioned procedures, the customs authority make every effort to
establish the customs value on a reliable and equitable basis (Art. 13.6 and 13.7).
(b) What is the provision for informing th e importer of the customs value determined
under Article 7?
hen valuation has been done, the importer shall receive information in writing from the
customs authority
(c) Are the prohibitions found in Article 7.2 delineated?
The prohibitions of Art. 7.2 have been fully observed.
6. How have the options found in Article 8.2 been  handled?  In the case of f.o.b. application,
are ex-factory prices also accepted?
Costs of freight and insurance are included in the transaction value. Normally, the options in
Article 8:2 (a) and (b) can not be separated. In case they are separated, (b) is excluded in determining
the value of goods
7. Where is the rate of exchange pub lished, as required by Article 9.1?
It is published by Central Bank (Nepal Rastra Bank) everyday in national newspapers.
8. What steps have been taken to ensure co nfidentiality, as required by Article 10?
It is the established practice of the Customs Authorities to ensure confidentiality in the spirit
of Art. 10.
9. Questions concerning Article 11:
(a) What rights of appeal are open to the importer or any other person?
The aggrieved party may go to the court of law – Revenue Tribunal-in this case.WT/ACC/NPL/2/Add.1
Page 24
(b) How is he to be informed of his right to further appeal?
The right to further appeal is expressly mentioned by the adjudicating authority in the verdict.
10. Provide information on the publication, as required by Article 12, of:
(a) (i) the relevant national laws;
(ii) the regulations concerning th e application of the Agreement;
(iii) the judicial decision and administrative rulings of general application
relating to the Agreement;
(iv) general or specific laws being referred  to in the rules of  implementation or
application.
The relevant laws and regulations related to customs valuation are published in Nepal
Gazette. Judicial decisions are published in a journal published by the Supreme Court. The Seventh
Amendment (1997) to the Customs Act 1962 embodies the rules applied to customs valuation. At the
moment, no other legislation in this area is envisaged to be enacted.
(b) Is the publication of further rules antici pated?  Which topics would they cover?
The rules may be amended in conformity with the entire provisions of WTO Rules.
11. Questions concerning Article 13:
(a) How is the obligation of Article 13 (last sentence) being dealt wi th in the respective
legislation?
Article 13.6 of the Customs Act (Seventh Amendm ent) provides that the owner of goods may
take delivery of his goods, if he so desires, after he has paid of the customs duty leviable thereon onthe basis of the value as estimated by the customs officer and, in addition, furnished a deposit
amounting to 10 percent of such customs duty. But in such cases customs duty shall be finally levied
on the basis of the value as determined subsequently.
(b) Have additional explanations been laid down?
No.
12. Questions concerning Article 16:
(a) Does the respective national legislatio n contain a provision requiring customs
authorities to give an explanation in writing as to how the customs value was
determined?
Yes. Upon request of importer, the customs authority gives an explanation in writing as to
how the customs value was determined, though there is no such provision in the law. This is an
established practice.WT/ACC/NPL/2/Add.1
Page 25
(b) Are there any further regulations co ncerning an above-mentioned request?
No.
13. How have the Interpretative Note s of the Agreement been included?
The interpretative notes are applied to the extent described in the answers to questions 1 and 2
above. We have adopted the transaction method (price actually paid or payable).
14. How have the provisions of the Decision of 26 April 1984 on the Treatment of Interest
Charges in the Customs Value of Imported  Goods (Val/6/Rev.1)  been implemented?
Interest charges are not included.
15. For those countries applying paragraph 2 of  the Decision of 24 September 1984 on the
Valuation of Carrier Media Bearing Software for Data Processing Equipment (Val/8),
how have the provisions of this  paragraph been implemented?
Not applicable.WT/ACC/NPL/2/Add.1
Page 26
ANNEX 5
INFORMATION ON TECHNICAL BARRIERS TO TRADE
1. Standards and technical regulations are governed by the Standards, Weight and Measurement
Act and by the Quality Certificate Make and Rules Act. Standards and Technical Regulations are
approved by the Nepal Council of Standards headed by the Minister of Industry.
2. The Bureau of Standards and Metrology, will be appointed as the inquiry point as foreseen in
Articles 10.1 and 10.3 of the WTO Agreement on Technical Barriers to trade. The Bureau is currently
fully operational. The Bureau will deal with the consultation as foreseen in Article 14 of the
Agreement, and perform all the functions foreseen in Agreement.
3. The Bureau of Standards will be the only central government agency responsible for the
notifications foreseen in Art. 10.11 of the agreement.WT/ACC/NPL/2/Add.1
Page 27
ANNEX 6
INFORMATION  ON STATE-TRADING
I. ENUMERATION OF STATE TRADING ENTERPRISES
In fact, Nepal does not have enterprises which would be covered by the working definition
agreed in the Understanding on the interpretation of Article XVII of GATT 1994. The only enterprise
that could possibly be defined as state trading is the Nepal Oil Corporation. There are not products orgroups of products except petroleum products for which an enterprise has exclusive or special
privileges. The Nepal Oil Corporation has a special monopoly power to import petroleum products,
however, other products like lubricants are free to import to private sector and State Trading
enterprises. This following public enterprises, which are active in import trade, have not been granted
any exclusive rights or privileges.
(i) The Nepal Food Corporation.
(ii) The National Trading Limited.
(iii) The Nepal Oil Corporation
(iv) The Salt Trading Corporation
(v) The Agriculture Imports Corporation
(vi) The Cottage and of Handicraft Emporium
(vii) The Nepal Coal Company
(viii) Nepal Transit and Warehouse
II. REASONS AND PURPOSE FOR INTRODUCING AND MAINTAINING STATE-
TRADING ENTERPRISES
Nepal has a "dual" economy with a quite developed urban economic infrastructure and an
under developed rural agriculture based economy. Due to its economic, social  and culturalbackwardness, the supply management is being a  very big problem especially in the rural areas. The
Nepalese law defines petroleum products as basic needs goods. Therefore, every citizen has equal
right to get the products frequently and at a rational price. Nepal does not have its own petroleum
products. So they are only imported. So for the purpose of regular and general supply and for
preventing consumer prices from being increased artificially, the NOC has been created.
III. DESCRIPTION OF THE FUNCTIONING OF STATE TRADING ENTERPRISES
 The Nepal Oil Corporation deals with imports of all petroleum products. However, it does
not have exclusive rights as far as lubricants are concerned. The private traders are allowed to import
lubricants and there is free competition between them and the NOC in this field.
The quantities of the different types of fuels to be imported are determined by the Board of
Directors of the NOC consisting of the representatives from the government agencies as well as public
and private enterprises. The decision on the quantity of import is based on trends and current
information about demand and future projections. The Board meets regularly and special meeting may
be convened if the situation so requires. The price of the imported products is determined on the basis
of international prices plus transport and the average operational costs.
The NOC has long-term contract with the Indian Oil Corporation.WT/ACC/NPL/2/Add.1
Page 28
IV. IMPORT AND CONSUMPTION OF MAJOR PETROLEUM PRODUCTS
Qty. in Kiloliters
Description F. Y. 1993/94 F. Y. 1994/95 F. Y. 1995/96 F. Y. 1996/97
Petrol 31,056 34,942 41,191
High speed diesel 196,047 227,226 250,504
Kerosene Oil 162,077 180,536 208,720
Light diesel Oil - 4,191 4,375
Furnace oil 27,319 31,567 18,449
Aircraft Turbine
oil30,250 37,536 40,621
Source:   Economic Survey HMG/Nepal, 1996/97.WT/ACC/NPL/2/Add.1
Page 29
ANNEX 7
SERVICES SECTORAL CLASSIFICATION LIST
1. BUSINESS SERVICES
A. P ROFESSIONAL SERVICES
(a) Legal Services
Nepal Bar Council Act,  1993
This act has been enacted for the purpose of establishing Nepal Bar Council (NBC), an
autonomous body to look after the interests and welfare of the legal practitioners, and causing their
services to be more responsible towards the society at large. The main functions of NBC are: to issue
licence and register individuals as legal practitioners on the basis of conducting bar examinations for
these individuals; to follow up whether the legal practitioners are acting according to the professional
code of conduct devised for that purpose, and take  complaints against any violation of the code of
conduct and refer the matter to the Disciplinary Committee for necessary action; to establish the
working procedures for registering the name in the law practitioners list, and finalise the workingprocedure to be adopted by the Disciplinary Committee; to file suits against those who acted contrary
to this Act; to arrange for the protection of the prestige, security, rights and welfare of the legal
practitioners; to help standardise the legal educat ion befitting the legal practice; and to organize
training, seminars/workshops, conferences and visit programmes for the cause of legal profession.
This Act has provided for only three grades of lawyers, such as senior advocates, advocates andpleaders. A senior advocate is a post of honour conferred by the Supreme Court to an advocate of
eminence and long practice. From the year 1999 onwards no one below an advocate shall be eligible
to practice law, since the designation "pleader" will have been abolished by then. No one can practice
law without obtaining an advocate's licence. Only a Nepali citizen who has passed the Bar
examination is not convicted for any criminal offence of moral turpitude and is at least a law graduatebesides possessing other requirements for other careerists is eligible to get an advocate's licence. This
Act prohibits any foreigner to practice law in Nepal except otherwise allowed by the competent
Nepalese court to plead in a particular case representing a party to the case. Any person found
practising law without having a licence or a foreigner pleading a case without getting the permission
of the concerned court shall be liable to a fine up to NRs. 2,000 or an imprisonment up to six monthsor both.
FITTA, 1992
Section 3 (4) and Annex of Foreign Investment and Technology Transfer Act, 1992 prohibits
foreigners to practice law or make an investment for that purpose.
(b) Accounting, auditing and bookkeeping services
Nepal Chartered Accountants Act,  1997
Enacted for the promotion of auditors' service, this Act provides for the establishment of an
autonomous body called "The Institute of Chartered Accountants of Nepal". The Institute works as a
regulatory body for promoting the audit services and service conditions of audit professionals. A
Council as a central body has been made responsible to look after the affairs of the Institute. The
Council is mandated among other things to conduct examination for those entering the audit
profession, issue licence to them, provide membership of the Institute, follow the guidelines ofWT/ACC/NPL/2/Add.1
Page 30
International Accounting Standards, International Auditing and International Federation of
Accountants, and to execute the code of conduct of auditors. Members of the Institute are classified
into Chartered Accountants and Registered auditors. But a foreign auditor or accountant is not eligible
to get the membership of Institute. The Council may cancel the registration of membership or a
license issued to a person if it is found to ha ve been issued by mistake. The Council is also
empowered to take help from  foreign Chartere d Accountants, Associations or foreign experts or
foreign universities or associations for conducting auditors' examination. The Council may recognize
foreign auditor's licence or foreign chartered institut es, or foreign auditor's examination with the prior
approval of HMG. No one is allowed to engage in auditor's profession without obtaining an auditor's
licence. The Institute has to publish the complete name-list of its members and of the auditors each
year. For obtaining a licence, a fee as prescribed shall have to be paid. All the members and  auditors
shall have to abide by the code of conduct provided for in the Act. Whoever works as an auditor
without obtaining a licence commits an offence, for which a fine not exceeding  NRs. 2,000 or an
imprisonment for a term not exceeding  3 months is imposed. The Council may also invite
participation of an expert foreign auditor in the Council meeting as an observer. The Act does not
make any specific mention of foreign auditors to work in Nepal.
(c) Taxation services
Taxation services in the private sector are conducted by lawyers and law firms, and private
Chartered Accountants, and Auditors' firms on a clientele  or job contract basis. Their activities are
regulated not by any specific taxation service law or regulations but by their professional association
laws. In the case of lawyers and law firms, it is provided by Nepal Bar Council Act, 1993 whereas inthe case of Chartered Accountants and Auditors and firms it is provided by Nepal Chartered
Accountants Act, 1997. Under the provisions of these Acts only Nepalese citizens can proceed with
their professional services (inclusive of taxation services).
(d) Architectural services
Same as (see) engineering services.
(e) Engineering services
There is no specific law at present regulating separately the engineering services in Nepal in the
private sector. But this service may be operated under the provisions of Industrial Enterprises Act,
1992 by any Nepalese citizen, and even the foreigners can provide their services, under this Act and
under the Foreign Investment and Transfer of Technology Act, 1992.
(f) Integrated engineering services
Same as (see) engineering services.
(g) Urban planning and landscape architectural services
Basically, urban planning and landscape architectural work is a governmental responsibility
and a state activity undertaken by the Ministry of Housing and Physical Planning. But these days
some real estate firms or companies are also engaged in this field of service they purchase plots of
urban land and planning and architectural designing suitable for  residential landscape purposes and
sell it in fragmented of residential plots. The Acts and regulations relating to this sector are:WT/ACC/NPL/2/Add.1
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(a) (i) Town Development Act, 1989
Implementation of this Act has to be undertaken by governmental agencies. The only provision
relating to private sector is to get prior approval for any land development project to be launched by
the real-estate business firms/companies and to conf orm to the land development standards set by the
Land Development Board. It is the primary responsibility of the Town Development Board to see that
its town planning and the urban residential settlement schemes are executed properly and effectively.
(b) (ii) Kathmandu Valley Development Authority Act, 1989
This Act aims to execute all the schemes set under it for the planned settlement and
development of Kathmandu Valley. In working under this regime the real estate firms/companies
have to conform to the schemes set by the Kathmandu Valley Development Authority.
(c) (iii) FITTA, 1992
Section 3(4)  and Annex of the Foreign Invest ment and Technology Transfer Act, 1992 prohibit
foreign investors to operate a real estate business in Nepal except in the  construction industries.
(h) Medical and dental services
Nepal Medical Council Act, 1997
This Act provides for the establishment of a Medical Practitioners' Council for the purpose of
adequately regulating the health services in the country and registering the name of medical
practitioners according to their qualifications. No foreign citizen is eligible to get nominated orelected to the membership or continue to be a member of the Council. But a foreign medical specialist
can be invited to attend the meeting of the Council as an Observer. The Act allows no person to
engage in medical practice without being registered af ter one year of the entry into force of this Act.
The Act is silent  over the registration of a foreign medical practitioner in Nepal. The Act is yet to
enter into force.
(i) Veterinary services
There is no specific veterinary service Act/regulation. Individuals and persons organised  as
firms and companies conduct veterinary services in the private sector. Mostly, the veterinary servicetechnicians who are retired from or left the job of government veterinary hospitals or those still in job
before or after official hours provide veterinary services to the customers by organizing them selves in
a legal firm or otherwise.
(j) Services provided by midwives, nurses, physiotherapists and para-medical personnel
Nursing services are provided under the or ganisational aspects of Nepal Nursing Council
Act, 1997. But there is no specific Act or regulation to provide the services of midwives, nurses,
physiotherapists and para-medical personnel to be  organised in the private sector. Besides the
government hospitals or health centres or medical centres, there are private sector hospitals, nursing
homes and medical clinics formed as firms or companies which provide these medical technician
services. Traditional and trained (ex-employee) midwives, nurses, physiotherapists and para-medicalpersons often provide services in an individual or unorganized capacity formally or informally.WT/ACC/NPL/2/Add.1
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B. C OMPUTER AND RELATED SERVICES
(a) Consultancy services related to th e installation of computer hardware
Services  provided under this heading are run in the private sector rendering these services on a
clientele or contract service basis, since no specific law has been enacted till now in this field.
Computer and related services are rendered individually or through firms and companies.
(b) Software implementation services
Same as (a) as above.
(c) Data processing services:
Same as (a) as above.
(d) Data- base services
Same as (a) as above.
(e) Other
The Statistics Act, 1959
The Statistics Act, 1959 provides for collecting, compiling, publishing and analysing of
statistics and data by a central governmental agency called Central Bureau of Statistics (CBS). HMG
has been empowered to require any person, who is in possession of certain documents , information,
or statistics or data, to submit to the Director-General of CBS, and direct CBS to collect statistics as
notified. For this purpose, the Director-General has been authorised power by the Act to collect,publish, compile and analyse the information in the form of statistics.
This Act provides that if any foreigner (indivi dual or institution) wants to collect any economic
records, information and statistics for commercial purpose, he has to seek permission from the CBS.
The foreigner, in seeking such permission, has to a pply to the CBS showing in detail the reasons for
collecting such statistics, the area of collecting such data and the methodology to be adopted or
programme to be conducted for such collection. The CBS may put certain conditions or give certain
directions before granting such permission. Such a  foreigner is required to get certified from the CBS
before making any use of such data or publishing them. Such a foreigner is also required to pay an
amount to the CBS if pass on any such statistics to foreign individual,  institution or international
agency without obtaining permission of CBS. Any fore igner (individual,  institution or international
agency) violating these requirements mentioned herein above shall be fined up to NRs. 5,000 for eachsuch offence committed. In case the offence is committed by a foreign institution, such fine shall be
imposed on it is its chief officer unless  proved that such offence was committed without his/her
knowledge.
C. R
ESEARCH AND DEVELOPMENT SERVICES
(a) R&D services in natural sciences
There is no specific law in this area. Various acts of different objectives make some references
to R&D. There are certain governmental or government-controlled agencies or institutions (state
enterprises)  engaged in R&D activities. Certain university level R&D activities are conducted bytheir research centres and faculty research labs. Such labs are also operated by hospitals, clinics,WT/ACC/NPL/2/Add.1
Page 33
police and industries. Very  few of such things could be found in the private sector operated
individually or by firms and companies established as service industries under the provisions of the
Industrial Enterprises Act, 1992. In this regard, the provisions of the following acts may be taken
notice of:
(i) Royal Nepal Academy of Science and Technology Act, 1991
This Act provides for the establishment of Royal Nepal Academy of Science and Technology
(RONAST) as a competent and corporate body for the development, research and promotion of
science and technology, to cultivate a  congenial atmosphere for scientific and technological activities,
and to encourage and honour talented scientists and technicians engaged in the field of science and
technology. The Act provides that the fundamental objective of  RONAST shall be to develop and
assist in the development of appropriate science and technology in the country for all-round
development of the nation, to protect and modernize the indigenous technology and to assist thereon,to conduct and assist in conducting research on science and technology, and to identify foreign
technology appropriate for the need of the country and to assist in the transfer of such technology.
The powers, functions and duties of the RONAST as  provided by the Act shall be as follows:
to conduct study, research, development and promotion of various aspects of science and technologyon the basis of priorities; to assist His Majesty's Government on the formulation and execution of
policies relating to transfer of technology; to operate and cause operation of programmes in
coordination with the national and foreign agencies relating to science and technology; to develop a
central records and information system relating to science and technology and to render service
thereon; to arrange by itself or through others seminars, conferences, etc. on themes of science andtechnology and  arrange for publication on science and technology; to establish, expand and
consolidate relationship with regional or international and other foreign institutions and organizations
on science and technology to maintain the mutual exchange of assistance; to seek and obtain financial,
technical and other kinds of assistance from national and international entities for the operation of the
Academy and for the functions related to science and technology and  administer them; to honour andencourage persons or organizations who have made distinctive contributions towards the
development, promotion and use of science and tech nology; to increase interest among the general
public on the usefulness and suitability of science and technology and  generate congenial atmosphere
for the increasing use of science and technology; to conduct studies on programmes and achievements
of national agencies relating to science and technology and prepare periodic reports thereon; to submitsuggestions to His Majesty's Government relating to development programmes on science and
technology;  to advise His Majesty's Government on the establishment of new entities and laboratories
for research and development of science and technology; to grant financial and technological
assistance, as prescribed, for the development of  entity or laboratory relating to science and
technology of Nepal; to establish exhibition rooms for appropriate items of inventions and samples
relating to science and technology; and to execute and get executed other activities essential for
achieving the objectives of the Academy.
His Majesty the King is the patron of the RONAST. RONAST as operated to date has been
engaged in undertaking R&D activities by constituting a number of laboratories and R&D Department
under the provisions of  the RONAST Act, 1991 and Rules made thereunder. The Senate is the apex
body of the RONAST, but no foreign academician can be its (Senate's) member excepting that aforeigner can be nominated as an academician to the RONAST.
