WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 28 
  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) MEASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures, valuation, and rules of origin 
(a) Customs declaration and clearance 
1. The Customs Act and Regulation 2007 repl aced the Customs Act 1962.  All companies 
registered with the Office of the Company Registrar, including foreign ones, may import (and export) goods in Nepal.  Individuals may import as long as th ey register as sole proprietor undertakings.   
2. Customs declarations may be made by importers  or exporters, or by Customs agents.  To 
become a Customs agent, a person must obtain a licence from the Department of Customs under the 
Ministry of Finance.  A licence is va lid for one year and is renewable.  Customs Regulation 2007 
stipulates qualification requirements for Customs ag ents;  there is no nationality requirement.   
3. As a landlocked country, about 90%  of Nepal's trade is transported by road.  The Customs 
Act 2007 stipulates that drivers transporting any goods to be exported or imported must provide 
details of such goods to Customs before vehicles enter the customs area.  Importers/exporters must 
submit to Customs a declaration form, accompanied by the prescribed documents (Table III.1).  The 
Customs authorities decide whether to carry out a physical inspection based on an examination of the 
declaration form.  Importers or exporters may apply for customs officers and food/quarantine officers 
to inspect their goods. 
Table III.1 
Customs declaration documents 
Import Documents required 
Imports from a third country Banking document regarding payment procedure, i nvoice, packing list, bill of lading or airway 
bill, certificate of origin, foreign exchange control form, airlines delivery order in case of import 
by air, terminal management delivery order in  case of Customs office managing the terminal, 
documents required as per the prevailing law regarding a recommendation, licence, or certificate from any institution 
Transit through India Customs transit document 
Imports from India Invoice;  packing list;  documents required as per prevailing law regarding a recommendation, 
licence, or certificate from any institution 
Import in-bonda Also required:  Nepal invoice (in-bond form), foreign exchange control form, banking document 
regarding payment procedures 
Import under "duty 
refundable procedure"b Also required:  Nepal invoice 
a In-bond here means import from India with foreign exchange as  specified in the procedure issued by Nepal Rastra Bank. 
b "Duty refundable procedure" means deducti on of excise duty paid in India from the chargeable customs duty on the import of 
goods from India as per the provision in the trade agreement between Nepal and India. 
Source:  Customs Regulation 2007. 
4. In accordance with the Customs Act 2007, a customs officer may clear goods only upon 
collecting the duty.  Currently, electronic clearance is applied in ten major customs offices (covering 
about 83% of declarations) in Nepal.  The authoriti es note that in five major customs offices (covering 
about 67% of declarations), around 40% of cargo is cl eared without physical inspection.  According to 
the authorities, most consignment may be cleared  within two hours;  for other consignments 
(depending on the nature of the goods, such as food , plants and plant products, animals and animal 
products), requiring more declaration information or  inspection, longer clearance time is needed.  A Nepal WT/TPR/S/257/Rev.1 
 Page 29 
 
 
customs service fee of Nr 565 on imports, and Nr 678 on exports, is charged for each consignment 
with a value above Nr 5,000.   
5. According to the authorities, Nepal does not require preshipment inspection. 
(b) Customs valuation 
6. The Agreement on Implementation of Article V II of the GATT is followed in determining 
customs value of imported goods in Nepal.  Thus, the customs value is based on the transaction value 
of goods, and importers are required to d eclare the transaction value to Customs. 
7. If the declared transaction value does not appear  to include freight, insurance, and other 
related expenses, customs authorities add an estimated amount.  If customs authorities doubt the 
declared transaction value, the following methods ma y be used in sequential order:  (a) transaction 
value of identical goods already imported into Nepa l;  (b) transaction value of similar goods already 
imported into Nepal;  (c) deductive value method, deducting tax, duty, and other costs incurred in 
Nepal on the selling price of each unit of the goods;  (d) computed value method, calculating the costs 
incurred in the production or manufacture of such goods  and profits made or likely to be made by the 
seller while selling such goods to the importer.  Th e importer may request the "deductive value" and 
the "computed value" methods be used in reverse sequence.  
8. If the declared transaction value is less than th e value determined by the customs officer, the 
customs authorities may:  clear the goods by coll ecting 50% additional cust oms duty on the difference 
in value;  or with the approval of the DG Customs, purchase the goods by paying an amount equalling 
the declared transaction value, plus 5%.  
9. Any person not satisfied with the value determin ed by Customs may file an application to the 
Valuation Review Committee no later than 15 days after the decision or order.  Under the Customs 
Rules 2007, the Committee must make its final decision within 90 days  from the date of registration 
of the application.  If still unsatisfied, the importer may appeal to the Review Tribunal within 35 days 
after the date of this decision.  In FY 2010/11, the Valuation Review Committee received 
114 applications, and 145 applications were carried  forward from previous years.  Of the total 
259 applications, the Committee made decisions on 205 applications:  approving Customs' decisions 
in 106 cases;  reaching a different value in 88 cases;  agreeing the argument of the importers in 
3 cases;  and pending decisions in the other 8 cases. 
(c) Rules of origin  
10. Nepal does not apply non-preferential rules of origin .  It has not made any notifications to the 
WTO regarding its rules of origin. 
11. Nepal applies preferential rules of origin under the SAFTA (South Asia Free Trade Area) 
Agreement.  Products wholly produced or obt ained in the exporting country are considered 
originating in the exporting country.  Products no t wholly produced or obtained in the exporting 
country may also be considered originating in that country if:  the total value of materials, parts or 
produce originating in other countries do not exceed 50% of the f.o.b. value of the products, and the 
final process of manufacture was performed in that exporting country.1   
                                                      
