G/SCM/N/401/NPL  
 
17 April 2024 
(24-3206) Page: 1/7 
Committee on Subsidies and Countervailing Measures  Original:  English  
 
  
SUBSIDIES  
NEW AND FULL NOTIFICATION  PURSUANT  TO ARTICLE  XVI:1   
OF THE GATT 1994 AND ARTICLE 25 OF THE AGREEMENT  
ON SUBSIDIES AND COUNTERVAILING MEASURES  
NEPAL 
The following  communication,  dated  and received  on 16 April 2024, is being  circulated  at the request 
of the delegation of Nepal.  
 
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The following  notification  constitutes  Nepal's  subsidies  notification  for the fiscal years  2020/21 and 
2021/22. The Nepali fiscal  year starts from mid -July. 
This notification does not prejudge the nature or legal status of the programmes herein under  
GATT  1994 and Articles  1 and 2 of the Agreement  on Subsidies  and Countervailing  Measures  (ASCM). 
Data may reflect approximations, estimates or preliminary information.  Technical or legal 
inaccuracies may have been inadvertently introduced in the text in the attempt to make the 
description of the programmes sufficiently illustrative, but also straightforward and concise. For 
transparency  purposes,  Nepal  may have included  certain  programmes  that arguably  are not specific 
within the meaning of the ASCM and/or are not covered by that Agreement.  
Table  of Contents  
1  INDUSTRIAL INCENTIVES  ................................ ................................ ............................  2 
1.1  The Industrial Enterprises Act, 2020  ................................ ................................ ...............  2 
1.2  Public Private Partnership and Investment Act, 2019  ................................ .........................  3 
2  BUDGETARY INCENTIVES  ................................ ................................ .............................  4 
2.1  Cash Incentive Scheme for Exporting Industries  ................................ ...............................  4 
2.2  COVID -19 Active Response and Expenditure Support (CARES) Programme  ..........................  5 
2.3  Transportation Subsidy on Rice and Salt Programme ................................ .........................  6 
 
 G/SCM/N/401/NPL  
 
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  1  INDUSTRIAL INCENTIVES  
1.1  The Industrial Enterprises Act , 2020  
1. Title of the subsidy programme  
Incentives, Exemptions, Facilities or Concessions for Industries . 
2. Period  covered  by the notification  
From 16 July 2020 to 15 July 2022 . 
3. Policy  objective  and/or  purpose  of the subsidy  
To enhance the production of industrial goods or services and emp loyment opportunities by making 
investment friendly and competitive environment in the country . 
4. Background  and authority  for the subs idy 
The Industrial Enterprises Act , 2020 was enacted on 11 February 2020 . The Ministry of Industry, 
Commerce and Supplies is responsible for the implementation of this Act.  
5. Form of the subsidy  
(1) An industry registered under the Act is entitled to the exe mptions, facilities or concessions under 
the prevailing laws.  
(2) Without prejudice to the generality of subsection (1), the following exemptions, facilities or 
concessions are provided to the industries:  
a. a manufacturing industry is entitled to 20 percent exemption on the rate of tax leviable 
on the income earned by it, and to 29  percent  exemption from income tax by additional 
five percent of the rate of tax leviable on the income earned by it by exporting its 
products;  
b. an infrastructure industry, such as road, bridge, tunnel, ropeway, railway, tram, trolley 
bus, airport, industrial structure and infrastructure complex, is entitled to forty percent 
exemption on the rate of tax leviable on the income earned from investment , if any, in, 
and operation of, the industry;  
c. a manufacturing industry, other than an industry producing fruit -based brandy, cider, 
or wine, established in the least developed, underdeveloped and less developed regions 
mentioned in Schedule -10 is entitled  to respectively ninety, eighty and seventy percent 
exemption on the rate of income tax leviable under the prevailing law for up to ten years 
from the date of commencement of commercial production or transaction of such 
industry;  
d. an industry producing fru it-based brandy, cider, or wine established in the least 
developed and underdeveloped regions is entitled to respectively forty and twenty -five 
percent income tax exemption for up to ten years from the date of commencement of 
its transaction;  
e. a manufactur ing industry producing and processing local tea products, dairy industries 
dealing in milk products and industries manufacturing textiles is entitled to fifty percent 
exemption on the rate of income tax leviable on the income earned by it from the sale 
of its products;  
f. twenty -five percent exemption on the rate of income tax leviable on royalty income 
earned by any person from exporting an intellectual property right;  G/SCM/N/401/NPL  
 