(ii) Environmental Protection Act, 1997
The basic aim of this Act is to protect environment and control pollution. The Ministry of
Population and Environment has been recognized as the Ministry of liaison. For the execution of thisWT/ACC/NPL/2/Add.1
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Act, an Environment Protection Fund and Environment Protection Council have been established.
This Act provides for establishment of laboratori es to help in out the programmes relating to
environmental protection and pollution control. For this purpose, HMG may constitute various
laboratories or authorize the existing laboratory(ies) to conduct lab work in the public sector under
this Act. The rights, duties and functions of such laboratories are to be provided by the rules and
regulations made under this Act. HMG has been empowered to formulate guidelines under the rules tobe framed under this Act. The penal provisions of this Act may apply in case such a laboratory
violates provisions of this Act.
(iii) Nepal Agricultural Research Council Act, 1990
This Act (inclusive of its latest amendment of 1997) provides for the establishment of Nepal
Agricultural Research Council (ARC) in the public sector as an autonomous body, in order to identify
the problems of agricultural sector and find solu tions and undertake high-level study and research to
find appropriate technology, knowledge and skills for the improvement of agricultural productivityand its quality. Some of the important powers and func tions of ARC as provided by the Act are: to fix
priorities for agricultural research; to coordinate, fo llow up, review and evaluate the research activities
undertaken inside the country; to up-date the profile of research activities; and forward appropriate
recommendations to HMG for devising National Agricu ltural Policy. ARC is empowered to formulate
by- rules under HMG authorization for the implementation of the activities to achieve the objectivesof the Act.
(iv) B.P. Koirala Memorial Cancer Hospital Act, 1997
This Act has provided for the establishment of an autonomous national cancer lead hospital for
the purpose of producing high-level manpower fo r undertaking high-level study and research on
cancer disease and making this sector self-reliant for the control of and cure and treatment of cancer
patients in Nepal. This hospital is a public sector institution pursuant to this Act.
(v) B.P. Koirala Institute of Health Sciences Act, 1992
This Act has provided for the establishment of an autonomous national medical (health)
institute for the purpose of producing high-lev el manpower for undertaking high-level study and
research on public health, providing qualitative health services to the people and making this sector
self-reliant in the field of health. This Institute is a public sector institution pursuant to this Act.
(vi) Nepal Health Research Council Act,  1990
This Act provides for the establishment of Nepal Health Research Council, an autonomous
body in public sector, for the purpose of undertaking high-level study and research in the field of
health and identify problems and recommend suggestions for solving these health related problems.
(vii) Drugs Act, 1977 and Composition of Drugs Consultative Council Regulation, 1980;
Drugs Registration Regulation, 1981; and Inquiry and Inspection of Drugs
Regulation, 1982
This Act is enacted with a view to control misuse or abuse of drugs or auxiliary substances of
drugs, control  false propaganda relating to the usefulness and use of drugs, and control the
production, sales and distribution, export and import, storage and consumption of drugs which are not
safe, effective and qualitative. This Act provides for the formation of a Drugs Advisory Board byHMG which is required to advise the Drugs Administration Department on matters relating to
research and development and control of Drugs. The department is made responsible by this Act to
work for the fulfilment of the objectives of this Act. The Act has provided for the establishment of
Royal Drugs Laboratory as the chief agency of HMG in the field of scientific research, testing andWT/ACC/NPL/2/Add.1
Page 35
analysis of drugs. It has also made provision for establishing research laboratories by any national or
foreign individual or body corporate for undertaking scientific research and development of any
particular drug with the permission of HMG. Reliability of such research laboratories is demanded
since they have to report and certify the validity,  certainty and reliability or otherwise of these
medicines to the concerned authorities.
(viii) Narcotic Drugs (Control) Act, 1976
This Act was introduced in order to control the cultivation, production, manufacture, sale,
purchase, storage, traffic, consumption, export and import of narcotic drugs in order to maintain
morality, health, convenience and economic well-being of the public. The Act has been made
applicable to Nepalese and foreign nationals, who, while residing in a foreign country, conduct
transaction of export and import of narcotic drugs from or into Nepal in contravention of this Act and
rules or orders framed or issued thereunder. Extra-territoriality of this Act is applied both to nationalsand foreigners, and commissioning of an act by any one in contravention of this Act amounts to
prosecution and punishment. But this prohibition doe s not apply to HMG or any institution working
under the full and complete supervision and control of HMG after obtaining a special licence for
cultivating, processing, producing, manufacturing, exporting or importing narcotic drugs for purposes
of medical or scientific research or from selling narcotic drugs to any person on the recommendationof a recognised medical practitioner pursuant to this Act.
(ix) The Plant Quarantine Act, 1972 and  Plant Quarantine Regulation, 1974
This Act aims to control and eradicate the tr ansport and spreading up of dangerous epidemic
diseases of plants and plant products for export and import. HMG has been empowered by this Act toestablish laboratories meant for examination and treatment of plants and plant products, check-points
and plant quarantine stations and fix their powers, duties and functions. This Act also authorizes the
Plant Protection Officer to provide facilities as necessary to the governmental or non-governmental or
private agencies who import and treat plant and plant products for study, research or undertake any
other scientific activities. No plant and plant products will be given permission for imports unless theyare found safe and  parasites-free by the lab - test.
(x) Seeds Act, 1978
This Act is introduced in order to increase  agricultural production by supplying high quality
seeds to farmers prepared by means of scientific production, processing and testing. For this purposeHMG is entrusted by this Act to establish a Central Seeds Testing Laboratory and other laboratories at
various places as necessary. HMG may authorize private sector seeds laboratories to test the seeds
under this Act fixing certain conditions. Rights, duties and functioning of these laboratories have been
made to be regulated by Rules.
(xi) Animal Feed Act, 1975
This Act is enacted for the purpose of controlling adulteration in animal food products and
manipulation in the natural qualities or utilities of these products. HMG is empowered by this Act to
arrange for quality control of animal feed. For this purpose, HMG is required to make arrangement for
sending such animal feeds to laboratory test in a prescribed laboratory for determining whether or not
any feed is adulterated .
(xii) Foods Act, 1966 and Foods Regulation, 1969
This Act is introduced to control undesirable adulteration in human food products and
manipulation in the natural qualities or utilities  of these products, thereby maintaining the adequateWT/ACC/NPL/2/Add.1
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qualities of food stuffs in order to maintain the health and convenience of the general public. The
basic objective of this Act is consumer protection in food products or stuffs. For this purpose, this Act
and the various rules provide for the establishment of a Central Food Research Laboratory under the
Food Research Section of HMG for determining whether or not a certain food stuff is harmful .
(xiii) Nepal Drinking Water Corporation Act,  1988
This Act provides for the establishment of an autonomous body called Nepal Drinking Water
corporation for supplying safe drinking water and pr oviding sewage facilities to the consumers. One
of the powers, duties and functions of this public sector Corporation is to conduct study research and
survey of the source of drinking water and its supply and sewerage facilities.
(xiv) Nepal Electricity Authority Act, 1983
This Act provides for the establishment of an autonomous public sector institution named
Nepal Electricity Authority in order to authorize it to make the generation, transmission, distribution
or supply of electricity effective, reliable and easily accessible. One of the functions, duties and
powers of this authority is to undertake or cause to undertake research as necessary in relation to the
generation, transmission and distribution of electricity.
(xv) Academic Research Laboratories
Universities established or yet to be established under the following acts have their own
scientific research centres and faculty/institute level academic research laboratories meant specially
for higher education purposes:
(i) Tribhuvan University Act,  1992
(ii) Kathmandu University Act, 1990
(iii) Eastern  Regional University Act, 1994
(iv) Pokhara University Act, 1997
(b) R&D services in the social sciences and humanities
There is no specific law in this area. Acts ha rdly  make any references to R&D in the social
science and humanities. Certain governmental or government-controlled agencies/institutions
undertake such research regularly or occasionally. Certain institutes and universities established or yet
to be established under the following acts have their own social science research centres and faculty-level academic research programmes for higher academic and educational purposes.
(i) Royal Nepal Academy Act, 1993
(ii) Tribhuvan University Act, 1992
(iii) Mahendra Sanskrit University Act, 1986
(iv) Kathmandu University Act, 1990
(v) Eastern  Regional University Act, 1994
(vi) Pokhara University Act, 1997
Very few R&D activities in the Social Sciences and Humanities can be noticed in the private
sector operated individually or by firms and companies under the provisions of Industrial Enterprises
Act, 1992 or even by profit-making trusts established operated  under the Societies Registration Act,
1976 and Regulation, 1977.WT/ACC/NPL/2/Add.1
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(c) Interdisciplinary R&D services
There is no specific law in this area. Hardly any act makes references to interdisciplinary R&D
services. Certain governmental and government- controlled agencies/institutions do undertake such
research regularly or occasionally. But very few interdisciplinary R&D activities (services) can be
noticed in the private sector operated individually or by firms and companies established under theIndustrial Enterprises Act, 1992 or even trusts under the Societies Registration Act, 1976 and
Regulation, 1977.
D. R
EAL ESTATE SERVICES
(a) Services involving own or leased property
(i) The Constitution of the Kingdom of Nepal, 1990
The basic source of real estate ownership entitlement is Article 17 (1) of the present
constitution of the Kingdom of Nepal, 1990 which provides every citizen of Nepal rights to acquire,
hold, dispose and use property in any manner under the provisions of the existing law. A Nepali
citizen can dispose his/her property by either sale or any other means of transfer only if he/she is
entitled to do so by law. Selling and buying a real estate is a constitutional right of the Nepalesecitizens provided by Article 12 (2) (e) of the constitution under the rights to freedom to engage in a
profession, business, industry and trade subject to reasonable restrictions of law. Hence, real estate
firms can own and use real property.
(ii) Civil Rights Act, 1956
Section 6 (6) of the Civil Rights Act, 1956 also confirms the Nepali citizen's right to own and
use real property in Nepal.
(iii) Muluki Ain, 1963 (Civil Code)
Section 2 of ADALKO MAHAL (Miscellaneous Chapter) of Muluki Ain prohibits any one to
sell, mortgage, gift or endow or dispose any real property to  foreigner (individual or body corporate
or State) without prior permission of HMG. In case, transactions of such real property transfer are
concluded in contravention of the above prohibition, the real property so sold or purchased shall be
confiscated by HMG and will be transformed into government ownership. The amount of capital
involved in the transaction of  such real property shall be refunded to the creditor (foreigner) under adeemed promisory note. However, HMG is not empower ed by any prevailing laws to give permission
to any one to sell, mortgage or dispose or transfer by any  means any property to a foreigner.
Section 3 of the above chapter provides a foreign national who is found to be a heir apparent to any
claim to  an intestate or a coparcenary property of a deceased in Nepal; he is entitled to sell that
property.
A substantial number of persons are engaged in operating real estate business in Nepal. But all
the modes of real estate business have not yet commenced in Nepal. At present real estate business is
operated in Nepal in the following ways: (a) direct selling and purchasing through brokers; (b) direct
purchasing from the owner and selling for profit; (c) fi rms of legal draftsmen engaging as brokers; (d)
unregistered real estate firms doing business; (e) established registered firms and companies doing
land plotting, land developing and other components of real estate business. But an appropriate legalregulatory and monitoring mechanism is not yet available in Nepal relating to real estate.WT/ACC/NPL/2/Add.1
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(iv) Contract Act, 1967
It is the only act or law which provides for regulating contractual relationships between a real
estate agency and its clients, especially in the leasing of one's real property to another. Legal rights,
duties, obligations and liabilities of contracting parties, i.e., lessor and leasee are elaborated broadly
under this Act. The contract document signed between the parties of a contract should conform to
provisions of this Act.
(v) Lands Act, 1964
This Act has fixed land ceilings, beyond which Nepali citizens are not allowed to acquire, hold
and dispose real property of it. But there is no such ceiling requirements to lands allotted to industrial
and agro-industrial purposes  for companies or firm s undertaking  such a venture. For companies that
conduct  real estate business without owning there are  no such  limitations on ceiling.
(vi) FITTA, 1992
Section 3(4) and Annex of the Foreign Investment and Technology Transfer Act, 1992 prohibit
foreign investment in real estate business services in Nepal excluding construction industrial business.
(b) Services operating on a fee or contract basis
Real estate firms/companies or brokers can serve the clients on a fee or contract basis under the
Contract Act, 1964. There is no legally fixed rate  of fee or commission or contract service charge
except tax payable to the real estate agencies, all of which is  negotiable. At present no real estate
business act exists in Nepal.
E. R ENTAL /LEASING SERVICES WITHOUT OPERATORS
(a) Relating to ships
There is no specific law which provides renting or leasing of shipping services without
operators. However, renting/leasing of maritime ships may be undertaken under the following two
schemes: leasing the ship owned or taken under a rental  basis by HMG, and leasing the ship owned
or taken under rental basis by private sector. For the leasing of maritime ships either by HMG or by
the private sector provisionally with operators, the following acts and rule are the governing ones:
(i) Shipping Registration Act, 1971 and Nepal Shipping Registration Regulation, 1972 
and two other acts relating to Flag and Certification and Daybook of Registered Ships
This Act was enacted for the purpose of registering mercantile ships as the national flag
carriers. This Act has extra-territorial application. The following categories of Nepali mercantile ships
have to be registered in the registry book of Nepal shipping office: a ship holding at least 51 per cent
share of Nepali citizens or  as a body corporate established under the prevailing Nepal laws and with
its principal business office situated inside Nepal; Nepali citizens holding more than 51 per cent seatsin the Board of Directors; owners and co-owners applying jointly for ship registration in the Ship
Registration office of Nepal; and those whose registration is cancelled in case the ship contained
foreign registration. HMG is authorized by this Act to establish Nepal Shipping office and appoint its
Registrar by notifying in the official Gazette. The fees and procedures of registration of ships are
provided in the Nepal Shipping Registration Regulation, 1972 framed by HMG under the provisionsof this Act. The Act requires that the Master and 75 per cent of the Navigators (operators) are to be
Nepali citizens. But in case they are not available in a particular ship, foreigners can be hired
proportionately from the second year of plying the ship making the required figure to be 75 per centWT/ACC/NPL/2/Add.1
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Nepali citizens on the eighth year of its service. But no citizen of a foreign country, with whom Nepal
has a warring state of enmity, can be hired. Despite the above requirements the Act provides that in
recruiting the Master or any employee of the ship, Nepalese citizens should be given preference. It
specifies that the Registry book of Nepal Ship kept in Nepal Shipping office is a public document
open to everybody. Such books are of two types, one relating to the registration of mercantile ships
and the other relating to the registration of boats. Each such book contains different folios, such asparticulars, ownership, charge and restrictions. The Act provides that the Certificate of Nationality
issued by the Registrar of Nepal Shipping Office is  also a public document. It contains the name of
the ship,  date and place of its purchase, name and address of its owner, name of its Master, details of
its tonnage, design and manufacturing particulars. As provided by this Act, no transfer of share or
partial ownership of a Nepali ship shall be made to a foreign citizen or foreign body corporate, nor
any transaction of the ship shall be made which creates any liability towards a foreign citizen or
institution contrary to the provisions set under sections 4 and 28 of this Act, which provide that theownership of Nepalese citizens or institutions or HMG shall not be less than 51 per cent of such a
Nepali ship. HMG has been empowered to inspect the ship and shipping business and seek details and
reports on a regular basis. The standard and format of contract document to be prepared for the
operation of ship leasing business are to be in accordance to the rules.
As regards the penal provisions, the Act provides that any person supplying false details for the
registration of a ship or falsifying the certificate of registration by means of over-writing on it or
failing to submit reports or details to HMG shall be liable to a fine up to NRs. 50,000 or up to two
years imprisonment or both. The use of national flag by that ship in such a case may be withdrawn or
suspended for a certain period. The owner of the sh ip shall be fined up to NRs. 10,000 in case the
name and registration number of the ship are not painted on the body of the ship as provided or if an
unauthorized name is painted or the name of the ship is changed without the permission of the
Registrar or if information regarding  the loss of th e ship or its withdrawal form the shipping business
or any other matter causing the cancellation of its registration is withheld. The Registrar of the Nepal
Shipping office is provided to be the first court of instance exercising and following all the powersand procedures of the District Court in the finalization of the case. An appeal against his/her decision
could be made to the local Appellate Court within 35 days of the decision.
There are two other important acts which are not only related to the above Act but also
considered as the part and parcel of this Act. One of them is Flag of the Mercantile Ship of theKingdom of Nepal Act, 1971 which outlines the objectives and facilities of flag, envisage the rights
and duties of the flag carrier, conditions for which use of the flag cannot be made, and the penal
provisions and authorities to hear cases. The other is, Nepal Ship (Certification and Daybook
Keeping) Act, 1971, which provides  various documents relating to the ship, such as Certificate of
Registration, Provisional Certificate of Nationality, Navigators Index, Safety Certificate, Tonnage
Certificate, Certificate of Mice Eradication, Ship Daybook, Engine Daybook, Sanitation Daybook,
Radio Daybook, and provides for penalties and hearing of cases.
(b) Services relating to aircraft
(i) Civil Aviation Authority of Nepal Act, 1996
This Act has been especially enacted for establishing an autonomous institution, named Civil
Aviation Authority of Nepal (CAAN) Act, 1996, in order to make the operation of national and
international air flights, air communication, and navigation and air transportation service safe, regular,
qualitative and effective. Working under the Mini stry of Tourism and Civil Aviation, CAAN is the
competent authority in the matter of civil aviation in Nepal. Among  other things,  important process,
functions and duties of CAAN are: to grant permissi on and certification, and suspend or cancel the
permission as prescribed to the licensed institutions to operate airlines services; to conduct air flight
training; to manufacture aeroplanes and its parts and equipments; to conduct maintenance and testing;WT/ACC/NPL/2/Add.1
Page 40
to provide services of technicians and other services related to airlines  to grant recognition to foreign
airlines, and entities relating to aircraft engineering, to conduct maintenance and testing of Nepalese
aircrafts; to conduct registration and provide markings to aircrafts as prescribed; to provide certificate
of air- worthiness, renew or cancel it; to determine conditions for air cargo and other industrial
activities to be run by aircraft in; to fix air routes, entry points for arrival to and departure from Nepal
except the non-flying zones; to provide air traffic service, flight information service, alerting service,air traffic advisory service, air traffic control service, air navigation service and facilities, area control
service, approach control service and aeroplane control service; to control air noise and prohibit air
pollution from aircraft; to prohibit, control and quantify air cargo of dangerous goods; to grant flight
permissions and determine the functions and duties of pilots; to advise HMG of the rates of air
carriage of goods and passenger fares; to make the best commercial and economical use of the airport
and the facilities and services available there; to undertake insurance of the buildings, aircraft,
machines and equipments at the disposal of CAAN; to execute the standards set and recommendationsmade by the Convention on International Civil Aviation as accepted by HMG, and as determined by
International Civil Aviation Organization (ICAO); a nd undertake any other activities related to it and
do or cause to do other functions as instructed by HMG under this Act. HMG may make available any
private land necessary to  CAAN for the execution of its project work causing it to pay due
compensation to its owner. The Act has empowered  CAAN to create its own fund by making use of
its resources, by taking loans and grants from local and foreign governments and agencies and by
means of any other commercial strategies.