1 WTO document WT/ACC/NPL/16, 28 August 2003, p. 16. WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 30 
  
12. The BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic 
Cooperation) Agreement has no provi sions regarding preferential rul es of origin;  Nepal and other 
parties are negotiating preferential rules of origin under this agreement.  
13. Nepal does not apply any other preferential rules of origin. 
(ii) Trade facilitation 
14. Trade into and out of Nepal must transit throug h ports in neighbouring countries, in particular 
India.  Currently, the Indian ports of Kolkata and Haldia are used for transit of Nepal-bound sea cargo.  Kolkata is the largest port;  according to the authorities, transit through Kolkata accounted for 
19% of Nepal's international trade, or 45% of inte rnational trade if Indo-Nepal trade is excluded.  
India and Nepal also agreed to  use Vishakapatnam for Nepal-bound sea cargo, although this port is 
not operational yet. 
15. The entry into force of the Customs legisla tion in 2007 simplified customs procedures in 
Nepal.  Before 2007, numerous documentary requir ements and complicated procedures for transit 
transport, inadequate inter-modal competition in tr ansit movement, and out-of-date transport vehicles, 
all caused delays in border crossings.  The num ber of documents require d by banks, Nepalese 
Customs, and Indian Customs at land borders and tr ansit ports was reduced to 10 (down from 15) for 
imports;  and to 9 (down from 14) for exports.  
16. Further, in recent years Nepal has introduced a number of trade facilitation measures.  
Customs clearance has been fac ilitated by the application of, inter alia , ASYCUDA++ with the 
Brokers Module (in ten major customs offices), Selectivity System (in five major customs offices), 
Post Clearance Audit, and Wide Area Network (WAN) (in ten major customs offices).  According to the authorities, there has been a positive res ponse from business communities on these facilitation 
measures.  
17. As a landlocked country, Nepal's trading costs are high, and it ranks low in the World Bank's 
trading-across-borders index.
2  However, the authorities pointed out that after the latest reforms, 
customs clearance and technical controls for imports and exports take 5 and 4 days respectively (out 
of a total of 35 and 41 days);  a large part of the time required to import or export includes transit time 
through major Indian ports to Nepal, which is beyond the control of Nepalese Customs. 
(iii) Tariffs 
18. Nepal has no tariff quotas.  It applies at least MFN treatment for all WTO Members. 
(a) Bound tariffs 
19. Nepal bound all but 54 tariff lines at the HS 8-di git level (Table AIII.1).  The unbound lines 
are mainly for arms, cement, some parts and components of automobiles, and petroleum oil.  According to the authorities, Nepal did not bi nd these tariff lines for revenue collection and 
environment protection reasons.  In particular, the tariff for cement is unbound to facilitate the 
development of the domestic industry (cement consum ed in Nepal is largely produced domestically), 
and the tariff for petroleum oil is unbound to bala nce the price difference between India and Nepal. 
                                                      