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  g. fifty percent exemption on the rate of income tax leviable on the income earned by any 
person from selling by way of transfer of an intellectual property right;  
h. a manufacturing industry established with the investment of more than one billion 
rupees and providing direct employment to more than five hundred individuals 
throughout the year is entitled to hundred percent income tax exemption for first five 
years from  the date of commencement of transaction and fifty percent exemption on 
the income tax for next three years; Provided that a manufacturing industry currently 
in operation is entitled to hundred percent income tax exemption on the income earned 
from such ca pacity enhancement for first five years and fifty percent exemption on the 
income tax for next three years if such industry enhances its installed capacity by at 
least twenty -five percent, increases investment to two billion rupees and provides direct 
employment to more than three hundred individuals throughout the year.  
i. a licensee person or body commencing the commercial generation, transmission or 
distribution of hydropower not later than the month of Chaitra 2080 (mid -April 2024) 
or project generating e lectricity from solar, wind and bio substance is entitled to 
hundred  percent income tax exemption for first ten years and fifty percent income tax 
exemption for next five years.  
6. To whom  and how the subsidy  is provided  
The federal government provides incent ives, exemptions, facilities or concessions to the industries 
that meet the criteria mentioned in the above clause 5.  
7. Total amount  of the subsidy  
The relevant information is not available . 
8. Duration  of the subsidy  
The schemes commenced on 11 February 2020 and will continue on a regular basis without any 
fixed termination date . 
9. Statistical data permitting an assessment of the  trade effects  of the subsidy  
The relevant information is not available . 
1.2  Public Private Partnership and Investment Act, 2019  
1. Title of the subsidy p rogramme  
Infrastructure Viability Gap Funding . 
2. Period  covered  by the notification  
From 16 July 2020 to 15 July 2022 . 
3. Policy  objective  and/or  purpose  of the subsidy  
To support the projects that yield positive returns in the long run and are imp ortant basic 
infrastructure development but may not yield reasonable financial returns immediately . 
4. Background  and authority  for the subsidy  
The Public Private Partnership and Investment Act was e nacted on 27 March, 2019 . The responsible 
government entity for the project implementation  is Investment Board Nepal . G/SCM/N/401/NPL  
 
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  5. Form of the subsidy  
Capital and operational loan or grant for the prescribed projects by Investment Board Nepal.  
6. To whom  and how the subsidy  is provided  
Capital and operational loan or grant is provided to the projects prescribed by Investment Board 
Nepal as per the said act.  
7. Total amount  of the subsidy  
The guideline is yet to be developed and no budget has been allocated for this scheme.  
8. Duration  of the subsidy  
The programme commenced on 27 Mar ch, 2019 and t here is no pre-established  time limit for the  
programme's  termination.  
9. Statistical data permitting an assessment of the  trade effects  of the subsidy  
The relevant information is not available.  
2  BUDGETARY INCENTIVES  
2.1  Cash Incentive Scheme for Exp orting Industries  
1. Title of the subsidy programme  
Cash Incentive Scheme for Export Industries . 
2. Period  covered  by the notification  
From 16 July 2020 to 15 July 2022 . 
3. Policy  objective  and/or  purpose  of the subsidy  
To increase the export of priority products for enhancing competitiveness and reducing ballooning 
trade deficit . 
4. Background  and authority  for the subsidy  
The incentive is provided based on the  Export Cash Incentive Directives (ECID), 201 8 and the budget 
allocated by the federal government f or this scheme. The Ministry of Industry, Commerce and 
Supplies is mainly responsible for the implementation of this scheme.  
5. Form of the subsidy  
Cash incentives provided  to exporting industries . 
6. To whom  and how the subsidy  is provided  
The G overnment  of Nepal  provides cash subsidies ranging from 3 -5 percent of the value of export 
transactions for a select group of products. According to the scheme, exporters can avail a certain 
amount of their total export depending on the products exported a nd value addition.  
The products that are eligible for  5 percent cashback  are: processed tea; processed coffee; 
handicraft and woodcraft items; processed leather and its products; processed herbs and essential 
oils; processed semi -precious stones and jewelr ies with those stones;  allo products; processed 
water/mineral water; processed turmeric; vegetables; processed honey; processed black G/SCM/N/401/NPL  
 