CAAN is authorized by the Act to undertake joint venture projects and conduct programmes
with the national and foreign investors with prio r approval of HMG in this regard. CAAN has been
provided to have a Board of Directors to look after and manage its affairs. The Board is required to
give thrust to the commercial principles. Keeping in mind the business profession of air services and
the security of the passengers in the course of managing its affairs, HMG is required to give security
to the airport and its vicinity until CAAN makes its own security arrangements. The Act totally
restricts all the officials and officers of CAAN to take part directly or indirectly in businesstransactions or contracts for personal benefit. Au dit of the accounts of CAAN is conducted under the
Auditor General's Office. CAAN is empowered to recover any dues,  fees, etc. from an body under the
Governmental Arrears Recovery Process. HMG has been conferred immense power by the Act in the
implement of this Act. It may issue stop any work which is being or likely been undertaken by any
one contrary to the provisions of this Act and the Rules. It may annul fully or partly any order(s) madeby CAAN if it feels it necessary for public interest. It may by public notification exempt any aircraft
or person from paying any charge or fee or fare fully or partly. It may dissolve CAAN in case of any
omission or commission of the Act for failing to carry out the works of HMG or for causing any loss
to CAAN or for any reasons calling for its dissol ution. After the dissoluti on all the properties and
assets of CAAN go to HMG ownership. It is further provided that after the commencement of this
Act, all the property of air transportation service or project conducted by HMG shall after its valuation
be transferred to CAAN as HMG's capital investment to it. CAAN is authorized to issue any orderwhatsoever necessary for the safety, protection, regulation and management of the matters relating to
air services to anybody, civilian or governmental, and it is their duty to carry it out. After the
commencement of this Act the responsibility of runn ing the civil aviation services shall be transferred
to CAAN and the employees serving hitherto in the  Civil Aviation Department shall either be
transferred to CAAN or retained in any other government service according to their choice. It is alsoprovided by this Act that matters which are not covered by this Act but have the connection with
matters relating to civil aviation service shall be governed by prevailing laws. CAAN has been
empowered to impose fine on a person for violating its orders, terms and conditions of its permission
or obstructing its works, which is up to NNR. 50,000 or NRs. 25,000 or NRs. 16,000 depending upon
the cases. This Act has been made to have extraterritorial application.WT/ACC/NPL/2/Add.1
Page 41
(ii) Civil Aviation Act, 1959
This Act (inclusive of its latest amendment of 1996) which is in force at present provides to
regulate the operation of civil aviation in a manner the country could get maximum benefits out of it
and create an environment conducive to the development of civil aviation in Nepal. This Act has
extraterritorial application. In order to achieve the objectives of the Act, HMG may formulate rules
especially in the following matters; matters relating to the permission for establishing and operatingairports by private sector and the fees thereof; prohibition for flying over a particular area or
regulating flights at a particular situation and time; and adoption of the necessary measures to protect
an individual's life and physical security; determination of the amount of compensation and its
payment in the case of demolition of a private house or its premises for undertaking a project relating
to air-field construction; prohibition, control and regulation of air carriage of certain goods,
permission for conducting air flight services, flying school operation, manufacture of aeroplanes, their
equipment, maintenance, testing and overhauling of them; search and rescue of aeroplanes in distress;and control of noise and banning of air flight - caused pollution. Pursuant to this provision, the Civil
Aviation Rules, 1962 Aircraft (Landing, Parking and Housing) Fees Regulation, 1970 have come into
force.
The Act has authorized HMG to take the follow ing steps  necessary for public security and
maintaining peace ensuring and order to cancel or suspend any licence or certificate; to prohibit or
regulate flying over the whole or any part of the territory of Nepal by all or any class of aircraft; to
prohibit or regulate, with or without condition, constructing or manufacturing, establishing,
undertaking maintenance or keeping or maintaining of airports, aircraft industries, flying schools or
others; and to hand over things and equipment as aforesaid to HMG and put them for public use. Ifany direct loss is caused to anyone by these steps  he shall be duly compensated by HMG. Any one
not carrying out the orders issued  by HMG as above may be imprisoned for up to three years or fined
up to NRs. 5,000 or inflicted both penalties. HMG is also empowered to formulate rules relating to
aircraft accidents and make an execution thereof, according to which the Civil Aviation (Investigation
of Accidents) Rules, 1967 have been in existence. HMG has been given special powers by this Act toformulate rules and take immediate necessary action to control the transmission of epidemic or other
communicable diseases to the passengers and to the general public. For any violation of the provisions
pointed out above, an individual is subjected to a prison term up to 3 months or a fine up to NRs.
1,000  or both. The Act defines the following acts committed by anyone as crimes: illegal trespass;
flight encroachment; air hijacking, and flight security risks; safety risks to aircrafts; security risks toairports; security risks to persons connected with air transportation. There are different sets of
punishments imposed upon the offenders of these crimes, for instance, for the crime of illegal trespass
and flight encroachment, it is one to three years imprisonment; in the case of air hijacking, flight
security risks and security risks to aircrafts, the punishment is life imprisonment; it is 15 to 20 years
imprisonment in the case of an attempt to commit th e crime or being an accomplice to it, in the case a
of crime relating to security risks to airport, the punishment is one to five years imprisonment plus
recovery of the total amount of loss in cash; for the crime of security risks to persons connected withair transportation, the punishment is five to ten years, imprisonment; and in case a person dies or an
aircraft  gets blasted in the course of committing a crime, the punishment is life imprisonment or 15 to
20 years, imprisonment to both  the main criminal and the accomplice plus confiscation of their
property. In case the crime as outlined above is committed by a foreign national, he/she will be
extradited from Nepal to the country of demand under the provisions of the Extradition Act, 1988. Incase he is not extradited on technical reasons, a legal case shall be processed in the regular court of
Nepal. This Act has clearly stipulated that cases under local criminal jurisdiction may be processed
pursuant to the existing Nepal laws, besides the one being processed under this Act. The Act makes
provision to facilitate the despatch of a hijacked aircraft in case it has  landed in Nepal to its normal
destination with its crew, passengers and goods on board. It makes provision and lays downprocedures as to how HMG would recognize the in ternational conventions on the control of unlawful
interference in air service. Another set of punishmen t is also provided to a person who flies aircraftWT/ACC/NPL/2/Add.1
Page 42
endangering individual's life and property and threatening loss and damage to another aircraft for
which a maximum 6 months imprisonment and fine  ranging between NRs. 50,000 to NRs. 100,000
can be imposed. For entering a prohibited areas as prescribed fine up to NRs. 200 is charged. The Act
provides for checking and search of passengers' and other persons' body and baggage for security
reasons.
Cases under this Act are treated as government cases and are heard by the local District Court.
The court may also order confiscation of aircraft and goods therein if it is established that there have
been illegal activities. The Court is required to adopt the procedures laid down in the Special Court
Act, 1974 in the trial and proceedings of cases relating to the safety of aircraft and air flight. An
appeal against the decision of  the District Court lies in the local Appellate Court within 35 days of
such decision. HMG may also constitute a special court or tribunal to try cases relating to the safety of
aircraft and air flight. Customs duty regulations are also applied in the air transportation services.
(iii) Royal Nepal Airlines Corporation Act, 1962
This Act has provided for the establishment of the Royal Nepal Airlines Corporation (RNAC),
an autonomous public sector entity, to operate national flag carrier for domestic and international
airlines services. The main powers, duties and functions of the RNAC under this main objective are:to conduct commercial and other air transport services at promotional and possibly at cheap air
freight; to manufacture and repair aircraft and their parts and equipments; to take help from foreign
airlines; to award and get awarded contracts and leases; to act as an agent or contractor of other
airlines; to undertake joint venture air transportation services and to advise HMG whether or not a
foreigner (individual, body corporate or govern ment) should be given permission to start new air
transportation services. The rules of procedure and decisions of the RNAC are to guide negotiations
on leasing of air services without operators.
(c) Services relating to other transport equipment
(i) The Railways Act, 1962
This Act provides for the regulation and safety of railway transportation of goods and
passengers, penalties for railways offences, railway administration, paying of fares, freight and
demurrage charge by passengers and customers, and payment of compensation by the railways for any
loss and damage of goods etc. This Act does not provide anything about rental/leasing services ofrailways without operators.
(ii) Vehicles and Road Transportation Regulating Act, 1993
This Act has been enacted to control road accidents,  provide compensation to the parties
affected by such accidents, arrange for insurance, and make available to the general public simple and
accessible transportation services, which  make the road transportation service strong, efficient  and
effective. This Act applies to all types of vehicles. It provides for registration and certification andrenewal of vehicles, inspection and checking of vehicles; sale and transfer of vehicles, driving licence,
foreign vehicles and transports; road and route permit, and registration of the name of transport
services and carriers; rates of fares and ticketing; safety of passengers and goods; seat arrangements;
traffic control arrangements; parking and stations; code of conduct for drivers; insurance
arrangements; powers, duties and functions of the Transport Management Board of HMG, penalprovisions, road accidents and compensation to parties affected.
This Act requires that all the commercial transportation services have to be undertaken in a
healthy, reliable, safe, comfortable, well-managed, scientific and competitive manner. Under this legalWT/ACC/NPL/2/Add.1
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framework leasing of transport equipments may also be undertaken by dealing under the Contract Act,
1967.
(d) Services relating to other machinery and equipment:
(i) Contract Act, 1967
Rental/leasing services relating to other machinery and equipment without operators may also
be undertaken by negotiating under the terms and conditions agreed on the contract made or
concluded under the Contract Act, 1967.
F. O THER BUSINESS SERVICES
(a) Advertising services
There is no single or specific act regulating all the modes of advertising services, but  some
provisions of the following acts deal with it:
(i) National Broadcasting Act, 1992
Under the provisions of sections  14, 15 of this Act, any person (whether a national or a foreign
individual, firm or body corporate) who wants to advertise anything in public may be provided time in
the media by the concerned broadcasting agency after collecting the prescribed advertising fee from it.
Advertisement programmes which are harmful to public health, such as smoking, use of tobacco and
drinking of alcohol, are provided to be discourage d. But advertisements in the following matters are
not allowed to be released, those which are against the interests of political parties; are vulgar; areprovocative and intend to overthrow the elected government by using violent means; are of a nature
causing unnatural public fear and havoc; are contrary to the non-aligned foreign policy of Nepal; and
contain elements misinterpreting, insulting a nd undermining any community, language, religion and
culture.
(ii) Gorkhapatra Corporation Act, 1962
This Act has been enacted specially for the establishment of an autonomous corporate body,
though government-controlled, named Gorkhapatra Corporation, for the publication of a daily
newspaper Gorkhapatra, The Rising Nepal and other regular or periodic publications. As  part of its
functions and duties, Gorkhapatra Corporation is required to publish advertisements by charging feesfor it besides its scheduled activities.
(iii) Press and Publication Act, 1990
This Act regulates, among other things, the publication of advertisements through press. The
Press Registrar who is responsible for keeping records of journals and periodicals published from
Nepal is authorized by this Act to provide details of any journal or periodical to any person, who
seeks it for publishing advertisements-on it, by collecting the fees prescribed from them.
(iv) Press Council Act, 1990
This Act which provides for the establishment of a Press Council for helping out the
government devising appropriate policy on journalism, may also work for regularizing advertisement.
The Journals Distribution Scrutiny Board constituted under this Act, a representative of theAdvertisement Association, is also nominated by HMG as its member, which signifies that advertising
services have a place of their own.WT/ACC/NPL/2/Add.1
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(v) Based on the above legal regulatory schemes plus the provisions of Industrial Enterprises Act,
1992, advertising services have to be carried out under the following legal forms:
− by forming a sole proprietorship private firm under the Private Firm Registration Act,
1959 and Regulation, 1977;
− by forming a partnership firm under the Partnership Act, 1963; and
− by forming a company under the Company Act, 1997.
(b) Market research and public opinion polling services
(i) Not a single regulatory Act or Rule is available as yet in this area. But it is undertaken
sometimes by people without organizing under a legal form or by organizing as a private firm,
partnership, company or even a Society under Societies Registration Act, 1977 and Regulation, 1978.
(ii) Central Bank Act, 1955
Under section 15 of this Act, Nepal Rastra Bank (Central Bank) undertakes market research on
a regular basis for the purpose of survey, evaluation and analysis of economic situation of the country.
(iii) Management consulting service− Not a single Act/Rule is available as yet. But such a service may be undertaken under the
Industrial Enterprises Act, 1992 by an individual, firm or a company.
− But foreigners are prohibited to engage in management consulting service under section
3(4) and Annex of the Foreign Investment and Technology Transfer Act, 1992.
(d) Services related to management consulting
Same as (see) (iii) of b. above.
(f) Services incidental to agriculture, hunting and forestry
There is no legal formality required to engage in this service unless it is organized as corporate
agricultural farming under the Industrial Enterprises Act, 1992.
So far as hunting is concerned, it is not a common service. Hunting of nationally protected
animals or wildlife is totally prohibited, violation of which is considered a criminal offence. Hunting
of wild animals or creatures which are not protected can not be done by anyone without the written
permission/licence of the concerned authority under the provisions of the following acts/rules for a
certain duration and time, and on certain terms and conditions and charges payable for that:
− Forests Act, 1992
− National Parks and Wildlife Conservation Act, 1973 and Regulation, 1974; Royal
Chitwan National Park Regulation,  1974; Wildlife Conservation Regulation, 1976;Himalayan National Park Regulation, 1978
As regards the forestry services  no specific, provisions are made by any Act or rules in the private
sector except in the case of growing and exploiting private forests.WT/ACC/NPL/2/Add.1
Page 45
(g) Services incidental to fishing
(i) No specific law is available. The service is found in the unorganized sector. Foreign
investment is prohibited  under sect ion 3(4) and Annex of FITTA, 1992.
(ii) Aquatic Protection Act, 1961 and Aquatic (Lease) Rule,  1962
This Act prohibits catching or fishing of certain species of aquatic animals in the national or
government waters outside the private ones. Those which are outside the protection net may be
allowed by HMG to fish or catch under certain terms and conditions of a contract.
(h) Services incidental to mining
(i) Mines and Minerals Act, 1985
This is the only Act regulating mining and mineral exploration and exploitation outside the
exploration and exploitation of petroleum and natural gas. According to the provisions of this Act, all
the mines and minerals found and located under any type of land in the government or private
ownership shall be the property of HMG. HMG has been given absolute monopoly to undertake
mining or mineral operations. The Department  of Mines and Geology may on behalf of HMG
undertake this activity on its own or give it in contract to any national or foreign party or undertake it
in foreign collaboration. In case  of undertaking mines and mineral operation through another party,
the Department may issue licence on a renewal basis putting the terms and conditions on it. The
licence-holder may export the minerals unless it is restricted only for domestic consumption and
required for national security.  The licence-holder is required to pay HMG the royalty and other fees
at the rate prescribed. Other obligations required by this Act and the Rules made under it and set out
in the contract document have to be discharged by both the parties. Any dispute arising out of the
contract has to be resolved finally by arbitration unless resolved mutually.
(ii) FITTA, 1992 and Industrial Enterprises Act, 1992
The protection, facilities and incentives of the Industrial Enterprises Act, 1992 are provided to
the mineral industries, and those of FITTA, 1992  cases of foreign investment and technology are
involved.
(i) Services incidental to manufacturing
There is no specific Act/Rule available as yet regulating manufacturing services. However, the
protection, facilities and incentives of the Industrial Enterprises Act, 1992 are provided to
manufacturing industries, and those of FITTA, 1992 in  the case of foreign investment and technology.
(j) Services incidental to energy distribution
No particular Act is available as yet, but the services may be conducted under a job contract or
contract service basis.
(k) Placement and supply services of personnel
(i) There is no specific Act on inland placement and supply services of personnel for any type of
governmental, non-governmental, semi-governmental or private sector requirements. Any Nepali
citizen taking notice of it through public or private means may try to get that opportunity.WT/ACC/NPL/2/Add.1
Page 46
But as regards the foreign citizens' service opportunities in Nepal, and the Nepalese citizens
serving in foreign countries, the following acts are relevant:
(ii) Labour Act, 1991 and Industrial Enterprises Act, 1992Section 4(1) of the Labour Act, 1991 and the Nepalese Supreme Court's decision and
interpretation on this section (vide Writ No. 2156, and section 22 of the Industrial Enterprises Act,
1992) require that the manpower required for any industry shall have to be recruited from among the
Nepalese citizens. But if any industry cannot be operated without persons living outside his/their own
country (expatriate manpower), foreign nationals may be appointed in such industry with the prior
approval of the Department of Labour for a maximu m period of five years. If a person so appointed
happens to be a technician of a special category  but not available within Nepal, such a person may,
with the approval of Department of Labour be appointed for up to an additional period of five years.Such a foreign employee is allowed 75 per cent  of his earning to be repatriated in convertible foreign
currency.
(iii) FITTA, 1992
For foreign nationals working under FITTA, 1992, arrangements also fall under the above
labour requirements.
The above labour requirement forms the rule and legal basis for all agencies employing foreign
nationals.
(iv) Foreign Employment Act, 1985This Act (with its latest amendment in 1992) aims at controlling and regulating the business or
trade of arranging employment of Nepalese citizens in foreign countries. No one is allowed to operatethis business without obtaining a licence. Such licence is issued only to the body corporate established
under the existing law after collecting the licence fee and security deposits in advance from the
licensee. A licence contains certain terms and conditions, any default of which or of the existing acts
or rules or order may cause cancellation of such licence. However, in certain special situations HMG
may cancel a licence at any time. The supply of Nepalese labour can be made only in those countriesas notified by HMG in the official Gazette. Th e ownership and liability of the business concern can
not be transferred or changed without the permission of HMG. A licensee has to secure prior
permission from HMG for the selection of workmen to be sent for foreign employment, for which he
has to apply by furnishing the required particulars. After obtaining such permission the licensee has to
publish a public advertisement for selecting the workers. Each selection has to be made impartially
and in the presence of a government representative and the representative of the foreign employer in
case it wishes so. But in no case shall minors and females be provided  foreign employment withoutthe consent of their guardians. A licensee is entitled to obtain a prescribed amount of service charge
from the workman for getting foreign employment. HMG may give permission to the licensee to send
workers for foreign employment only after a formal copy of contract document is signed between the
licensee and the employee is produced before HMG. The employee has to be made fully aware of the
background details of the foreign country of employment. A detailed record of the workmen sentabroad has to be presented by the licensee and HMG may inspect it. Any irregularity found to be
maintained in the process of foreign employment may be investigated by HMG. The licensee should
follow the directives given by HMG in this regard. A licence has to be renewed every year. This Act
provides for the formation of an Advisory Committee to advise HMG in matters of foreign
employment. HMG may formulate rules as necessary to enforce the Act. A licensee violating the legalprovisions and the directions of HMG may be fined NRs. 5,000 to NRs. 50,000. A person operating
the business without obtaining a license or cheating a sum of money from persons on a false pretext of
providing foreign employment shall be required to refund such amount of money and an amount ofWT/ACC/NPL/2/Add.1
Page 47
interest at the rate of 18 per cent, and the costs of travel to and from the foreign country along with a
fine of NRs. 50,000 to NRs. 200,000 or an imprisonm ent of one to five years or both. The penalty
would be half in case the workman  has not yet been sent abroad. Penalty for forging the documents
related to foreign employment is fixed at NR s. 25,000 to NRs. 100,000 or six months to 3 years
imprisonment or both. This leads to the cancellation of licence as well as non-reissuing of licence.
Cases under this Act fall under the Government cases Act, 1992 in which, the  State is a party. Theforeign Employment Act, 1985 is, however, silent about the foreigners'  participation in Nepal in this
business.
(m) Related scientific and technical consulting services
No particular act or law is available as yet. The services may be conducted under a contract
service basis in a few cases.
(n) Maintenance and repair of equipment (not including maritime vessels, aircraft or other 
transport equipment)
No particular act or law is available as yet. It is conducted under a job contract or contract
service basis by practising technicians or technical firms for certain types of equipments.
(o) Building-cleaning services
No particular Act or law is available as yet. It is conducted under a job contract or contract
service basis by certain contractors or labourers.
(p) Photographic services
No particular law is available as yet. It is conducted under a job contract or contract service
basis by photographers or photo studios as individuals or  firms or companies (attracting the
provisions of Industrial Enterprises Act, 1992).
(q) Packaging services
No particular law is available as yet. It is conducted under a job contract or contract service
basis by individuals or firms or companies (attracting the provisions of Industrial Enterprises
Act, 1992).