2 World Bank and IFC (2011). Nepal WT/TPR/S/257/Rev.1 
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(b) Applied MFN tariffs 
20. The simple average tariff for imports is 12.2% in 2011/12, down from 13.8% in 2002/03 
(before Nepal's accession to the WTO) (Table III.2 and Chart III.1).  Nepal's applied MFN tariff 
consists of 5,168 lines at the HS 8-digit level (5 ,351 lines in 2002/03).  The applied MFN tariff 
contains 7 ad valorem  rates (zero, 5%, 10%, 15%, 20%, 30%, and 80%) (Chart III.2).  The highest 
rate applies to pipe tobacco, automobiles, and w eapons.  Dispersion in applied MFN rates, indicated 
by the coefficient of variation, has fallen sin ce 2002/03, reflecting the lowering of maximum tariff 
rate from 130% to 80% in 2011/12.  
21. Non- ad valorem  rates apply to 38 tariff lines, all with specific rates.  The ad valorem  
equivalents (AVEs) for these 38 tariff lines are not av ailable to the Secretariat;  the overall average 
tariff rate might therefore have been underestimated. 
Table III.2 
Tariff structure, 2002/03, 2008/09, and 2011/12 
(%) 
 MFN applied Final  
bounda SAFTA 
  2002/03 2008/09 2011/12 2011/12 
Bound tariff lines (% of all tariff lines) .. 99.0 99.0 99.0  
Simple average rate 13.8 12.3 12.2 26.3 10.0 
   Agricultural products (HS 01-24) 13.9 13.0 12.5 40.3 10.9 
   Industrial products (HS 25-97) 13.7 12.2 12.1 23.9 9.9 
   WTO agricultural products 13.5 12.8 12.4 42.4 10.8 
   WTO non-agricultural products 13.8 12.3 12.1 23.8 9.9 
   ISIC 1 - Agriculture, hunting and fishing 9.3 9.7 9.7 33.9 8.2 
   ISIC 2 - Mining 12.0 10.6 10.3 20.3 8.2 
   ISIC 3 - Manufacturing 14.1 12.5 12.3 26.0 10.1 
        Manufacturing excluding food, beverages and 
tobacco 13.9 12.3 12.2 24.0 9.9 
        Food, beverages and tobacco 15.9 14.4 13.7 42.7 12.1 
   First stage of processing 9.3 9.4 9.3 27.8 7.9 
   Semi-processed products 12.2 11.7 11.6 24.5 9.2 
   Fully processed products 15.7 13.3 13.1 27.0 10.9 
Domestic tariff "peaks" (% of all tariff lines)b 0.7 3.1 0.6 0.7 0.3 
International tariff "peaks" (% of all tariff lines)c 15.4 13.8 14.6 88.8 13.1 
Overall standard deviation of tariff rates 11.0 9.1 8.6 12.9 7.3 
Coefficient of variation of ta riff rates 0.8 0.7 0.7 0.5 0.7 
Tariff quotas (% of all tariff lines) 0.0 0.0 0.0 0.0 0.0 
Duty-free tariff lines (% of all tariff lines) 1.0 2.6 2.6 2.5 2.6 
Non- ad valorem  tariffs (% of all tariff lines) 0.6 0.8 0.7 0.0 0.7 
Nuisance applied rates (% of all tariff lines)d 0.0 0.0 0.0 0.0 0.0 
Number of lines 5,351 5,164 5,168 5,114a 5,168 
  Ad valorem  5,318 5,125 5,130 5,114 5,130 
  Per cent of total tariff lines 99.4 99.2 99.3 100 99.3 
  Duty-free lines 51 135 135 126 135 
  Non- ad valorem   33 39 38 0 38 
      Specific 31 38 38 0 38 
      Compound 0 0 0 0 0 
      Mixed 0 0 0 0 0 
      Others 2 1 0 0 0 
Table III.2 (cont'd)  WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 32 
  