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  cardamom; and processed ginger and its products. All these products need to prove that domestic 
value addition is more tha n 30 percent to avail of the facility.  
The products that are eligible for  3 percent cashback  are; domestically produces textiles; readymade 
garment; carpet and wool products; items made from 'Chyangra ' Pashmina; jute and jute products; 
gold and silver jewe lry; semi0processed leather; medicines; felt products; yarns of polyester, 
viscose, acrylic and cotton; and items made from bronze. These items can avail up to 5 percent cash 
incentive if the value addition of their products is 50 percent. Similarly, if th e value addition of these 
products is higher than 40 percent and they are exported under a collective trademark then such 
products can avail 4 percent cash back.  
The exporters need to get a value addition certificate issued by the Department of Industry for the 
exportable products at the beginning of each fiscal year. The value addition rate for an item is 
determined based on export price (free on board) and the value of foreign -originated material used.  
The exporters can contact their banks used  for export procedures to receive the cash subsidy. The 
documents required are: EXIM code, copies of PAN and VAT Certificates, copies of the commercial 
invoice and Single Administrative Document submitted to customs, advance payment certificate or 
bank sta te to prove exporters had received the payments from foreign buyers, and tax clearance 
certificate.  
7. Total amount  of the subsidy  
Following amount was allocated to provide cash incentives to the industries :  
FY Amount (US$, million) *  
2020/21  10.93  
2021/22  11.82  
* Calculated as per the exchange rate of US$1= Rs. 117.87 for 2020/21  and Rs.  120.84 for 2021/22 .  
8. Duration  of the subsidy  
The programme commenced on  fiscal year 201 0/11 and is an on -going programme.  
The government periodically reviews the provisions for th is scheme . 
9. Statistical data permitting an assessment of the  trade effects  of the subsidy  
The relevant information is not available . 
2.2  COVID -19 Active Response and Expenditure Support (CARES) Programme  
1. Title of the subsidy programme  
COVID -19 Active Response and Expenditure Support (CARES) . 
2. Period  covered  by the notification  
From 16 July 2020 to 15 July 2022 . 
3. Policy  objective  and/or  purpose  of the subsidy  
To support the government 's National Relief Programs in dea ling with public health emergencies and 
mitigating the economic and social impacts from COVID -19. 
4. Background  and authority  for the subsidy  
Following the government 's announcement of the National Relief Program me (NRP) on 
29 March  2020, the CARES programme  was implemented by the Government of Nepal.  The G/SCM/N/401/NPL  
 
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  executing agency for the program me was the Ministry of Finance (MOF). The implementing agencies 
included Ministry of Agriculture and Livestock Development (MOALD), Ministry of Health and 
Population (MOHP), Ministry of Industry, Commerce and Supplies (MOICS), Ministry of Labor, 
Employment a nd Social Security (MOLESS) and Nepal Rastra Bank (NRB) , the central bank of Nepal . 
5. Form of the subsidy  
Concessional lending  to the private sector enterprises . 
6. To whom  and how the subsidy  is provided  
The programme is aimed to provide concessional lending f or at least 10,000 affected MSMEs, of 
which at least 30 percent are women -led MSMEs and at least 50 percent  of women -led MSMEs are 
from disadvantaged groups.  
7. Total amount  of the subsidy  
During the notification period , US$ 97.53 million  was provided to the private sector enterprises as 
concessional lending.  
8. Duration  of the subsidy  
The programme started on 29 March 2020 and completed on 15 July 2021.  
9. Statistical data permitting an assessment of the  trade effects  of the subsidy  
The relevant information is not available.  
2.3  Transportation Subsidy on Rice and Salt  Programme  
1. Title of the subsidy programme  
Transportation Subsidy on Rice and Salt  Programme . 
2. Period  covered  by the notification  
From 16 July 2020 to 15 July 2022 . 
3. Policy  objective  and/or  purpose  of the subsidy  
To facilitate the supply of essential goods viz. rice and salt at subsidized price to the economically 
weaker households  living in the remote parts of the country.  
4. Background  and authority  for the subsidy  
The annual budget of the government makes the provisions regarding the subsidy program for the 
transportation of rice in remote districts of the country.  
Likewise, as per decision of the Government of Nepal in 1999, the subsidy on the transportation of  
salt ha s been provided under the " Throat Disease (due to deficiency of Iodine) Elimination 
Programme" . 
The supply of rice on transportation subsidy is administered by Food Management and Trading 
Company, a fully government owned enterprise . The  subsidized salt is  supplied by Salt Trading 
Corporation, a semi -government enterprise.  
5. Form of the subsidy  
Transportation subsidy for the s upply of rice and salt to the remote parts of the country . G/SCM/N/401/NPL  
 
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  6. To whom  and how the subsidy  is provided  
Initially, t he subsidized rice was provided to the people living in the 53 remote districts of the country  
which upon periodical review has now reduced to 2 4 remote  districts of the country. As regards to  
the subsidized salt , the scheme initially covered  22 remote districts which is now  confined to 
17 remote districts of the country.  
7. Total amount  of the subsidy  
Essential Goods  Quantity and Amount  Fiscal Year  
2020/21  2021/22  
Salt Supplied Quantity  
(Quintals)  88,279  93,980  
Amount (US $  million) *  0.79 1.27 
Rice Supplied Quantity  
(Metric Ton)  16,658  25,462  
Amount (US $  million) *  4.03 3.31 
* Calculated as per the exchange rate of $1=NRs. 117.87 for 2020/21 and NRs. 120.84  for 202 1/22. 
8. Duration  of the subsidy  
The Transportation Subsidy on Rice programme was started on fiscal year 1998/99 whereas Throat 
Disease (due to deficiency of Iodine) Elimination Programme  commenced on 2 March 2000. T here 
is no pre-established  time limit for the  programme's  termination. However, the Government of Nepal 
reviews the area covered by th ese programme s periodically .  
9. Statistical data permitting an assessment of the  trade effects  of the sub sidy 
The relevant information is not available.  
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