(r) Printing, publishing
(i) The Constitution of the Kingdom of Nepal, 1990
Article 13 of the constitution guaranteeing Press and Publication Right stipulates that no news
item, article or other reading material shall be censored, provided that nothing shall prevent the
making of laws to impose reasonable restrictions on any act which may undermine the sovereignty
and integrity of the Kingdom of Nepal, or which may jeopardize the harmonious relations subsistingamong the peoples of various castes, tribes or communities; or on any act of sedition, defamation,
contempt of court or incitement to an offence; or on any act which may be contrary to decent public
behaviour or morality. It further provides that no press shall be closed and seized for printing any
news item, article or other reading material. It furthermore provides that the registration of a
newspaper or periodical shall not be cancelled merely for publishing any news item, article or otherreading material.WT/ACC/NPL/2/Add.1
Page 48
(ii) Press and Publication Act, 1990
This Act confirming the above constitutional right of press and publication freedom provides
for registration of printing press and newspaper or periodical and other matters related to it. It requires
a press or a newspaper or a periodical to get registered before coming into operation. It also requires
that  once a book is published, two copies of it have also to be submitted to the local DistrictAdministration Office for documentation before the book is distributed or sent to market for selling.
The ownership of a press or newspaper or periodical  may be sold and transferred pursuant to this Act.
No prior restriction is imposed except on the foll owing grounds (nothing of these can be published) in
addition to those stipulated under Article 13 of the constitution for publishing any news, article or any
other reading materials: causing disregard or hatr ed or contempt or enmity against His Majesty or
Royal family and disturbing the security, peace and order of the Kingdom of Nepal. HMG by
publishing notification has the power to restrain for a certain period publication of any news item,notice or any reading material relating to a particular issue, event or region or order to publish it after
getting it checked by the concerned authority. HMG has been empowered to forbid the import of
certain foreign publications which are objectionable for the same reason provided under Article 13 of
the Constitution and those mentioned above in this Act. No one is allowed to import and sell the
publications which are banned. This Act also provides licensing of press correspondents of national orforeign press or communication institutions. It lays different penalties for offences committed under
this Act.
(iii) FITTA, 1992
It does not prohibit foreign investment in printing and publication services except for security
printing as provided under its section 3(4) and Annex.
(s) Convention services
No particular Act or regulation is available as yet. But this service may be conducted under a
job contract or contract service basis.
2. COMMUNICATION SERVICES
A. P
OSTAL SERVICES
The following Act and Rules and Regulations made under it are attractive to it:
(i) Post Office Act, 1962, and Additional Post Office Regulation, 1976; Postal Saving Bank
Regulation, 1975; Letters without Postal Stamp Regulation, 1976; Money-Order
Regulation, 1974; Internal Postal-Parcels (Insurance) Rules, 1961; Post-Office
Regulation, 1963
Post Office Act, 1962 has given monopoly to HMG to provide postal communication  services
to the people. Only courier services and air document services are out of its purview. Through a recent
amendment to this Act, HMG has been authorized to issue licence to the private sector to run postal
services under certain conditions. In providing postal services to the people, HMG has been given
immense power under the detailed provisions of th is Act. Accordingly, HMG may fix domestic postal
charges, fix foreign postal charges with an agreement between HMG and members or non-members
of World Postal Union (WPU) under the Convention of  WPU or on the basis of understanding with a
non-member of WPU; arrange and introduce different types and costs of postal stamps; fix conditions
for the dispatch of postal - objects; conduct postal registry, undertake insurance and recovery of stamp
charges from the postal due letters; dispose  undelivered postal objects; conduct domestic and foreignmoney-order; operate postal savings banks; and frame rules and regulations for the execution of theWT/ACC/NPL/2/Add.1
Page 49
provisions of the Act. This Act has prescribed a long list of fines and punishments for different
offences committed under this Act. Offences  under this list are normally criminal offences  legal
actions and proceedings for which are initiated under the Government Case Act, 1991.
B. C OURIER SERVICES
(i) Post Office Act, 1962
Section 3 of this Act provides for courier services. For this purpose, item 3 A of this Act
authorizes HMG to issue licence laying certain conditions upon a person or institution to run private
postal services or courier services in the private sector. In case of violation of the terms and conditions
of the licence or violation of any of the related provisions of Postal Office Act, 1962 the licence-
holder has to pay compensation for any loss caused and may have to bear imprisonment up to five
years or a fine up to NRs. 2,500 or both.
(ii) FITTA, 1992Section 3(4) and its Annex does not allow foreign investment in the internal courier service.
C. T
ELECOMMUNICATION SERVICES
(a) Voice telephone services
(b) Packet-switched data transmission services
(c) Circuit-switched data transmission services
(d) Telex services
(e) Telegraph services
(f) Facsimile services
(g) Private leased circuit services
(h) Electronic mail
(i) Voice mail
(j) On-line information and database retrieval
(k) Electronic data interchange (EDI)
(l) Enhanced/value-added facsimile services, including store and forward, store and
retrieve
(m) Code and protocol conversion
(n) On-line information and/or data processing (including transaction processing)
(o) Other
Services of all the sub-headings (a to o) under this heading are governed by the following Act
and are to be undertaken mainly by the public sector operations:
(i) Telecommunication Act, 1996
This Act provides for the establishment of  Nepal Telecommunication Authority for the
regulation of telecommunication services in accordance with the legal provisions and the
communication policy of HMG. The Authority has been mandated to make arrangements for easy and
accessible distribution of telecommunication services in all the urban and rural areas of the Kingdomas a basic service. For this purpose it may engage the private sector  both from local and foreign
investors. The Authority may among other things give permission for operating telecommunication
services in the private sector. It may approve and regulate the rates of service charges. It is
empowered to operate radio frequency services, engage in R & D activities for updating and using the
latest telecom technology, engage in human reso urce development useful for the telecommunicationWT/ACC/NPL/2/Add.1
Page 50
sector and work for introducing Nepal as an international transit point of telecommunications. It is
also empowered to settle disputes between the licence-holders and/or consumers, and exercise
supervision over the activities of licence-holders. HMG has also been empowered either to operate
telecommunication services on its own or authorize others to operate them. The government exercises
its privilege in controlling transmission provisionally at the time of emergency or for the reason of
national security.
The Act authorizes no person to operate telecommunication services without obtaining a
license from the Authority. A licence is granted within 120 days after completing a long process of
formalities and collecting the charges. Licence fee, renewal fee and royalty sums are negotiable. A
person unable to obtain licence within the said  period may lodge a complaint with HMG, and the
decision of the later in this regard is final. A licence is granted for a period of ten years at the
minimum in one term, the total period of which is 25 years at the maximum. A licence isautomatically cancelled once it is not renewed.  Renewal is done for a maximum period of five years
for each term by collecting fees for that purpose. Amendment to a licence has also been made possible
by the Act. A licence can be sold, purchased or transferred with the prior permission of the Authority
and by paying fees for it. A licence can also be cancelled in case services are not rendered within the
period as prescribed in the terms and conditions of licence or worked contrary to the legal provisionsor the directions given by the Authority. An appeal lies with HMG against the license cancellation
decision made by the Authority within 35 days,  and the decision of HMG is final in this regard. A
licensee has to invest certain percentage of its investment services out of the total in the rural areas as
directed by the Authority. The Act facilitates licen sees to interlink certain of their telecommunication
systems developed by each of them with the permission of the Authority or under the terms andconditions agreed by them. All the real estate prop erty and assets of the telecommunication enterprise
having more than fifty per cent foreign investment (individual and corporates may operate it after
paying the prescribed value of these properties and assets to HMG and getting a new  licence. But in
case of foreign investment having up to 50 per cent of the total investment of the project, the ex-
licensee may operate it again after getting a new licence. If HMG deems fit to encourage investmentin the telecommunication services, it may by notification exempt the licensee from paying tax,
customs duties,  sales tax and other charges for the import of telecommunication equipments for a
period determined by HMG.
If foreign investment is employed for the operation of telecommunication services in Nepal,
HMG shall make available to the licensee the required amount of foreign currency at the prevailing
rate for refunding and repatriating the foreign loan with interests and the amount of foreign capital.
The amount required of foreign currency shall also be made available to the licensee for importing
telecommunication equipments and tools. The Authority may fine a person up to NRs. 50,000 for
violating the legal provisions and orders and instructions issued by it, but losses may also be repaired
from the offender for any loss caused to anyone. Operating a service business without obtaining a
licence or breaching the terms and conditions of lic ence shall amount to a fine up to NRs. 50,000 and
closure of such illegal operations. For any misuse of telecommunication services or causing loss or
damage to any property and assets relating to telecommunication services, the offender may be
required to pay the total amount of such costs and a sum of fine equivalent to such amount. For
damaging or causing to damage telecommunication installations, etc., the Authority may penalise the
offender with a payment of a sum equivalent to the amount of with such damage and a fine equivalentto that amount or order an imprisonment  up to five years or both. Appeal against the order made by
the Authority shall lie before a competent committee to be constituted within 35 days of issuing such
order. The decision of such Committee is final. A case under section 47(5) of the Telecommunication
Act, 1996 is a Government case to be pr ocessed under The Government Cases Act, 1992.WT/ACC/NPL/2/Add.1
Page 51
D. A UDIOVISUAL SERVICES
(a) Motion picture and video tape production and distribution services:
(i) Motion Picture(Production, Projecti on and Distribution)  Act, 1969
A licence is required for the production, projection and distribution of motion pictures in Nepal.
Upon an application filed by a willing party, the Mi nistry of Communications issues a license. All the
procedural aspects of licensing, fees and terms and conditions to be met by the licensee are provided
by the Motion Picture (production, projection an d distribution) Rules, 1976. The Rules provide
different rates of fee for Nepalese and foreigners to get a license. There are separate fees, duration for
cinema production, exhibition and distribution and the period of licence and their renewal. But, HMG
may not charge any licence fee in the case of documentary films and mobile films based on the theme
of national developmental progress. There are certain other requirements, especially for a licensedforeign film-maker (producer), in which case he/she  has to meet all the expenses (which includes
allowances and insurance fees) of a liaison officer deputed by the Ministry of Communication during
the period of film shooting. Such a foreign film-maker before projecting a film produced in Nepal
should first exhibit it before the nearest Royal Nepal Embassy or Consulate General's Office or
Consulate's office and seek permission for releasing that motion picture in that foreign country. Theforeign film-maker should also submit a copy of that film to the Ministry of Communications. All the
film producers who are engaged in this business are required to seek permission from the Censor
Board constituted by HMG for releasing the film. The Censor Board reserves the right to give or deny
permission, specify the changes it demands or defi ne the nature of the viewer community. But no
permission is given if national sensitivities as outlined in the Act are being hurt. The permission givenby the Censor Board may be refused or amended at any time by HMG for the same reasons shown
above. A person aggrieved by the decision of the Censor Board may appeal to HMG within 35 days of
the order issued. Anyone who violates any provision of the Act and its Rules or produces, exhibits and
distributes a cinema without obtaining a licence is fined up to NRs. 5,000; the licence is cancelled and
the cinematographic tools used for that purpose may also be seized by the Chief District Officer. An
appeal against such a decision lies in the local Appellate Court.
(ii) FITTA, 1992But in no case is a foreigner  allowed to establish, run or operate a motion pictures business in
Nepal for producing motion pictures in Nepali national languages and the language of the nation
(Nepali) under s. 3(4) Annex of Foreign In vestment and Technology Transfer Act, 1992.
(b) Motion picture projection service
Same [see (a) of D] as above.
(c) Radio and television services:
(i) Radio Act, 1958 and Radio (Licence) Rules, 1968
No person (which may include a foreign person ) is allowed to keep, manufacture or use a radio
instrument without obtaining a licence. HMG is fully empowered by this Act either to exempt any
person or entity from the provisions of this Act by framing rules to that effect. The procedures for
obtaining a radio licence as well as the fees payable for the licence and its renewal are provided in
detail in the Radio (licence) Rules, 1970. A person who has been refused a licence may appeal to
HMG against the order of refusal issued by the concerned authority within 35 days of such order.Decision made by HMG in this regard will be final.  An offender keeping or manufacturing or using a
radio equipment without obtaining a license may be fined up to NRs. 800 and this amount may beWT/ACC/NPL/2/Add.1
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doubled each time in case the offence is repeatedly committed. Repetition of the offence may also
amount to confiscation of such radio equipment. Committing an offence repeatedly other than the
above shall amount to a fine of NRs. 800 at the maximum for each repetition. Before confiscating a
radio equipment a search warrant is also issued to the offender's place. A person not satisfied with the
order or decision made by HMG may appeal to the local Appellate Court. HMG is also empowered to
frame other rules for the fulfilment of the objectives of the Act.
(ii) National Broadcasting Act,  1992
HMG has been empowered by this Act to look after the broadcasting activities and formulating
policies for national broadcasting. No one is allowed to broadcast any programme without obtaining a
license under this Act. Any person, either a national or a foreigner (individual or body corporate), or
under a joint-venture between them, may operate broadcasting services by installing a satellite orcable television or any other mechanism may seek permission from HMG. HMG may grant such
permission with conditions after a thorough check-up of the requirements fulfilled and fees paid.
HMG has the power to prohibit  broadcasting of any objectionable programme for a period not
exceeding six months in one term. HMG may, after giving an opportunity of representation, cancel a
licence for  violation of the provisions of this Act and the Rules made thereunder. Other provisionsrelating to the installation of satellite broadcasting earth station and broadcasting may be as
prescribed. Fees payable to HMG or designated authority by the Broadcasting agency for the
distribution and operation of the programme and the fees to be collected from the users of such
programme shall be as prescribed. The Act has outlined a priority list for producing and broadcasting
a programme, to which the broadcasting agency shall give preference. Private sector participation maybe included in the broadcasting service for making the programme impartial, simple, qualitative and
effective pursuant to the Act. Foreign broadcasting agencies or communication media may be
allocated time on condition that they broadcast  programmes which are educative, entertaining and
informative and not against the national interest. Ti me for advertisement may be allocated to persons
national/foreigners etc. after collecting a prescribed fee. Advertisement programmes which adverselyaffect  public health such as smoking and drinking alcohol are to be discouraged. But advertisement
on the following matters are not allowed these, which are against the interest of political parties, those
which are vulgar, are provocative and intended to overthrow the elected government by using violent
means, are of a nature causing unnatural public fear and havoc, are contrary to the objectives of
Nepalese non-aligned foreign policy, and contain elements misinterpreting, insulting and underminingany community, language, religion and culture. The Act has also provided the functions, duties and
powers of the broadcaster. Penalty for broadcasting a programme without obtaining a licence and
operating programme by installing a satellite eart h station with the permission of HMG or acting
contrary to the provisions of the Act and the Rules made thereunder, is fixed to a maximum NRs.
10,000 or one month imprisonment or both. A person not satisfied with the order issued or
punishment imposed by HMG or a designated aut hority may appeal to the local Appellate Court
within 35 days. The Act has also required HMG to provide security to the broadcasting agency asnecessary.
(d) Radio and television transmission services
Same (see (c) of D) as above.
(e) Sound recording
Same (see (a) and (c) of D) as above.WT/ACC/NPL/2/Add.1
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3. CONSTRUCTION AND RELATED ENGINEERING SERVICES
A. G ENERAL CONSTRUCTION WORK FOR BUILDINGS
B. G ENERAL CONSTRUCTION WORK FOR CIVIL ENGINEERING
C. I NSTALLATION AND ASSEMBLY WORK
D. B UILDING COMPLETION AND FINISHING WORK
E. O THERS
Sub-headings A to E of this heading are covered by the following legal scheme:
(i) There is no particular act or law relating to them. Construction work for government or
government-controlled or foreign-aided development project and buildings of large and unique size
and cost are normally undertaken by big contractors [either by local or global tendering under on the
Fiscal Administration Rules, 1985] on a turn-key cont ract basis. As regards the construction work for
buildings below the above size, it is normally undertaken under a labour contract and piece-meal
contract basis and in few cases under a turn-key contract basis.
(ii) Contract Act, 1967
It applies in the cases of construction contract services.
(iii) FITTA, 1992It applies in construction industries under its section 3(4) and Annex. 4.
4. DISTRIBUTION SERVICES
A. C
OMMISSION AGENTS ' SERVICES
(i) Nepal Agency Act, 1958, and Agency (Amendment and Consolidation) Rules, 1962
The basic objective of this Act is that the agents, distributors, stockists, nominees or
representatives of a local or foreign company/firm to Nepal shall not take undue profit from the sale
of goods and commodities. No person can engage himself/herself as an agent without registering
himself/herself as an agent under this Act. An agent is registered only after he/she deposits a
prescribed amount of fee and security and gives a written bond to the Department of Commerce. The
Act gives preference to Nepalese citizens for gettin g registered as an agent. A registered agent is
required to submit statement showing the goods collected, sold and in stock, and the rates of the
goods. The Agency (Amendment and Consolidation) Rules, 1962 made under the provisions of the
Act has fixed the rates of fees, security deposits, the forms of statements and other procedural matters.
The Act has prescribed different amounts of fines and different terms of  black- listing an agent who
violates the provisions of this Act.WT/ACC/NPL/2/Add.1
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B. W HOLESALE TRADE SERVICES
C. R ETAILING SERVICES
Both these aspects (Sub-heading B and C of heading 4 above) are governed by the following
acts to the extent of relevancy only).
(i) The Black-Marketing and  other Social Offences and Punishment Act,  1975The main objective of this Act is to contro l black-marketing, illegal profiteering, hoarding,
adulteration of goods and commodities and other social offences in order to maintain  good health,
quality of life and economic well-being of the people. In this course, this Act has required certain
code of conduct on the part of the wholesale and retail traders. Primarily, the wholesalers and retailers
should sell  goods and commodities at a price fixed by HMG. In case the price is not so fixed by
HMG, the wholesalers should fix the price by themselves keeping in mind the views of the concernedsectors and the objective that the consumers shall get a reasonable fixed price. While fixing the price,
consideration should be given to the following aspects: costs of the goods and commodities;
transportation costs; customs duties, taxes, fees, charges and the reasonable amount of other
expenditures payable for importing and producing goods and commodities, office expenditures;
dealers, retailers and agents; amount of commissi on payable  the and reasonable amount of profits of
the producers and importers. This Act authorizes HMG to form different Price Fixation Advisory
Committees for price. This Act fixes a maximum fixing of 20 per cent as the outer limit of profit
making on the actual price of  goods and commodities. The Act requires every wholesaler and retailer
to display a price-list of the goods and commodities at the selling-counters. The Act prohibits all
dealers and retailers to sell in any areas elsewhere, other than the zones and districts for which sellingquotas are fixed on the prescribed goods and commodities. This Act also prohibits sellers to hoard and
create artificial scarcity and forbids the sale of adulterated goods and medicines. Any violation of
these prohibitions and other provisions of the Act done by any wholesaler or retailer will make him
pay different amounts of fines and terms of impris onment which may also extend to life imprisonment
depending on the seriousness of the offences committed.
(ii) Essential Commodities Control (Conferment of Power) Act, 1961
This Act has been introduced mainly for the purpose of conferring powers to the authorities to
take strong control measures for maintaining regular supply of the daily consumable foodstuffs, goodsand commodities essential to the general public. Accordingly, HMG is empowered by this Act to
regulate and control the distribution and trade of such goods which it specifies through an order
notified for increasing the volume of supply of certain goods, maintaining or equally distributing it or
making it available  at a reasonably fixed price. Those who violate the provisions of the Act and the
orders issued by HMG in this regard may be fine d and imprisoned, recovering the amount or  seizing
the goods and commodities  involved. The Act has requires HMG to keep a serious vigilance on the
activities of wholesalers and retailers and achieve a very effective execution of this Act.
(iii) Foods Act, 1967 and Foods Regulation, 1968The objective for which this Act has been introduced is the protection of consumers from
adulterated food products. This Act prohibits the sale or distribution of harmful and adulterated foodproducts. HMG may confiscate such harmful and adulterated food products. The Act requires the
wholesalers or retailers to take a letter of permission   for selling or supplying certain foodstuffs. But
in case of sealed food packets, the secured retailers need not take any such letter. HMG may by
notification announce from time to time what food stuffs  should contain what type of quality, standard
or quantity. The Act lays different sets of punishments for violating the provisions of the Act. TheFoods Regulation referred to above provides detailed regulation on what a wholesaler or  retailer isWT/ACC/NPL/2/Add.1
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required not to do in relation to food adulteration, the status of food, the pollutant aspects of food, use
of food preservatives, the permission/letter and the terms and conditions that a permission-holder is
required to fulfill.