 MFN applied Final  
bounda SAFTA 
  2002/03 2008/09 2011/12 2011/12 
Memo:      
Some comparisons      
WTO agriculture 13.5 12.8 12.4 42.4 10.8 
  Animals and products thereof 10.9 10.8 10.6 36.0 8.1 
  Dairy products 14.3 14.3 15.5 45.8 15.5 
  Fruit, vegetables and plants 12.8 11.3 11.4 40.7 10.4 
  Coffee and tea 21.9 22.7 23.3 40.8 20.3 
  Cereals and preparations 15.7 14.9 14.3 45.8 12.8 
  Oil seeds, fats and oils and their products 11.2 9.7 9.7 34.8 8.1 
  Sugars and confectionary 17.4 15.0 14.4 45.9 12.5 
  Beverages, spirits and tobacco 41.3 38.9 30.2 90.9 30.2 
  Cotton 0.0 14.0 14.0 36.0 8.8 
  Other agricultural products n.e.s. 7.9 8.2 8.2 30.7 6.5 
WTO non-agriculture 13.8 12.3 12.1 23.8 9.9 
  Fish and fishery products 10.9 10.8 10.6 23.2 8.4 
  Minerals and metals 13.2 12.7 12.4 25.3 9.9 
  Chemicals and photographic supplies 12.9 11.6 11.5 21.9 9.1 
  Wood, pulp, paper and furniture 14.5 13.6 13.6 24.5 10.5 
  Textiles 12.8 12.5 12.8 26.3 10.9 
  Clothing 24.5 19.9 19.9 29.9 19.8 
  Leather, rubber, footwear and travel goods 15.2 12.2 11.7 27.2 10.2 
  Non-electric machinery 7.7 6.9 6.9 19.6 6.0 
  Electric machinery 14.8 10.3 10.4 20.8 8.2 
  Transport equipment 27.1 22.7 21.6 29.4 19.3 
  Non-agricultural articles n.e.s. 14.7 11.8 11.7 20.8 6.9 
  Petroleum 22.7 20.8 17.9 15.0 15.6 
.. Not available. 
a Based on the 2011/12 tariff schedule.  Im plementation of final bound rates was reach ed in 2008 for all but 13 tariff lines (u nder 
Chapter 87).  Calculations are based on 5,114 bound rates. 
b Domestic tariff peaks are defined as those exceeding three times the overall simple average applied rate. 
c International tariff peaks are defined as those exceeding 15%. 
d Nuisance rates are those greater than zero, but less than or equal to 2%. 
Note: The 2002/03 tariff is based on HS02 nomenclature and the 2008/09, and 2011/12 tariffs are based on HS07 nomenclature. 
Source:  WTO Secretariat calculations, based on data provided by the authorities. 
22. Between 2002/03 and 2011/12, despite the overa ll reduction in the simple average MFN tariff 
rate, the applied MFN tariff rates increased on dair y products, coffee and tea, cotton, and other 
agricultural products n.e.s.  In addition, the app lied MFN tariff rate for pe troleum is above Nepal's 
final bound level. 
23. For food, beverages, and tobacco, textiles a nd leather, and chemicals, Nepal has positive 
escalation between first stage processing, semi-proce ssed, and fully processed products (Chart III.3). 
For paper printing and publishing, non-metallic mineral products, basic metals, and other 
manufacturing, tariff escalation exists between fi rst stage processing and semi-processed products.  
The authorities stated that tariff escalation is for revenue collection, not to protect its processing or 
manufacturing industry. Nepal WT/TPR/S/257/Rev.1 
 Page 33 
 
 
0.010.020.030.040.050.060.070.080.0
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Calculations exclude specfic rates.    HS section 19 is fully unbound.  HS sections 05, 11 and 17 are not fully bound. 
WTO Secretariat calculations, based on data provided by the Nepalese authorities.Per centChart III.1                
Average applied MFN and final bound tariff rates, by HS section, 2002/03 and 2011/12
Note:
Source :01   Live animals & products        
02   Vegetable products
03   Fats & oils      
04   Prepared food, etc.
05   Mineral products
06   Chemicals & products07   Plastic & rubber
08   Hides & skins
09   Wood & articles
10   Pulp, paper, etc.
11   Textiles & articles
12   Footwear, headgear13   Articles of stones
14   Precious stones, etc.
15   Base metals and products
16   Machinery
17   Transport equipment
18   Precision instruments19   Arms & ammunition
20   Miscellaneous manuf.
21   Works of art, etc.MFN 2002/03
MFN 2011/12 
Final bound
Average applied rate 
2002/03  (13.8%)Average applied rate
2011/12  (12.2%)Average final bound rate
(26.3%)
 
1.0%22.3%31.5%
29.2%
n.a.10.1%
n.a.4.5%
0.5% 0.2%2.6.%25.7%31.0%
25.3%
8.2% 
n.a.5.8%
n.a.0.6%n.a.
02004006008001,0001,2001,4001,6001,800
Duty free 5% 10% 15.0% 20% 25.0% 30% 40% 80% 130%
Not applicable.
Percentages denote the share of total lines.  Calculations  exclude specific rates.  Figures for 2002/03 are based on 
HS02 nomenclature, and for 2011/12 on HS07.  Totals do not add to 100% due to the exclusion of specific rates, 
representing 0.6% and 0.7%, respectively, for 2002/03 and 2011/12.
WTO Secretariat calculations, based on data provided by the Nepalese authorities.MFN 2002/03
MFN 2011/12Number of tariff linesChart III.2
Distribution of MFN tariff rates, 2002/03 and 2011/12
Tariff rates
n.a.
Note:
Source : WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 34 
  
n.a.n.a.
0246810121416182022
Food, beverages
and tobaccoTextiles and
leatherWood and
furniturePaper printing
and publishingChemicals Non-metallic
mineral
productsBasic metals Fabricated
metal productsand machineryOther
manufacturingPer centChart III.3
Tariff escalation by 2-di git ISIC industry, 2011/12
Average applied rate in manufacturing
(12.3%)
First stage of processing Semi-processed Fully processed
Not applicable.
WTO Secretariat calculations, based on data provided be the Nepalese authorities.n.a.
Source :
 