5. EDUCATIONAL SERVICES
A. P RIMARY EDUCATION SERVICES
(i) Constitution of the Kingdom of Nepal, 1990
Article 18(2) of the Constitution of the Kingdom of Nepal guaranteeing educational right to the
people provides that each community residing within the Kingdom of Nepal shall have the right to
operate schools up to the primary level in its own mother tongue for imparting education to its
children.
(ii) Education Act, 1971 and Education Regulation, 1992
This Act provides a two-way scheme of primary education: the one is run in the public sector
as free education under state expenditure, and the other in the private sector with costs for users.
Primary education is also divided into pre-primar y and primary education with or without boarding
facilities. It is one of the primary functions of the state and the government as laid down by the
constitution to make arrangements to establish and run primary schools in each of the small units of
local wards. Primary education may be imparted in  the child's mother tongue as provided by the
constitution. The goals and objectives of primary education shall be as set by the government under its
total education policy. Therefore, the school education is always guided by HMG. The Act requireseach school to use the course and curriculum as prescribed by HMG. Primary school leaving
certificate examination is also required to be conducted under the instructions of the local District
Education Office of HMG. Anybody other than HMG willing to establish a primary school shall have
to get permission from the District Education Office of HMG by fulfilling all the requirements. In
each primary school a school management committee is required to be constituted with therepresentatives of District Education Committee, local ward office, school guardians and
educationists. The school Management committee can be dismissed by the District Administration
Office on solid grounds of mismanagement. HMG has the power to issue directives to the concerned
educational authorities such as the District Education Committee, Teachers Selection Committee and
School Management Committee. The property and assets of every school are treated as publicproperty. But the property invested by promoter  of a private school may be refunded to him by the
school management with the permission of District Education Officer. The Act has granted full
exemption to all the schools from paying real estate registration fee to HMG. The Act has imposed
certain fines on those who cause loss and embezzle the property of the school. certain other actions
can be taken against on those who violate the provisions of this Act.
Education Regulation, 1992 provides for the arrangements relating to obtaining permission to
open school; composition, functions, duties and power s of the District Education Board, and School
Management Committee; and the functions, duties and powers of the Regional Education Director,
District Education Officer and Supervisor; Teachers Selection Committee and Headmaster;
conducting and control of examination; composition, level and grading of school education service;
service conditions of the teachers and employees of public schools; school course and curriculum; thecode of conduct of teachers and students, teachers, training, school fees and collection; extra-
curricular activities of schools; protection to schools; property and assets; library arrangements;
financial aspects of the schools; District Educ ation Fund and School Fund; government grants to
public schools; school flag, logo and prayer; etc.WT/ACC/NPL/2/Add.1
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B. S ECONDARY EDUCATION SERVICES
(i) Education Act, 1971 and Education Regulation, 1992
This Act provides for secondary education up to class X. Secondary education is imparted by
the government as well as the private sector, with or without boarding facilities. HMG has declared
free education (without paying school fee) up to the secondary level, which applies to governmentschools only. The government authority to give permission to open a secondary school is the Regional
Educational Director. In between primary educati on and secondary education, there is a level called
Lower Secondary Education, which comprises educ ation of classes VI to VIII. School Leaving
Certificate examination of the secondary level is conducted each year by the Controller of
Examinations Office of HMG on an all-Nepal basis.
The provisions of the Education Act, 1971 and Education Regulation, 1992 are all similar to
those discussed above in relation to primary education (under sub-heading A of heading 5 as above)
excepting the differences on requirements between these two levels of education.
(ii) Higher Secondary Education Act, 1988 and Higher Secondary Education 
Regulation, 1996
This Act was enacted for the purpose of introducing 10+2 higher secondary school education to
produce a qualitative medium-class  manpower needed for the country and prepare good entrants for
higher university education. An autonomous High er Secondary Education Board is provided to be
constituted under this Act, which has been made responsible for executing Higher SecondaryEducation Programme. Any existing secondary school willing to run higher secondary education may
be granted permission or affiliation by this Board to run classes XI and XII of higher secondary
education for students passing the S.L.C. examination in case it fulfils all the requirements set. Such
requirements are, mainly, adequate physical facilities, adequate number of qualified teachers, required
amount of security deposits in the Bank and, good performance in the last 3 years' S.L.C. examinationof that school and other matters. Initially, the Board confers provisional  affiliation of that School to
the Board, but after assessing the examination results of the first batch students and other aspects, it
may confer permanent affiliation. Those who pass 10+2 examination of this Board shall be recognized
as equivalent to  the Intermediate level of education hitherto rendered by universities. The main
function of the Board is to grant affiliation, set the course and curriculum, and conduct examinations.As a transitional arrangement, the intermediate level classes run by campuses may be transformed into
Higher Secondary classes  conducted by the High er Secondary Schools. It has been made mandatory
by this Act that Tribhuvan University and any other university shall not give affiliation to any
intermediate level  public or private campus after this Act is commenced. This Act empowers the
Board to delegate all or some of its powers to the Regional Education Director, District Education
Officer or other committees or officers. The Board has to execute the education policy and other
directives of HMG. This Act has provided to constitute a higher Secondary Education Assembly toformulate policies regarding the raising of quality of education and coordinating between the Higher
secondary schools. The Board may also grant affiliation to an higher secondary school established by
individual or institution provided it fulfils the requirements set  above.
The Higher Education Regulation, 1996 provides on matters relating to affiliation and its
cancellation, composition, powers, functions and duties of the Higher Secondary Management
Committee of the school, procedures of meetings, and the powers, functions and duties of the Board
and its office-bearers. Management of the Higher Secondary School is done by its Management
Committee represented by the Board, the District Education Office, local bodies, educationists and
women, guardians and donors and teachers. The Board has to seek consultation of HMG beforedissolving this managing committee. The Board may with the prior permission of HMG, arrange orWT/ACC/NPL/2/Add.1
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operate a joint programme of research, consultancy and training by signing agreement with the local
or foreign governmental or non-governmental agencies pursuant to this Regulation.
C. HIGHER EDUCATION SERVICES
(i) Tribhuvan University Act, 1992
Tribhuvan University (TU) is the  oldest, and largest university in Nepal, established in 1959
under the old Act and to date under the TU Act, 1992. It renders higher education in science, arts,
commerce, law, education and other technical subjects such as engineering, medicine, forestry and
agriculture. TU as an autonomous higher education institution has the following functions, duties and
powers pursuant to this Act: to constitute academ ic institutes, faculties, research centers and
departments, and to look after and supervise them in order to conduct different kinds of teaching,
training and research activities; to award degrees and certificates to the students acquiring highereducation in particular subjects from the  university and their campuses and affiliated (private)
campuses, and to trainers and researchers, and also confer honoris causa  degrees to the distinguished
personalities; to grant permission to open campuses in the private sector and give them affiliation with
TU and determine the amount of facilities and assistance to be provided by TU to them; to keep
relationship with the national or foreign universities and educational institutes; to obtain financialassistance from national or foreign academic, educational or other institutions or individuals, and
arrange for academic exchange programme; to arrange for awarding scholarships, medals and
rewards; to conduct games and sports programmes and launch other welfare activities within the
university; to frame rules of procedure as necessary; and undertake other activities as necessary.
This Act provides the organizational set-up of TU in the following order: University Assembly,
Academic Council, Executive Council, Service Co mmission, institutes, faculties, departments,
university campuses, affiliated campuses, research centres, and other bodies. This Act has also listed
an order of authorities, who lead the above constituents of the university system. The Act has
provided for the composition and  powers, functions and duties of the above organizations of TU. His
Majesty the King is the Chancellor of TU and Education Minister is the Pro-Chancellor whereas a
Vice-Chancellor is appointed by the Chancellor under the recommendation of  a recommendatory
committee. TU Assembly has passed various rules of procedure to execute the provisions of this Act.
Basically, it is a State-funded public sector university pursuant to this Act.
(ii) Mahendra Sanskrit University Act, 1985
The main objective of this Act is to establish Mahendra Sanskrit University, an autonomous
body which is the only Sanskrit University of Nepal. The main functions, powers and duties of this
university are: to establish, operate and manage Sanskrit Colleges to impart higher sanskrit education;
to conduct Ph.D. programmes and courses at the Masters, Bachelors and Intermediate levels in
Sanskrit and confer the relevant degrees or certificates, to try to elevate the image of the country;  as aland of knowledge and inspiration of sanskrit studies by promoting study and research on it; to
preserve the achievements of and contributions made in the area of Sanskrit through measures that
would help sustain; people's respect for the tradit ional values in religion, morality and good conduct.
This Act provides an organizational set-up and functioning arrangement of this University which is
basically similar to that of Tribhuvan University discussed above. In totality, this is a State-fundedpublic University pursuant to this Act.
(iii) Kathmandu University Act, 1990
This Act has provided for the establishment of Kathmandu University, an autonomous
academic institution established in the private sector to impart higher education in Arts, Science,
Commerce and Technology through various teaching and research constituents of the University. ThisWT/ACC/NPL/2/Add.1
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is the only private sector university of the country chartered under the Act. It has organizational
structure similar to  that of Tribhuvan University, excepting that it does not have the post of Rector,
Service Commission and research centres. The Prime Minister is the Chancellor of this University.
The University is empowered to frame rules for th e execution of this Act. This Act provides the
composition, powers, functions and duties of the different organizations of the University.
(iv) Eastern-Regional University Act,  1993
The main purpose of this Act is to establish an autonomous Eastern - Regional University in
Biratnagar sub-metropolitan area under the regional and multi-university concept of HMG. This
University has not yet commenced its academic programme, but  aims to be established under the
financial management and active participation of the local people and to conduct higher education
(teaching and research) in Arts, Science, Law, Ma nagement, Education, and Technology. It also aims
to create  conducive academic and educational environment in the country. It has the organizational
set-up similar to that of Tribhuvan University excepting that it does not contain the post of Rector.
This Act has provided the composition, powers, functions and duties of the university. The Prime
Minister is the Chancellor and the Minister of Education is the Pro-Chancellor of this University. This
Act requires the University to function under the national educational policy of HMG.
(v) Pokhara University Act, 1997This Act aims to establish an autonomous Pokhara University in the Pokhara sub-
metropolitan area  in the  western development region of the country. The purpose, objectives,organizational and functional set up of this University are similar to those of Eastern - Regional
University provided under the Eastern -Regional University Act, 1993 discussed above. The Act is yet
to enter into force. Option lies with the existing campuses of other universities whether they want to
get affiliated with Pokhara University with the consent of their affiliated universities, which is a
provision similar to that of the Eastern-Regional University Act, 1993.
(vi) B.P. Koirala Institute of Health Sciences Act, 1992See supra  (under V of sub-heading (a) R&D services on natural science of heading CS R&D
Services).
(vii) University Grants Commission Act, 1992University Grants Commission (UGC) has been established under this Act, as an autonomous
high-level institution. The main functions, duties and powers of UGC are: to give advice to HMG in
the course of establishing new universities; to formulate policy decisions in relation to conferring
financial grants to the universities; to recommend to the concerned grant giving institutions for
making available grants and additional grants; to cause coordination among the universities for
standardizing the academic programme to be launch ed at the universities; to make arrangements
necessary for raising the quality of education; to make arrangements  necessary for exchanging
scholarships and fellowships between the universities and educational institutions inside and outside
of Nepal. For discharging the functions mentioned herein above, UGC may ask for supplying relevantfinancial and academic statements and details of the universities concerned, but UGC has the power to
inspect the concerned universities. After the commen cement of this Act, grants to the universities
have to be channelled only through the UGC. Not only the university, UGC may also provide
financial assistance to the private campuses that fulfill the requirements set by it.WT/ACC/NPL/2/Add.1
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D. A DULT EDUCATION
(i) Education Act, 1971 and the Education Regulation, 1992
This Act has made a provision that adult education shall be conducted under the rules or
regulation made under it. Accordingly, the Education Regulation, 1992 provides adult education
under its arrangement of Informal Education. The Regu lation provides that adult education shall be a
regular campaign launched under the coordinated programme of action between HMG, NGOs and
INGOs. Any adult education programme so launched is required to be communicated to the District
Education Office. An adult education programme should be imparted only to the illiterate persons of
15 to 45 years  in age. It has to be carried out wi th the help of that curriculum which is designed in
accordance with the objectives of the national literacy programme. Normally, an adult literacy
programme shall be of six months duration.
HMG may constitute a 21-member high-level National Informal Education Council under the
chairmanship of the Minister of Education, Culture and Social Welfare Ministry. The Ministry may
determine the functions, duties and powers of the Council under the recommendation of the Council
itself. There is a high-level District Informal Education Development Committee constituted for the
purpose of conducting, managing, coordinating and inspecting informal education at the district level.The powers, functions and duties of this committ ee shall be as determined by the Council. The
District Informal Education Committee may constitute village and ward level Literacy Campaigning
Committees,  if necessary. An Informal Education Development Fund may also be created at the
national and district levels for launching informal education programme.
E. O
THER EDUCATION SERVICES
(i) The Education Act, 1971 and Education Regulation, 1992  provide the following 
educational programmes.
(a) Child EducationPursuant to the rule-making provisions of this Act, the Education Regulation, 1992 provides
for child education as  part of informal education discussed above. Child education programme may
be conducted in the following manner. In order to include children of 8 to 14 years of age group in
this programme who were unable to get education for different reasons, arrangement may be made tosend such children for formal education and include them in other programmes of informal education.
Institutions engaged in providing child education should introduce the courses and curricula set by the
Ministry of Education. Child education programme may be launched phase-wise. Normally each
phase consists of nine months. Those children who have completed child education programme may
be admitted into the appropriate classes.
Other matters relating to informal education  discussed above under the topic 'adult education'
shall also apply to the child education programme.
(b) Special EducationSchools that provide special education to blind, deaf, dumb, physically disabled or mentally-
retarded children may be granted facilities and incentives as determined by HMG. HMG may
constitute a high-level Special Education Council under the Chairmanship of the Minister of
Education for the purpose of formulating policies regarding Special Education, executing such
policies into programmes and coordinating and supervising such programmes. The powers, functions
and duties of this Council and other matters are also provided in the Education Regulation.WT/ACC/NPL/2/Add.1
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(c) Coaching Classes
Coaching classes for the academically weak students of schools may be organized by a school
itself before or after school time or during school vacations. An individual or institution other than a
school willing to run coaching classes  supplement ary to school education should obtain permission of
the local District Education Office. The rate of fees and other amounts to be charged to the studentsby the coaching institutes should be as approved by the District Education Office. But in no case shall
the duration and time of coaching classes be equivalent to the school classes. Such classes should be
run only in the approved levels of classes and subjects. Coaching classes should be taken by qualified
and experienced teachers of related subjects. Issuing of certificates to the students who complete the
coaching classes is prohibited. No grant or any other type of assistance is to be given to the coaching
institutes by the  government or related agencies. Permission granted  to an individual or institution
for running coaching classes may be cancelled in case su ch persons are not acting in conformity to the
objectives of coaching classes. They have to follow the instructions issued by the Ministry of
Education from time to time.
(d) Language Classes
An individual or institution willing to run la nguage classes should seek permission from the
local District Education Office by applying along wi th the curriculum of such language course. The
District Education Office may grant permission if  adequate physical facilities, qualified language
trainers and running capital are available. All the investments in such language institute are required
to be made by the promoter since no government grants can be made available to it. The promoter
may fix the rates of fees with the approval of th e District Education Office. The District Education
Office has the power to give instructions to the la nguage institutes, supervise them and cancel the
permission-letter issued to the Language Institute in case the conditions for smooth running of such
classes are not met or the actions are contrary to the objectives of the course or instructions given to it
are ignored.
(ii) Council for Technical Education and Vocational Training Act, 1987This Act was enacted for the purpose of establishing an autonomous body called Council for
Technical Education and Vocational Training (CTVT) . This is a high-level Council established under
the chairmanship of the Minister of Education or State Minister of Education. The main objectives,
powers, functions and duties of CTVT are: to make arrangements for the teaching, training and
research for the development of technical education and vocational training;  give permission for the
establishment and operation of technical education and vocational training in the private or non-
governmental sector, and make an arrangement for giving facilities and assistance to them;  maintain
relationship with the national universities and inst itutions in relation to technical education and
vocational training;  emphasize  quality education and training,  chalk out programmes and determinethe level, and draft policies in relation to technical education and vocational training and get them
approved from the Technical Education and Vocational Training Assembly;  conduct basic level skills
and training programme and produce medium-level  manpower;  establish and operate or cause to
establish and operate Polytechnic Institutes;  introduce or get introduced the curriculum prescribed for
it;  arrange coordination among the different training programmes;  arrange for technical trainers,training, apprenticeship training, short term or mobile training package;  arrange for classification,
testing and authentication of skills;  obtain national or international assistance to CTVT and to that
purpose sign agreement or contracts with national, foreign and international agencies or institutions
with the approval of HMG;  advise HMG in matters relating to technical, educational and vocational
training; and execute the programmes approved by the Technical Education and Vocational TrainingAssembly. This high-level body has been constituted under the chairmanship of Minister or State
Minister of Education with the basic mandate that it should give guidelines to CTVT, to formulate
policies and arrange for its effective execution, and evaluate or cause to evaluate whether theWT/ACC/NPL/2/Add.1
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development and expansion of technical education and vocational training are keeping pace with time.
This Act has authorized the Assembly and the CTVT to invite any national or foreign expert or
consultant  to its meeting if it is deemed necessary.
6. ENVIRONMENTAL SERVICES
A. SEWAGE SERVICES
(i) Nepal Drinking Water Corporation Act, 1988
Nepal Drinking Water Corporation has been established under this Act, as an autonomous
public corporation with the mandate to make regular supply of clean drinking water and make
adequate arrangement of sewage system at different places of the kingdom of Nepal. This Act
provides to establish different offices of this corporation at different places of Nepal. As regards to
sewage services, the main functions, duties and powers of this corporation are: to devise sewageplanning and make an execution of that;  undertake studies, research and survey on the various aspects
of sewage;  undertake or cause to undertake construction works relating to sewage works;  accomplish
acts as decided to be performed under the agreements signed in relation to sewage system between
HMG and foreign governments or international or foreign institutions;  execute sewage development
projects assigned by HMG;  provide sewage service to the people by charging them fees;  imposeconditions for the use of sewage facilities;  repair and maintain sewage pipelines;  do other activities
necessary for the fulfilment of the objectives of the corporation.
The activities of this corporation are managed by its Executive Committee. HMG has the
power to issue orders to the corporation in the execution of this Act, and the corporation is required tofollow it. HMG has the power to constitute or dissolve the corporation and also frame rules. The
corporation may frame rules of procedure with th e consent of HMG, The liaison ministry of the
corporation is Ministry of Housing and Physical Planning.
The Act prohibits all to disturb, misuse, break  pipeline or destroy and sewage system.
Anybody found acting contrary to these restrictions and other violations of the Act and orders or
decisions of the corporation may have to suffer penalties devised under this Act.
B. R
EFUSE DISPOSAL SERVICES
(i) Solid Waste (Management and Resource Mobilization) Act, 1986, and Rules, 1988
This Act aims to establish an autonomous body corporate named Solid Waste Management
and Resource Mobilization Centre. This centre as a public corporation has been mandated to perform
the following duties and functions: to devise policy decisions on the projects related to the centre and
see that the decisions are being executed;  undertake the basic construction and maintenance works
and obtain cooperation of the concerned municipality in this connection if necessary;  provide
container service to the people at the appropriate places for disposing refuse, collecting or dumping it;take away the solid wastes so collected at the last  dumping site for dumping or recycling or producing
compost fertilizers, briquette, biogas or other it ems; make arrangement of pollution-free emission of
refuses;  classify the solid wastes and make arrangement for their prevention;  undertake studies and
research as necessary for  control of solid wastes and resource mobilization;  provide technical advice
or other necessary assistance to any person, organization or entity in respect of management andcontrol of solid wastes;  arrange public toilets, bathrooms and slaughter-houses as necessary;  conduct
training relating to management of solid wastes and environmental cleanliness;  engage local
participation for solving and controlling the problem of solid waste disposal; arrange coordination
among different agencies in this pursuit; and do other works as necessary for the fulfilment of the
objectives of this Act.WT/ACC/NPL/2/Add.1
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This centre may establish its branch offices at different places of Nepal. The centre is
administered by an executive committee constituted by HMG. The solid wastes and refuses collected
or contained in the areas and matters related to it under its jurisdiction are the property of the centre.
The center has the power to issue instructions to th e public to avoid doing things which are prohibited
by this Act and cooperate in the mission of the centre. Failure to comply with the provisions of theabove Act, Rules and orders by anyone will lead penalties.
C. S
ANITATION AND SIMILAR SERVICES
(i) Municipality Act, 1991This Act provides for the establishment of municipalities all over the kingdom as autonomous
local-self government units. Such municipalities are given multifarious functions, duties and powersby this Act to undertake various activities related to sanitation. They should make arrangements for
the following: sewage and drainage system; city cleaning; collection and disposal of solid wastes;
public toilets; crematorium and cremation areas, a nd washing places; slaughter houses; catching stray
animals and their auction; the control of epidemics;  prohibition of  the sale of meat of diseased and
prohibited animals; disposal of the mad and street dogs and burial of the dead ones; and public health.
For performing these functions the municipality may use their own funds and resources or
engage public participation, NGOs and others.
(ii) Village Development Board Act, 1991This Act provides for the establishment of Village Development Boards all over the kingdom
as autonomous local self government units. Such Village Development Boards are conferred various
functions, duties and powers by this Act to be undertaken by them within their local jurisdictions
among which the aspects sanitation those are similar to of the municipalities. The funding aspects ofthese activities are also similar to those belonging to the municipalities.
D. O
THERS
(i) The Environmental Protection Act, 1997
See, (ii) of (a) R&D services on natural sciences of C. R&D services of 1 of this Annex-1.
This Act prohibits  anybody from polluting environment on a hazardous scale or on a scale
endangering public health or creating noise, heat, releasing radioactive radiation or emitting or
causing to emit refuses  from any mechanical equipments, industrial enterprise or places. If anyone is
found causing adverse impact upon the environment through these activities, the concerned authority
may impose conditions or restrictions upon such activities. HMG may also ban the use of certainmaterials, fuel, equipments and machinery if they are found creating immense adverse impact upon
the environment. The Act provides the appointment of Environment Inspectors for reducing,
removing and controlling the level of pollution for acting or causing to act effectively in the areas
suggested by the initial environmental testing a nd or Environmental Impact Assessment Report. The
inspectors have some sanctioning authority for enfo rcing this Act. The Act also provides to arrange
payment of compensation to the aggrieved party affected by pollution caused by some one through the
above mentioned instrumentality. The Act empowers HMG to frame rules, to issue guidelines,
constitute committees etc., for the enforcement of this Act.WT/ACC/NPL/2/Add.1
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7. FINANCIAL SERVICES
A. A LL INSURANCE AND INSURANCE -RELATED SERVICES
(a) Life, accident and health insurance services;
(b) Non-life insurance services;
(c) Reinsurance and retrocession;
(d) Services auxiliary to insurance (including brooking and agency services).
Services of all the above mentioned sub-headings (a to d) under this heading are governed by
the following acts.
(i) Insurance Act, 1992It provides for the formation of an autonomous Insurance Board for arranging, regulating,
providing and controlling insurance business in Nepal. Besides the representation of ministries, two
insurance experts and one insured person are also included in the Board. The Board is the governing
body for the execution of this Act. No one is allowed to operate insurance business in Nepal without
obtaining a licence. National or foreign insurance concerns willing to operate insurance business in
Nepal shall have to apply to the Board for regist ering as an insurer by furnishing the required
particulars accompanied by a required amount of fee. The Board, after examining the application
thoroughly and obtaining permission from HMG, issues a licence to the insurer on a renewal basis
each year. But no insurance concern whether national or foreign can be registered as an insurer if
registration is sought of a name resembling the name of an already registered insurer, and if the
insurer fails to show a paid capital not less than 30 million rupees. Registration of an insurer can becancelled by duly notifying him on the following grounds: in case the insurance business is not started
within six months of obtaining a licence; if his/her liabilities exceed his/her assets; in the case of
default of the insurer in making good his/her liabilities beyond three months of a final court decree in
the case of an insurance policy issued inside Nepal; in case a Nepalese insurer is not provided national
treatment in the country of the head office of an insurer incorporated outside Nepal; if an insurer failsto establish an office inside Nepal; and in case of omission or commission of acts made by an insurer.
Cancellation of registration is complete only after proper representation has been made and
the notice of such cancellation has been  issued in two leading newspapers of Nepal. But no
cancellation is retrospective. An insurer after the cancellation of its registration shall have to refundthe amount of fund to the insured persons in the manner and time fixed by the Board. An insurer is
required to repair the losses it has made to an insured person. Liquidation proceedings can be ordered
by HMG upon the dissolution of an insurance company caused by the cancellation of registration. An
insurer is required to maintain his books of acco unt and funds. An insurer should allocate a reserve
fund for meeting any liabilities to be incurred in the course of running insurance business inside
Nepal. An insurer is required to submit annual statement of his insurance business income earned
inside Nepal along with copies of the Auditor's repo rt to the Board. An insurer is required to appoint
an agent in his Nepal-based head office. The Act al so regulates the licensing of insurance agents and
surveyors, which apply both to national or foreigners in somewhat the same manner applicable to
insurers. Insurance Rules (First Amendment) 1996, require insurers to operate their life insurance and
insurance business in the name of two separate bus iness firms. A fine of NRs. 3,000 to NRs. 10,000 is
fixed for any violation of the legal regulations made by an insurer, or insurance agent or a surveyor orany other person, and for the reoccurrence of such offence NRs. 500 shall be charged for each such
person. The fine is NRs. 10,000 in case of undue handling of business. Punishment for falsifying or
not maintaining or not submitting the books of accounts or documents is up to NRs. 30,000 or two
years imprisonment or both. An appeal against the decision of the Board shall lie on the local
Appellate Court within 35 days of such decision. The Board may charge for any service rendered by itWT/ACC/NPL/2/Add.1
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to the insurers or agents at the rate of 1 per cent of his annual income. HMG may also constitute an
Advisory Board for determining insurance policy rates.
(ii) National Insurance Corporation Act, 1967Pursuant to this Act an autonomous public sector institution named National Insurance
Corporation has been established. The main function and duty of this Act is to undertake insurance
business including life insurance or non-life insura nce, reinsurance or other insurances under the
provisions of the Act or the rules made under this Act. Besides this main function and duty, it
undertakes many other activities for benefiting the corporation. Among them, the major ones are: to
make local investment in profitable areas and take steps as are necessary for acquiring the benefits
and securing the investments;  issue loan by taking cash or kind securities, and  take control of and
use such securities for a certain period;  borrow loan by mortgaging or depositing security of thecorporations' properties or assets;  let, lease, sell or make an arrangement of any property of the
company to assist in the issuance of shares and debentures of other corporations,  guarantee and
underwrite them, and undertake agency business;  invest in foreign countries if necessary;  make share
investments in other corporate bodies;  appoint agen ts and give them commissions;  give guarantees;
sell and purchase shares, bonds, debentures, promissory notes, and movable and immovableproperties;  give and take discount commissions and engage in  brokerage;  issue debentures or bonds
and preference shares; and do other things as  necessary.
This Act provides punitive provisions, empow ers HMG with various powers and authorities.
B. B
ANKING AND OTHER FINANCIAL SERVICES (EXCLUDING INSURANCE )
(a) Acceptance of deposits and other repayable funds from the public
(i) Commercial Bank Act, 1974
This Act provides for the establishment and operation of public or private sector banks in
Nepal. Under this Act various banks only with local investment or with foreign joint venture have
been established and operated as autonomous and limited liability companies. These banks may
operate throughout the kingdom of Nepal through their branches. The bank may perform the
following functions in addition to banking transactions: to accept the amount with or without interestand open fixed account, current account and savings account in the name of the depositors.
(ii) Agricultural Development Bank Act, 1966An Agricultural Development Bank has been established under this Act as an autonomous
and public institution with limited liability of its shareholders. This Bank is operating throughout the
Kingdom of Nepal through its various branches. The Bank while performing its functions has tofollow the commercial principles and policies suit able to agricultural development pursuant to this
Act. Without disregarding its basic role of working for agricultural development, the Bank may
engage in general commercial banking activities under the Commercial Bank Act, 1974 with the
consent of the Central Bank. While undertaking commercial banking activities it may accept the
amount with or without interest and open fixed account, current account and savings account in thename of depositors.
(iii) Development Bank Act, 1996This Act provides for the establishment of development banks as public limited companies
incorporated under the Company Act, 1997  to make available loans to the people required to make
investment in fixed assets and running capital needed  to run productive businesses which are feasibleWT/ACC/NPL/2/Add.1
Page 65
from the point of view of projects relating to agriculture, industry, service, trade and other
professions. The Act empowers the bank to accept deposits under the conditions set by the Central
Bank in transacting its business.
(iv) The Finance Companies Act, 1985
This Act is enacted to provide incorporation and management of finance companies for non-
banking business through institutionalized investment consolidating the scattered capital in the
country. Such finance companies are limited liability  companies incorporated mostly in the private
sector with the permission of the Central Bank having raised capital through sale of shares for the
objective of carrying out the financial transaction. This Act empowers finance companies to accept
deposits.
(v) Nepal Industrial Development Corporation Act, 1989
This Act provides for the establishment of Nepal Industrial Development Corporation
(NIDC), an autonomous public sector limited liability corporation for the promotion of industrial
development in Nepal. But no shares of this co rporation can be sold to foreigners without the
permission of HMG. The duties, functions and powers of NIDC as provided by this Act include the
following also: to undertake the business of merchant banking; and to mobilize capital and engage in
banking activities under the existing commercial banking law for industrial promotion.
(vi) The Cooperatives Act, 1990
This Act provides for the establishment of cooperative societies in order to require them to
render services and provide facilities to their members' economic and social development in
accordance with the principles of cooperatives. A cooperative society once registered under this Act
assumes the name of an autonomous institution with limited liability. These societies may accept
deposits from the members or other persons and engage in banking business with the permission of
the Central Bank.
(vii) The Post Office Act, 1962, and Postal Savings Bank Regulation 1975
See (i) of  A. Postal Services part of  2. Communication Services, also of this Annex.
This Act has empowered HMG to prescribe some post offices to accept small amounts of
deposits from low income people. For this purpose HMG has framed Postal Savings Bank Regulation,
1975 after consultation with the Ministry of Finance and the Central Bank. The Regulation provides
for three types of accounts to be opened for deposits which are: personal account, joint account and
minors account. An account may be opened with a minimum of NRs. 5 to maximum NRs. 30,000 as
deposits and the rate of interest is 8 per cent. Other matters relating to such savings deposits are also
provided by the above regulation.
(viii) Citizens' Investment Fund Act, 1990
This Act was enacted for the purpose of establishing a Citizens' Investment Fund. This fund,
which is so established, is an autonomous public institution with limited liability. It may sell its shares
to foreign individuals or bank or finance companies with the permission of HMG. The main objective
of this fund for which it is so established is to encourage the people for savings and increase theopportunities of investments and bring dynamism to the capital market. Pursuant to the provisions of
this Act, the Fund may institute and operate Inve stment Account and Citizens' Unit Scheme in the
name of investors for making investments in different sectors under certain conditions. In theseWT/ACC/NPL/2/Add.1
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schemes, Nepalese nationals living inside and outside Nepal may deposit amounts for making
investments. HMG may exercise its privilege by requiring civil servants and employees of
government corporate bodies to deposit compulsorily a certain percentage of the amount of their
monthly salary under these schemes.
(ix) The Central Bank Act, 1955
This Act has provided for the establishment of Nepal Rastra Bank (Central Bank) in order to
ensure proper management of the issuance of Nepalese currency notes,  make proper arrangement for
the circulation of Nepalese currency throughout the Kingdom and  stabilize the exchange rates of the
Nepalese currency,  mobilize capital for development, and encourage trade and industry in the
Kingdom, and also to develop the banking system in Nepal. This Bank which is in operation now is
an autonomous corporate body and operates also as a government bank, through various branches and
sub-branches throughout the kingdom. It receives all deposits of HMG. Commercial banks andfinancial institutions are required to maintain funds in this Bank against their total deposit liabilities in
such percentage, method and manner as prescribed by the Bank from time to time. Pursuant to this
Act, no person, firm or corporate body is allowed to accept deposits without the prior approval of this
Bank.
(b) Lending of all types, including, inter alia,  consumer credit, mortgage credit, factoring 
and financing of commercial transaction
(i) Commercial Bank Act, 1974
This Act provides the Bank to perform the following functions in addition to  banking
transaction: to provide loans or make investment against the guarantee of HMG or any foreign
government, or against the security of movable or immovable property or title deeds pertaining
thereto, Bills of Exchange, Promissory Notes or Shares and Debentures of a Company or against the
guarantee of any other security acceptable to the Bank;  provide loans not exceeding NRs. 100,000
without any collateral to any Nepali citizen trusted by the Bank with or without surety of any otherperson with due consideration to the feasibility of the project in the fields of the agriculture, cottage
industry, irrigation, power generation or any other fields specified by HMG;  secure additional
immovable property pledged against the margin in or der to ensure the security of loans provided by
the banks, provide hire purchase facilities against necessary collateral, and provide loans to service
industries;  provide loans on the basis of co-fin ancing according to the agreement concluded among
the banks or between the bank and financial institutions, so as to divide the collateral paripassue; to
provide loans against the guarantee provided by an y local or foreign bank or financial institution
trusted by the banks;  grant overdraft to the person trusted by the bank;  ascertain the conditions as per
necessity in the interest of the bank while operatin g transactions with or providing the loan to any
person;  conduct inquiries in order to determine whether or not any loan obtained from the bank has
been utilized for the purpose for which it has been received;  provide a fresh loan in a lump sum or in
instalments against the security of the same movable and immovable assets which have already beenpledged with the bank, or with any other bank or financial institution to the extent of the total value of
such security;  provide loans not exceeding the am ount specified by the Rastra Bank to low income
families with the provision of individual or collective responsibility; and to exchange among the
Rastra Bank, or other banks and financial institutions particulars, information or notices regarding
debtors or customers who have obtained loans or  an y other individuals who have used the services of
the Bank.
In addition, the banks have to comply with the di rectives issued by the Rastra Bank from time
to time regarding the accounts of bank, the loans provided by the bank, classification of the loans and
interest suspense.WT/ACC/NPL/2/Add.1
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Notwithstanding anything mentioned in the prevailing law, the bank may provide loans
against security of movable property in the following circumstances, and the bank shall provide the
loans only after stipulating the conditions acceptable to it: in the case of movable property acceptable
to the bank as  security under its possession by entrusting the security to the possession of the
borrower on the condition that the bank may take possession of the property whenever it so wants; if
the movable property of the borrower is not in its possession, it obtains a document showing itsownership with the additional provision that loans may be provided only on the condition that the
right to the property of the borrower rests with the bank; if the loans provided by the bank cannot be
secured by the movable property of the borrower after loans are provided as above, the bank may also
take over the immovable property of the borrower as security.
The bank may also provide loans to borrowers with the movable or immovable property of a
third person acceptable to the bank as surety or under conditions stipulated in the agreementconcluded between the bank and the person who provides surety in such a manner as to protect the
interests of the bank.
If any person, institution or industry fails to co mply with the terms of the agreement or any
terms regarding loans, or fails to repay loans to the bank within the time limit stipulated in the
documents, or in case the bank finds through investigation that any person, institution or industry
concerned has not invested the amount of the loan in the stated project, or has misappropriated it,
notwithstanding anything mentioned in the loan agreement or in the prevailing law, the bank may
auction or otherwise dispose of any property pledged to it, or the security deposited with it, and thus
recover the principal and interest.
(ii) Agricultural Development Bank Act, 1966The bank may undertake lending activities in the following manner pursuant to the Act:
provide short-term, mid-term and long-term loans to any company, individual, cooperative society orvillage committee for agricultural development;   provide loans and other facilities as required to the
small irrigation projects and development of technology for agricultural development;  provide loans
to the educated unemployed;  provide loans on the basis of co-financing according to the agreement
concluded between the bank and commercial banks or other financial institutions so as to divide the
collateral paripassu, and to free the securities in proportion to the loans recovered; to give consumercredit; to give loan for the establishment and operation of agro-based cottage and small-scale
industries; and to give loan at  concessional rates of interest to the tenants to purchase the land he/she
has tilled as a tenant.
The bank may for achieving a specific purpose, fix special terms of conditions of loan and fix
the limits of loan if it is  necessary. The bank is required to extend  loan only by taking  security, but
in the following cases the bank may issue loan with out taking any security: loans to the cooperative
societies or village committees; loans to the educated unemployed for promoting profession; and in
the case of issuing loan according to the prov isions of the agreement concluded between the
institution providing loan, grant or cooperation.
The bank may issue additional loan from the revalu ation of the same security if it satisfies the
security requirements. The bank may while making loan investment for any particular purpose
provide loan by taking the assets earned from the loan as its security.
If the bank is convinced that the purposes of the loan investment are not being fulfilled due to
some force majeure , in such a case the bank may by revising the terms and conditions of the
agreement extend the time limit of loan repayment, issue additional loan or do any other thing as it
deems fit.WT/ACC/NPL/2/Add.1
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As a special arrangement, the bank may issue loans to small farmers' and small farmers
groups with the provision of individual or collective responsibility with or without taking full or
partial security or surety. In case, someone  does not repay his share loan or the loan taken under
collective responsibility by small farmers or small farmers group is not paid back, the bank may
recover the amount of such loan from the earning of the project for which the loan was sanctioned. In
case, it is not recovered from the project concerned then  it may be recovered  from the borrower'shousehold property. In case, it is not still recovered  it is recovered by sale through auction or by any
other means.
But in other cases, the bank is empowered by this Act to recover its amount of capital and the
interest so accrued to it by selling through auction the security assets or by any other means including
direct sale of such assets or assuming the ownership of such assets by the bank itself, if the borrowing
individual, industry, village committee or corporat e body breaches the terms and conditions of the
loan agreement concluded with the bank.
(iii) Development Bank Act, 1996As  part of its functions, duties and powers, the bank  may perform the following functions
pursuant to this Act and the Memorandum and Articles of Association of this bank: to provide loans
to meet the fixed and running capital of any productive enterprise with due consideration to the
feasibility of the project in the fields of agriculture, industry, service, trade and other professions; to
provide loans jointly on the basis of co-financing according to the agreement concluded among the
banks and financial institutions;  to make loans available to persons who supply raw materials,arrange markets, provide technical or management consultancy services needed for the promotion and
development of projects; to  provide loan against the security acceptable to the bank or on the basis of
hypothecation;  to provide loans within certain lim its to low-income families or to other specified
classes of persons on collective responsibility without taking any security to launch a feasible project;
to  provide loans to other banks, to   distribute amounts as loans received from HMG or other nationalor foreign institutions for the promotion of projects;  to conclude agreement by fixing terms and
conditions as necessary and at the interest of the bank while transacting any business or giving loan to
other persons under the agreement; to investigate whether the loans taken by the bank are used for the
purpose, to issue fresh loan against the security of the same movable or immovable property which
has already been kept as security in the same bank or other banks or a financial institution to theextent of the total value of such security;  exchange with the Rastra Bank, and other banks and other
financial institutions particulars, information or notices regarding debtors or customers who have
obtained loans or any other individuals who have obtained loans or any other facility from the bank.
The bank may recover the amount of loan (princip al and interest) from the borrower in the same
manner as other commercial banks do.
(iv) Finance Companies Act, 1985The finance companies may carry out any or all financial transactions mentioned  below: to
make available instalment or hire purchase credit or loan to any individual, firm, company or
institution of agricultural or non-agricultural sector for the purchase of vehicles, machinery, tools,
equipment, durable household goods or other similar movable property as required by them; toextend, credit to any individual, firm, company or institution for purchasing or construction of
residential houses or godowns or purchasing of lands for the construction of such residential houses or
godowns; to extend credits for medium-term or long- term duration for operating an industry, trading
or business likely to promote economic development, or  to act as an intermediary in respect thereto or
to provide guarantee thereof.
This Act requires the finance companies not to issue loans without taking any securities.
These companies have to comply with the instru ctions or orders made by the Central Bank inWT/ACC/NPL/2/Add.1
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connection with the issue of loans and the rate of interest. The loans issued by these companies may
be recovered from the debtors in the same manner as the commercial banks do.
Finance companies may be established in foreign collaboration also pursuant to this Act.(v) Cooperatives Act, 1990Cooperative societies may also provide loans to their members pursuant to this Act.(vi) Nepal Industrial Development Corporation Act, 1989Nepal Industrial Development Corporation (N IDC) may perform the following functions
pursuant to this Act: to make available loans for the establishment, operation and modernization,
diversification, expansion and increase of productivity of the technically and economically feasible
industries;  make loans available  to the industries on the basis of co-financing;  provide loans against
hypothecation; provide loans against of securities and title-deeds.
NIDC is empowered by this Act to be flexible in setting conditions while sanctioning loans. It
has also power to recover loans from the borrowers in the same manner as banks do. It can recover the
amount of loan with interests before the expiry of the time of the agreement in case misstatement is
contained in the loan application, the conditions set in the agreement are not being fulfilled, the
security assets are not insured ,or additional security assets are not deposited as demanded when they
lose in value.
(vii) Central Bank Act, 1955The Bank may issue directives from time to time to commercial banks and financial
institutions regarding credit, and these banks and institutions should abide by them. The rate ofinterest of the loans issued by banks and financial institutions shall be as fixed by the Bank. In case, it
is not so fixed, they shall fix it with the approval of the Central Bank. Any one engaged in banking or
financial business is not allowed to issue loan without taking prior approval of the Central Bank. The
Commercial Bank and financial institutions shall have to supply credit in the specified areas as
specified by the Bank.
With due consideration to the monetary situation, the Bank shall provide loans or refinance to
any commercial bank or banks or financial institutions which supply agricultural or industrial credit
on conditions prescribed by it against the necessary security or guarantee. The Bank is granted
privilege by this Act to fix any time limitation on the documents of loan against the loan or refinance
provided by the Bank.
(c) Financial leasing
(i) Commercial Bank Act, 1974
Pursuant to this Act, the Bank may provide hire purchase facilities against the necessary
surety.
(ii) Finance Companies Act, 1985Pursuant to this Act, the finance companies may make leasing finance available to any
individual, firm, company or institution for the purchase of vehicles, machinery, tools, equipment,
durable household goods or other similar movable property on lease or to provide such movable
property on lease.WT/ACC/NPL/2/Add.1
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(iii) Nepal Industrial Development Corporation Act, 1989
Nepal Industrial Development Corporation (NIDC) may by standing guarantee make available on
lend lease or rent lease the plants, machinery, equipment needed to industries.
(d) All payment and money transmission services
(i) The Commercial Bank Act, 1974
While conducting banking transactions, the commercial banks are required by this Act to
make payments of cheques, bills or orders duly drawn. They are also required to remit or transmit
amount to different places within or outside  the kingdom of Nepal through bills of exchange,
cheques, or hundis. In the capacity of commission agents on behalf of customers these banks remit ortransmit the interests, dividends and income from r eal property so earned by the customers from their
investment, within or outside  Nepal.
(ii) Development Bank Act, 1996
This Act empowers the Development Bank to undertake banking activities, which may
include making payments and money transmission services.
(iii) Agricultural Development Bank Act, 1966
This Act empowers the Bank to engage in general commercial banking activities under the
Commercial Bank Act, 1974 with the consent of the Central Bank. This implies that it may make
payments and provide money transmission services to its customers.
(iv) Finance Companies Act, 1985This Act empowers the finance companies to undertake merchant banking activities with the
prior permission of the Central Bank, which may include payment and money transmission services.
(v) Central Bank Act, 1955This Bank undertakes payment and money transmission services inside or outside Nepal for
HMG and its related agencies.
(e) Guarantees and commitments:
(i) Commercial Bank Act, 1974
This Act empowers the banks to issue bank guarantees on behalf of its customers, have such
customers execute necessary bonds in consideration thereof, obtain security, and acquire their
movable or immovable assets as collateral or on mortgage, or the assets of third individuals as
collateral. In addition, the banks may help to issue shares or debentures of a company or any othercorporate body by standing guarantee.
(ii) Development Bank Act, 1996This Act provides the Bank to stand guarantee for its customers for securing loans from other
banks or financial institutions.WT/ACC/NPL/2/Add.1
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(iii) Finance Companies Act, 1985
This Act empowers a finance company to make available credits for medium-term or long-
term duration for operating any industry, trading or business likely to promote economic
development, or to act as an intermediary in respect there of or to provide guarantee thereof.
(iv) Central Bank Act, 1955
This Bank is authorized by this Act to guarantee the cash deposit certificate or stock and
debentures issued or loans obtained by the commercial banks, financial institutions and cooperative
societies.
(v) Nepal Industrial Development Corporation Act, 1989This Act empowers Nepal Industrial Development Corporation (NIDC) to stand guarantee of
industries who are borrowing loan from any national or foreign bank or financial institution.
(f) Trading for own account or for account of  customers, whether on an exchange, in an 
over-the-counter market or otherwise, on the following:
− money market instruments (cheques, bills, certificate of deposits, etc.);
− foreign exchange;
− derivative products including, but not limited to, futures and options;
− exchange rate and interest rate instruments, including products such as swaps,
forward rate agreements, etc.;
− transferable securities:
− other negotiable instruments and financial assets, including bullion.
(i) Commercial Bank Act, 1974
The bank is authorized by this Act to operate transactions in such bonds, promissory notes or
bills of exchange relating to commerce or crops as are redeemable within Nepal; to operate
transactions in bills or exchange regarding export commodities produced in Nepal;  operate
transactions in foreign exchange subject to prevailing Nepal Law;  issue, accept, redeem, discount, ordeal in bills of exchange, promissory notes, cheques, drafts, hundis;  issue, discount or endorse letters
of credit, drafts and travellers cheques; and to purchase sale or accept the securities of HMG.
(ii) Central Bank Act, 1955
Pursuant to this Act, this Bank shall have th e right to deal in exchange transactions between
Nepali and foreign currency at exchange rates determined by the Bank on the basis of the par value
fixed by HMG.  The Bank may give right to deal in foreign currency transactions to commercial
banks and financial institutions also. HMG consults the bank while fixing the basis of the par value.
This Bank may issue directives from time to time to commercial banks and financial
institutions regarding banking operations, currency and credit. It shall be the duty of the commercial
banks and financial institutions to abide by such directives.
Notwithstanding anything contained in the prevailing law, the rates of interest to be paid and
charged by commercial banks and financial institutions on loans and deposits shall be as fixed by the
Central Bank. It may fix the interest rates to be applied retrospectively in such cases where the bond
or agreement has already been existing between the parties of loan or deposits. If the Bank has notWT/ACC/NPL/2/Add.1
Page 72
fixed interest rates as above, the commercial banks and financial institutions shall obtain the Central
Bank's approval in fixing interest rates. In other words, the corporate bodies who have right to accept
deposit to provide loan or to issue debentures as pe r prevailing laws, while fixing the interest rates to
be paid for debenture or deposit or to be taken for loan, shall fix it according to the provision in
relation to the  interest rates specified by the banks from time to time.
The Central Bank publishes from time to time the rates prescribed for purchasing or
redistributing the bills of exchange or for purc hasing other commercial documents, which it may
purchase under the provisions of this Act.
The Central Bank as authorized by this Act ma y carry out the following transactions: to sell
and purchase cheque, draft and hundis;  rediscount promissory notes or bills of exchange on
commission;  purchase and sell securities or promissory notes of HMG or foreign governments, orforeign central banks, or international institutions, and  realize principal and interest thereon;
establish and negotiate letters of credit on behalf of HMG and the Bank; and to sell and purchase gold,
silver, ginni (guinea)and asarphi.
(iii) Negotiable Instruments Act, 1977All the banks and financial institutions who deal with negotiable instruments should follow
the provisions of this Act in their dealings.
(iv) Foreign Exchange (Regulation) Act, 1961Individuals, firms and companies, banks and financial institutions who deal with foreign
exchange should follow the provisions of this Act. No  one is allowed by this Act to engage in foreign
exchange business without obtaining licence from the Central Bank. Certain restrictions, impositions,
regulations and penalties are also provided under this Act.
(g) Participation in issues of all kinds of securities, including under-writing and placement 
as agent (whether publicly or privately) and provision of service related to such issues
(i) Commercial Bank Act, 1974
This Act authorizes a commercial bank to help to issue shares or debentures of a company or
any other corporate body, guarantee or underwrite such shares or debentures, and undertake any
agency business but not become thereby a managing agent;  work as an agent of the Central Bank on
the conditions specified by it, and accept, collect, hold amounts, bullion or securities or perform
similar other functions on behalf of HMG;  arrange for the sale or purchase of bullion, shares,
debenture etc. of companies, and collect dividends accruing on shares of companies, and interest ofpromissory notes, debentures etc. as an agent of its customers;  accept and arrange for the sale or
purchase of shares, debentures, securities and collect interest, dividends or securities of limited
company in the capacity of a commission agent on behalf of customers, and remit or transmit such
interests, dividends to places within or outside of Nepal; make arrangement for the management of
any real estate or other property, collect and inco me therefrom and remit payments within or outside
of Nepal; and to purchase, sale or accept the securities of HMG.
(ii) Development Bank Act, 1996This Act authorizes a development bank to sale and purchase or underwrite  shares,
debentures, bonds of agricultural, industrial, service, trading and other productive enterprises so
established and operated or cause to establish or cause to operate them.WT/ACC/NPL/2/Add.1
Page 73
(iii) Finance Companies Act, 1985
This Act authorizes a finance company to sell and purchase the bonds issued by HMG or
securities issued by other companies or institutions,  underwrite them and  form syndicates for such
purpose or to participate in such syndicates and  act as broker under the Security Exchange Act, 1983.
(iv) Nepal Industrial Development Corporation Act, 1989
This Act empowers NIDC: to establish or cause to establish industries and purchase or cause
to purchase and underwrite the shares and debentures of them;  issue debentures and bonds;  purchase
and sell shares, debentures and bonds of industrial enterprises through the institution recognized to
deal with security exchange business.
(v) Central Bank Act, 1955
This Act authorizes the Central Bank to act as an agent of HMG for the following purposes:
the sale and purchase of securities and promissory notes;  sale and purchase of gold, silver, ginni,
asarphi;  opening accounts out of the kingdom, with any bank or principal currency authority orinternational banks and  acting as their agent and purchase shares of international bank;  sale,
purchase or underwriting of the shares or debentures of the commercial banks and financial
institutions in case it is necessary for the development of agriculture, industry and banking; and
establishment or  provision of assistance  for participating in the establishment of non-profit making
institutions necessary for the economic and banking development of  the country.
(i) Asset management, such as cash or portfolio management, all forms of collective
investment management, pension fund management, custodial depository and trust
services.
(i) Commercial Bank Act, 1974
Pursuant to this Act, the Commercial  Bank's functions on this issue are to accept and arrange
for the sale or purchase of shares, debentures, securities and collect interest, dividends or securities of
the limited company in the capacity of a commission agent on behalf of  customers; remit or transmitsuch interests, and dividends to places within or outside  the kingdom of Nepal; make arrangement for
the management of any real estate  or other property; collect income therefrom and remit payments
within or outside  the kingdom of Nepal.
Pursuant to this Act., all the receipt of HMG shall be deposited with the bank on such
conditions as may be agreed upon between HMG and the Central Bank, and the Bank shall transact
banking operations like making payments and remittances and undertaking foreign exchangeoperations up to the amount standing to the credit of HMG on the instruction of  HMG.
(j) Settlement and clearing services for financial assets, including securities, derivative 
products and other negotiable instruments.
See as above, especially Commercial  Bank Act, 1974WT/ACC/NPL/2/Add.1
Page 74
(k) Advisory and other auxiliary financial services on all the activities listed in Article IB of
MTN. TNC/W/50, including credit reference  and analysis, investment and portfolio
research and advice, advice on acquisitions and on corporate restructuring and strategy.
(i) Central Bank Act, 1955
Pursuant to this Act, this Bank renders advice to HMG on financial matters.(ii) Development Bank Act, 1996This Act authorizes a development bank to undertake or cause to undertake study,  research,
survey for the establishment operation and evaluation of projects, and provide training, consultancy
and other information in this regard, and undertake merchant banking activities.
(iii) Nepal Industrial Development Corporation Act, 1989
This Act authorizes NIDC to undertake or cause to undertake all kinds of study, research,
survey, analysis with or without charging service fees for the establishment and operation of
industries, and provide training, consultancy and other information in this connection.
(l) Provision and transfer of financial information  and financial data processing and 
related software by providers of other financial services.
(i) Commercial Bank Act, 1974
This Act requires a commercial bank to exchange among the Central Bank, the bank and
financial institutions particulars, information or notices regarding debtors or customers who have
obtained  loans or any other individuals who have obtained loans or any other facility from the Bank.
This Bank is also required to do the following : to submit to the Central Bank, within four
months after the closure of the Bank's accounts, a separate particular of accounts which have
remained unoperated for ten years;  submit to the Central Bank within 4 months after the closure of
the Bank accounts, a particular of dividends payable to those shareholders who have not come to
claim the payment thereof within five years from the date of declaration of the dividend;  submit
regularly financial and other necessary particulars to the Central Bank in the specified format and timeas directed by the Central Bank, and to publish in the prominent newspapers for public information of
the balance-sheet and profit and loss account so audited within a period of five months from the date
of expiry of its financial year.
(ii) Finance Companies Act, 1985This Act requires the finance companies to do the following also: to submit the statement of
loan and investment to the Central Bank  within 15 days of the end of every month;  notify the Central
Bank in writing if it is unable to bear the liability or is unable to make payment to the investors;
submit the information and statistics to the Central Bank in relation to its business activities regularly
in a time and format as prescribed by the Central Bank;  submit to the Central Bank the statement of
the deposits which are not paid back for 15 years within four months from the end of the fiscal year,and to submit to the Central Bank the statement of shareholders who have not claimed their dividend
for three years from the date of declaration of such dividend within four months from the end of the
fiscal year of the company.WT/ACC/NPL/2/Add.1
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(iii) Development Bank Act, 1996
This Act requires a development bank to submit to the Central Bank and the concerned
Department  within 30 days of the general m eeting held, the particulars showing the number of
shareholders attending  that meeting, proposals presented before the meeting, the balance-sheet and
profit and loss account approved by the meeting and the Auditor's Report and the report of the Boardof Directors.
It also requires to exchange among the Central Bank, the Bank, other banks and other
financial institutions particulars, information or notices regarding debtors or customers who have
obtained loans or any other individuals who have obtained loans or any other facility from the bank.
It is required by this Act to publish for public information its balance-sheet, profit and loss
account in the same manner as that of the commercial banks discussed above.
(iv) Nepal Industrial Development Corporation Act, 1989
This Act requires NIDC to prepare its balance-sheet and submit a copy of it to the Department
of Industries. It should show its balance-sheet to its members as required and  submit financial
information to the Central Bank when asked for.
8. HEALTH- RELATED AND SOCIAL SERVICES
(Other than those listed under 1.A. h-j)
A. H
OSPITAL SERVICES
(i) B.P. Koirala Memorial Cancer Hospital Act, 1997
See, (iv) under I.C.a.(ii) B.P. Koirala Institute of Health Sciences Act, 1992.
See, (v) under I.C.a
(iii) No other specific hospital services acts  are available as yet.  But HMG runs hospitals
and health centers and health posts all  over Nepal. A Teaching Hospital under the Tribhuvan
University Act, 1992  exists.  Besides, hospital services may be provided by establishing and
operating hospitals, nursing homes, polyclinics in the private sector under the Industrial Enterprises
Act, 1992 as firms or corporate bodies.
B. O
THER HUMAN HEALTH SERVICES
No particular law is available as yet.  But services may be operated in the private sector by
organizing under firms or corporate bodies. Sometimes such services are also provided on an
individual and private basis.
C. S OCIAL SERVICES
(i) Social Welfare Act, 1991
This Act has been enacted with a view to bring social welfare activities in close harmony with
nation building and development process for the overall development of Nepal and Nepalese society,WT/ACC/NPL/2/Add.1
Page 76
and enable the weaker and helpless persons or sections of the society to lead a human life, to raise the
prestige and dignity of persons and institutions engaged in social service and to bring coordination
among the activities of NGOs.  Under the framework of this Act, HMG through the Ministry of
Youths, Sports and Social Welfare and NGOs, may launch various social welfare and social services
programmes, especially for the welfare of children,  the aged, helpless and disabled persons and
backward communities, for the protection of rights and welfare of women in order to enable them toactively participate in the development process and , to enable them to lead a dignified and respectful
life; help the persons involved in juvenile delinquency, drug addiction or other bad addictions and
social evils, to help  the unemployed, poor or uneducated persons to live a respectful life, and to  help
in the proper management of the activities of religious shrines and trusts.
A Social Welfare Council has been constituted under this Act as an autonomous body with
the mandate of executing this Act by coordinating, assisting, promoting and consolidating varioussocial organizations committed to social welfare and service.  Any foreig n NGOs or INGOs wishing
to operate or work inside Nepal have to seek approval of the Council by signing agreement with it.  A
local NGO without getting approval a for its projects can not get any assistance from the local and
foreign governmental and non-governmental and international agency today. But no project shall be
approved by this Council which is against the national interest. Once a local NGO gets any financialor material assistance from  foreign institution, it has to  inform to the Council and the amount of
money received through such assistance shall ha ve to be remitted to the NGO through the local
commercial bank.
(ii) Other ActsThere are the following few other acts and laws which are related to the social services
sectors.
(a) Chapter "Destitute " of  Muluki Ain (Civil Code), 1963It assigns HMG through local administration to arrange for the welfare of the destitute
children.
(b) Children Act, 1992 and Children's Regulation, 1994This Act was enacted to protect the rights and interests of the children and to provide them
appropriate maintenance and education for their physical, mental and intellectual development.  It has
been introduced basically to conform to the UN Convention on the Rights of the Child 1989 to which
Nepal is now a party.
(c) Societies Registration Act, 1977Any local NGO can be formed by registering itself under this Act, as a non-profit making
institution with the objective of social services or social work.
(d) The Disabled Protection and Welfare Act, 1982 and Disabled Protection and Welfare 
Regulation, 1993
This Act intends to protect and promote the interest of the disabled persons by controlling and
eradicating the situation causing disability, and by arranging for the welfare measures of their health,
education, care, training, enjoyment of the right of equality and employment,  thereby to make themcompetent, active and productive citizen.WT/ACC/NPL/2/Add.1
Page 77
9. TOURISM AND TRAVEL RELATED SERVICES
A. H OTELS AND RESTAURANTS (INCLUDING CATERING )
(i) Industrial Enterprises Act, 1992
Hotels, restaurants and catering businesses can be established and operated as service
industries under this Act.
(ii) FITTA, 1992Section 3 (4) and Annex of FITTA, 1992 prohibits foreign investment in tourist lodging
business.
(iii) Hotel Management and Sale and S upply of Alcohol (Control) Act, 1966
This Act prohibits hotel owners to sell and supply alcohol before or after  the time fixed for
such selling. It also prohibits them to organize vulgar and shameless entertainment or stage shows.
Hotels or any of its nomenclature are forbidden to sell alcohol to children and drunken persons. This
Act has also set other requirements and penal provisions on this theme.
(iv) Tourism Act, 1978 and Hotel, Lodge, Restaurant, Bar and Tourist Guide 
Regulation, 1981
The Department of Tourism may register a hotel or lodge or a bar as of tourist standard after a
thorough scrutiny of the application and on the advice of the Standard Classification  Committee and
also after recovering a registration fee as prescribed by the corresponding regulation of 1981.
The Department may inspect or cause to inspect the hotel, lodge, restaurant or bar as
registered, and may examine or cause to examine the food and drinks consumed there.  If it is foundfrom such examination that the standards are not maintained as required, the Department may ask to
maintain the standard or suspend the registration for a maximum period of one year and finally cancel
the registration if the required standard is not maintained.  Every hotel, lodge, restaurant or bar
registered under the Act should send the notice of its tariff to the Department and advertise it
accordingly.  Non-registration limits the chances of full-scale operation of the business and can leadto paying of heavy fines imposed by the Department.
B. T
RAVEL AGENCIES AND TOUR OPERATORS SERVICES
(i) Tourism Act, 1978 and Travel and Trekking Agency Rules, 1980
The Act  requires an individual who wants to operate a travel or trekking agency to obtain a
licence. A licence is issued by the Department of Tourism on a renewal basis by charging a fee ofNRs. 3,000 as prescribed under the Travel and Trekking Agency Rules, 1980.  HMG may grant
facilities to the classified tour and trekking agency.  The license should notify the Department of
Information about the rate of fee being charged from the tourist.  The rate of fee should be published
and advertised in a manner prescribed by the Department of Tourism.  These service bills to the
licensee have to be paid in foreign  currency by the foreign tourists. Foreign currency earned inside oroutside Nepal should be deposited in the Central Bank. The Department of Tourism may investigate
whether such transactions have really been made by the licensee.  The Department may suspend the
license of a travel or trekking agency for a period not exceeding six months on any violation of the
provisions of the Act.  However, a licensee is given fifteen days, time for making representation priorWT/ACC/NPL/2/Add.1
Page 78
to such suspension.  If the licensee violates the law in the same manner again after the expiration of
such suspension, HMG may cancel the licence as prescribed.  The Department may order the closure
of the agency if any person operates travel or trekking agency without obtaining a licence, and a fine
not exceeding   NRs. 20,000 is charged. A fine not exceeding  NRs. 20,0000 is charged to a person
who operates the business of tourism during the suspension of a licence and this licence may be
cancelled. A person failing to make or get the payment of a bill in foreign currency is charged a finenot exceeding  NRs. 40,000 if the offence is committed for the first time. For any repetition of such
offence the fine is NRs. 80,000 for each term.  The Department may cancel the licence of such travel
and trekking agency, which pursuant to the existing law on foreign exchange has been penalized for
three or more times for violating the requirement of  transacting foreign currency through the Central
Bank. The person aggrieved due to the order issued by the Department may make a complaint to
HMG within 35 days of the order.
This Act further provides the procedures of registration, renewal, operation, suspension and
cancellation of some other tourism related businesses such as rafting, gliding, ballooning, jungle
safari, camping, hiking, bird watching, skiing and other activities  as  specified.
(ii) FITTA, 1992Section 3 (4) and Annex of FITTA, 1992 prohibi ts foreign investment in travel agency,
trekking agency, water rafting, pony trekking and horse riding business in Nepal.
C. T
OURIST GUIDES SERVICES
(i) Tourism Act, 1978 and Hotel, Lodge, Restaurant, Bar and Tourist Guide 
Regulation,1981
A person intending to work as a tourist guide under this Act has to obtain a licence.  Such a
licence is issued to him by the Director General of the Department of Tourism if he has becomesuccessful  in the course of tourist guide training and has obtained a certificate from the Hotel
Management and Tourist Guide Training Centre and does not possess the prescribed disqualifications
and pays a prescribed fee.  Licence is issued for a period of five years on a renewal basis.  A tourist
guide is prohibited to do the following acts: to ask for or accept cash or any other material from the
tourist and  ask the tourist to purchase any goods or  services;  compel the tourist to appoint himself as
his guide; and lend his licence to others and cause and help them work as guides.  The Department of
Tourism imposes different amounts of fines on a person who is acting as a guide without obtaining a
licence or who has renewed it or who does not obey this Act or the Regulation or the order issued
under this Act. A tourist guide obtains a sum of  remuneration as provided in the licence. He is
required to submit a report of his experience with the tourists every 6 months to the Department of
Tourism.
10. RECREATIONAL, CULTURAL AND SPORTING SERVICES (OTHER THAN 
AUDIOVISUAL SERVICES)
A. E
NTERTAINMENT (INCLUDING THEATRE , LIVE BANDS AND CIRCUS SERVICES .)
Not a single regulatory Act or Rule is available as yet.  But it may be undertaken by people
without organizing under a legal firm or by organi zing as a firm or company or even a non-profit-
making society. In any such form entertainment services may be provided under a job contract or
contract service basis.WT/ACC/NPL/2/Add.1
Page 79
B. N EWS AGENCY SERVICES
(i) National News Agency Act, 1962
This Act provides for the dissemination, exchange, search, release or reporting of impartial
and  authoritative national or foreign news among the national or foreign users of news. For this
purpose, an autonomous public sector news agency called Rastriya Samachar Samiti (RSS) (NationalNews Agency) has been established under this Act. The functions of RSS as provided by this Act are
to open branch offices, appoint press correspondents and editors or create news subscribers within or
outside Nepal for the collection, sell and supply of news.
But this protective Act for RSS does not prohibit the engagement of other news agencies in
Nepal.  Any other  national or foreign news agency may with the permission of the Ministry of
Communications staying Nepal and collect news and send it to foreign countries.  But these newsagencies can sell and supply their news in Nepal only through the legally constituted news agencies or
HMG.
C. L
IBRARIES , ARCHIVES , MUSEUMS AND OTHER CULTURAL SERVICES
(i) Archives Preservation Act, 1989
For the protection and preservation of important national archives, HMG has constituted a
government agency named "National Archives". All the national documents of archival importance
are kept in the National Archives. Any person may deposit any document in his possession having
national archival importance  with the National Archives as a contribution. The National Archivesmay permit any person to read any archival material  other than those prohibited, but for making
copies or duplicates, fees as prescribed have to be paid. Obliterating or altering the archives is
prohibited.  Heavy punishments have been laid down in the Act for violating the provisions of this
Act.
(ii) Ancient Monuments Protection Act, 1957
This Act aims to protect ancient monuments and historical or artistic goods, control the
trading of archaeological goods and excavation and digging of places of ancient monuments. This Act
provides the basis for establishing museums. HMG may pursuant to this Act declare particular placesas protected monumental places. From the ownership point of view ancient monumental places have
been classified as public ancient monuments and private ancient monuments and from the importance
point of view they are classified as of international importance, national importance and local
importance. The Department of Archaeology of HMG is the competent authority for the execution of
this Act. This Act prohibits the export and shifting from one to another places and collection of
ancient monuments and archaeological goods or curios of the description  notified in the Gazette. But
no such bar applies in the case of other goods.  Any foreigner bringing any archaeological good insideNepal may do so by filling in the customs declaration form.
(iii) Social Welfare Act, 1991This Act which has been referred to earlier also provides for the proper arrangement of the
activities of religious shrines and trusts.
(iv) Chapter "Trusts" of Muluki Ain (Civil code),1963This Act provides for the establishment and mana gement of religious and charitable trusts in
the private sector. It lays down various duties and obligations on the part of trustees regarding theirWT/ACC/NPL/2/Add.1
Page 80
succession, arrangements and management of the properties and assets, religious sanctity of such
trust, liabilities and penalties for mismanagement a nd embezzlement of priorities. It authorizes HMG
to give government land if sought by anyone planning to establish charitable institutions such as
hospitals, schools and other public institutions. Any privately run trust may be transformed into a
public management body under HMG on certain conditions under this part of the Law.
(v) Royal Nepal Academy Act, 1993
This Act provides for the consolidation of  Royal Nepal Academy established in 1958 under
the old Act.  This Act through this autonomous and public body, the "Academy", aims to achieve the
development and progress of Nepali language and national languages, literature, arts and artisans,
music, drama, culture, and other social science through study, research and publication of original and
valuable books and materials, to give due honour and respect to the scholars and talents of thesefields;  introduce activities at the national and international levels; and to enlist people's participation
and interest in creative thinking and actions for the overall development of intellectual and cultural
spheres of the nation.  The Academy is required to secure permission from HMG for concluding any
agreement with the foreign party in the course of its functioning.
(vi) There are no specific acts on libraries, museums and cultural services. Libraries of different
nature and scale are established by different interests and purposes. There are national libraries,
institutional libraries, university, faculty and campus level libraries, foreign agency libraries. Cultural
services may also be organized under individual firm or corporate level (discussed already) and
undertaken under a job contract or contract  service basis. Voluntary cultural programmes are also thecommon phenomena of the day.
D. S
PORTING AND OTHER RECREATIONAL SERVICES
(i) Sports Development Act, 1992
This Act aims to develop sports in Nepal by conducting training of sports and organizing all
kinds of sports events and thereby enable appropriate participation of Nepal in international sports
competitions as well as to cultivate an efficient and disciplined citizenhood through the appropriate
physical and mental development of students and public in general by means of sports.
An autonomous body called National Sports Council is provided  to be established under this
Act for the development of sports.  Some of the important powers, functions and duties of the Council
are as follows : to arrange district, regional, national and international  level sports competitions in
order to augment the standards of sports;  send the athletes, members and employees of the Council to
foreign countries for participating in sports competitions and meetings;  arrange for providing training
to athletes by national or foreign coaches. But for requisitioning foreign coaches, a prior permission of
HMG is necessary.
The Council has to secure permission of HMG for signing agreement with foreign parties.
11. TRANSPORT SERVICES
A.  M ARITIME TRANSPORT SERVICES
(a) Passenger Transportation
(b) Freight Transportation
(c) Rental of vessels with crew
(d) Maintenance and repair of vessels
(e) Pushing and towing servicesWT/ACC/NPL/2/Add.1
Page 81
(f) Supporting services for maritime transport.
 
Maritime transport services subsumed under the subheadings (a) to (f) are not presently
available.
However only the following acts a rules make provision for these :
− Shipping Registration Act, 1971
− Nepal Shipping Registration Regulation, 1972
− Flag of the Mercantile Ship of the Kingdom of Nepal Act, 1971
− Nepal Ship (Certification and Daybook keeping) Act, 1971
See, discussion (i) listed under I.E (a) (under Rental/Leasing services without operators:
relating to ships).
B. I NTERNAL WATERWAYS TRANSPORT
(a) Passenger Transportation
(b) Freight Transportation
(c) Rental of vessels with crew
(d) Maintenance and repair of vessels
(e) Pushing and towing services
(f) Supporting services for internal waterway transport
None available as yet.
C. A IR TRANSPORT SERVICES
(a) Passenger Transportation
(b) Freight Transportation
(c) Rental of aircraft with crew
(d) Maintenance and repair of aircraft
(e) Supporting services for air transport.
See discussion (i), (ii) and (iii) listed under I.E. (b) (under rental/leasing services without
operators:  relating to aircraft )
D. S PACE TRANSPORT
None.
E. R AIL TRANSPORT SERVICES
(a) Passenger Transportation
(b) Freight Transportation
(c) Pushing and towing services
(d) Maintenance and repair of rail transport equipment
(e) Supporting services for rail  transport services.
See, discussion (i) listed under I.E.(c) (under rental/leasing services without operators:
relating to other transport equipment)WT/ACC/NPL/2/Add.1
Page 82
F.R OAD TRANSPORT SERVICES
(a) Passenger Transportation
(b) Freight Transportation
(c) Rental of commercial vehicles with operator
(d) Maintenance and repair of road transport equipment
(e) Supporting services for road  transport services.
See, discussion (ii) listed under I.E.(c) (under rental / leasing services without operators:
relating to other transport equipment)
G. P IPELINE TRANSPORT
(a) Transportation of fuels
(b) Transportation of  other goods.
None of (a) and (b) as above available as yet.
H. S ERVICES AUXILIARY TO ALL MODES OF TRANSPORT
(a) Cargo - handling services
(b) Storage and warehouse services
(c) Freight transport agency services
(d) Other
No particular acts / rules are available as yet for the (a) to (d) services listed as above.
However, the Customs Regulation, 1969  refers to HMG and  private storage and warehouse services.
All these may be undertaken by negotiating under the terms and conditions agreed on the
contract made or concluded under the Contract Act., 1967 with the private transport carriers.
I. O THER TRANSPORT SERVICES
None.
12. OTHER SERVICES NOT INCLUDED ELSEWHERE
Personal Services -
Somewhat based on a job contract or contract service basis.WT/ACC/NPL/2/Add.1
Page 83
ANNEX 8A
BILATERAL FOREIGN TRADE AGREEMENTS ENTERED INTO BY NEPAL
Country Year
1. Republic of Bangladesh 1976
2. Republic of Bulgaria 1980
3. People's Republic of China 1981
4. Czechoslovak Socialist Republic 1992
5. Arab Republic of Egypt 1975
6. Republic of India
(a) Treaty of Transit 1991
(b) Treaty of Trade 1991
(c) Agreement of Co-operation 1991
7. Democratic People's Republic of Korea 1970
8. Republic of Korea 1971
9. Mongolia 1992
10. Islamic Republic of Pakistan 1982
11. Republic of Poland 1992
12. Republic of Romania 1984
13. Democratic Socialist Republic of Sri-Lanka 1979
14. United Kingdom of Great Brit ain and Northern Ireland 1965
15. United States of America 1947
16. Union of Soviet Socialist Republics 1970
17. Socialist Federal Republic of Yugoslavia 1965WT/ACC/NPL/2/Add.1
Page 84
ANNEX 8B
TRADE AGREEMENTS OR PARTS OF THEM
WHICH CONTAIN PREFERENTIAL TRADE PROVISIONS
TREATY OF TRADE BETWEEN NEPAL AND INDIA SIGNED ON 6 DECEMBER 1991.
Article III
Both the Contracting Parties shall accord unconditionally to each other treatment no less
favourable than that accorded to any third countr y with respect to (a) customs duties and charges of
any kind imposed on or in connection with importation and exportation and (b) import regulations
including quantitative restrictions.
Article IV
The Contracting Parties agree, on a reciprocal basis, to exempt from basic customs duty as
well as from quantitative restrictions the import of such primary products as may be mutually agreed
upon, from each other.
Article V
Notwithstanding the provisions of Article III and subject to such exceptions as may be made
after consultation with His Majesty's Government of Nepal, the Government of India agree to promote
the industrial development of Nepal through the grant on the basis of non-reciprocity of specially
favourable treatment to imports into India of industrial products manufactured in Nepal in respect of
customs duty and quantitative restrictions normally applicable to them.
PROTOCOL TO THE TREATY OF TRADE BETWEEN NEPAL AND INDIA.
WITH REFERENCE TO ARTICLE IV.
The following primary products would be eligible for preferential treatment:
(i) Agriculture, horticulture and forest produce and minerals which have not undergone
any processing.
(ii) Rice, pulses and flour.
(iii) Timber.
(iv) Jaggery (gur and shakhar)
(v) Animals, birds and fish.
(vi) Bees, bees-wax and honey.
(vii) Raw wool, goat hair and bones as are us ed in the manufacture of bone-meal.
(viii) Milk, home made products of milk and eggs.
(ix) Ghani-produced oil and oilcakes.
(x) Ayurvedic and herbal medicines.
(xi) Articles produced by village artisans as are mainly used in villages.
(xii) Akara.
(xiii) Yak Tail.
(xiv) Any other primary products which may be mutually agreed upon.
It is understood that in the matter of internal taxes or charges the movement of primary
products of either Contracting Party to any market destinations in the territory of the other shall beWT/ACC/NPL/2/Add.1
Page 85
accorded treatment no less favourable than that accorded to the movement of its own primary
products within its territory.
It is also understood that the aforesaid provisions will not preclude a Contracting Party from
taking any measure which it may deem necessary on the exportation of primary products to the other.
WITH REFERENCE TO ARTICLE V: *
1. The Government of India will provide access to the Indian market free of customs duties and
the quantitative restrictions for all articles manufactured in Nepal.
2. (i) Import of articles in accordance with the paragraph 1 above shall be allowed by the
Indian customs authorities on the basis of a Certificate of Origin to be issued by the
agency designated by His Majesty's Government of Nepal in the format prescribed at
Annex B for each consignment of articles e xported from Nepal to India. However, this
facility shall not be available for the articles listed at Annex C.
(ii) In the event of the above facility leading to a surge in the imports generally or in the
import of any particular article, the two Governments shall enter into consultation with
a view to taking appropriate measures.
(iii) In the case of other articles made in Nepal which do not fulfil the conditions required
by the Certificate of Origin prescribed at Annex B including those Articles listed at
Annex C for the purpose of preferential treatment into India, the Government of Indiawill provide normal access to the Indian market consistent with its MFN treatment.
3. On the basis of a Certificate issued, for each consignment of products manufactured in the
small scale units in Nepal, by His Majesty's Governme nt of Nepal, or by an agency designated by His
Majesty's Government of Nepal that the relevant conditions applicable to the products manufactured
in similar Small Scale Industrial units in India for relief in the levy of applicable Excise Duty rates arefulfilled for such a parity, Government of India will extend parity in the levy of Additional Duty on
such Nepalese products equal to the treatment provided in the levy of effective Excise Duty on similar
Indian products under the Indian Customs and Central Excise Tariff.
4. The "Additional Duty" rates equal to the effective Indian Excise duty rates applicable to
similar Indian products under the Indian Customs & Central Excise Tariff will continue to be leviedon the imports into India of products manufactured in the medium and large scale units in Nepal.
In regard to "additional duty" collected by the Government of India in respect of
manufactured articles other than those manufactured in "small" units" Wherever it is established that
the cost of production of an article is higher in Nepal than the cost of production in a corresponding
unit in India, a sum representing such difference in the cost of production, but not exceeding 25
percent of the "additional duty" collected by the Government of India, will be paid to His Majesty's
Government of Nepal provided. His Majesty's Gove rnment of Nepal have given assistance to the
same extent to the (manufacturers) exporters.
5. Export of consignments from Nepal accompanied by the Certificate of Origin will normally
not be subjected to any detention/delays at the Indian Customs border checkposts and other places en
route. In case any need for clarification arises, this will be obtained expeditiously, by the Indian
border Customs authorities from the Indian and Nepalese authorities, as the case may be.
                                                     
* Replaced by the Letters of Exchange between His Majesty's Government of Nepal and Government of India at
Kathmandu on 3 December 1996.WT/ACC/NPL/2/Add.1
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6. Where for social and economic reasons, the import of an item into India is permitted only
through public sector agencies or where the import of an item is prohibited under the Indian Trade
control regulations, the Government of India will consider any requests of His Majesty's Government
of Nepal for relaxation and will permit the imports of such an item from Nepal in such a manner as
may be found to be suitable.
7. For the purpose of calculation of import duties customs valuation procedures, as prescribed
under the prevailing customs law, will be followed.
ANNEX C : 
Negative List Of Articles Which Will Not Be Allowed Preferential Entry From Nepal To India
On The Basis Of Certificate Of Origin To Be Given By His Majesty's Government Of Nepal
(i) *Alcoholic Liquors/Beverages and their concentrates except industrial spirits.
(ii) Perfumes and Cosmetics with non-Nepalese/non-Indian Brand names,
(iii) Cigarettes and Tobacco
Note:  Government of India may, in consultation with His Majesty's Government of Nepal, modify the above
list.
*  Nepalese beers can be imported into India on payment of the applicable liquor excise duty equal to
the effective Excise duty as levied in India on Indian beers under the relevant rules and regulations of
India.
AGREEMENT ON SAARC PREFERENTIAL TRADING ARRANGEMENT (SAPTA)
The SAPTA agreement was signed by Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan
and Sri Lanka. The principles of SAPTA are over all reciprocity and mutual advantage; gradual
expansion of preferential treatment to all products, manufactures and commodities is their raw, semi-
processed and processed forms; and recognition of the special needs of the least developed
contracting states. The arrangements under SAPTA may cover tariffs, para-tariffs, non-tariff measures
and direct trade measures. At the Ninth Summit of SAARC, the contracting states have decide to
move from SAFTA (South Asian Free Trade Area) by the year 2001.
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