(c) Preferential rates 
24. As a member of the South Asian Associati on for Regional Cooperation (SAARC), and after 
signing the South Asian Free-Trade Area (SAFTA) Ag reement, Nepal applies preferential tariff rates 
to other SAARC members (Table III.2 and Chapter II(4)(ii)).3  SAARC LDCs, i.e. Afghanistan, 
Bangladesh, Bhutan, and the Maldives, benefit fro m special and differentia l treatment, although the 
difference is small.  In 2011/12, the simple averag e applied tariff rates for SAARC members, and the 
SAARC LDCs, are 10.0% and 9.9%, respectively.   Each SAFTA country maintains a list of 
exceptions (Sensitive List).  Nepal's list contains  1,295 tariff lines at the HS 8-digit level for 
non-LDCs, and 1,257 tariff lines for LDCs, covering a wide range of products.4   
25. Nepal also provides preferential rates under the BIMSTEC Free Trade Area Framework 
Agreement:  products, except those included in the Negative List, may be subject to fast or normal 
track tariff reduction or elimination (Chapter II(4)(ii)) for developing country parties (India, 
Sri Lanka, and Thailand) and LDC parties (Ba ngladesh, Bhutan, Myanmar, and Nepal).   
26. In addition, under the Nepal-India Trade Treat y, Nepal and India agreed, on a reciprocal 
basis, to exempt from customs tariffs and quantitative restrictions imports of primary products.  India 
agreed to promote Nepal's industrial developmen t through, non-reciprocally, exempting industrial 
products manufactured in Nepal from customs tariffs.  Nepal agreed to exempt, wholly or partially, 
                                                      
3 Afghanistan, Bangladesh, Bhutan, India, the Maldives, Pakistan, and Sri Lanka. 
4 FNCCI online information.  Viewed at:  http ://www.fncci.org.np/downloa ds/safta_sensitive_list/ 
nepal.pdf, and http://www.fncci.org.np/downloads/sa fta_sensitive_list/nepal_non_ldc.pdf [26/05/2011]. Nepal WT/TPR/S/257/Rev.1 
 Page 35 
 
 
the customs tariff on imports from India.  Goods pr oduced in and imported from India into Nepal are 
granted a tariff rebate of:  7% for tariff rates of up to 30%;  and 5% for tariff rates above 30%.  These 
rebates do not apply to goods subject to specific duty.5 
(d) Tariff exemptions 
27. The authorities consider that tariff exemptions may be used to facilitate the importation of 
specific goods, and for social, educational, and welf are purposes.  Tariff exemptions are published in 
the Nepal Gazette ;  and the list was  also published in the Customs Tari ff Schedule.  The exemptions 
are valid for all suppliers (unless specified, i.e. for India).  The list varies annually (Table III.3). 
Table III.3 
Tariff exemptions, 2010/11 
 Items 
1. Goods falling under the following subheadings:   
44012100, 44012200, 44013000, 44021000, 44029000, 4431000, 44032000, 44034100, 44034900, 44039100, 44039200, 
44039900, 44041000, 44042000, 44061000, 44069000, 44071000, 44072100, 44072200, 44072500, 44072600, 44072700, 
44072800, 44072900, 44079100, 44079200, 44079300, 44079400, 44079500, 44079900, 49021000, 49029000, 50010000, 
51011100, 51011900, 51012100, 51012900, 51013000, 52010000, 52021000, 52029100, 52029900, 52030000 
2. Ethylene glycol (29053100) and tere phthalic acid and its salt (29173600) importe d by industry for their own production 
purposes 
3. Pet chips ( 39076000) to be imported by industry producing partially or iented yarn (POY) on the basis of utilization ratio o f raw 
materials, domestic consumption and export of finished products 
4. Fertilizer of Chapter 31 
5. Sindur (vermilion) of Chapte r 32, Chura (bangles), Tika and Tikuli (spangles  to be worn on foreh ead) of Chapter 39 and 70 
6. Raw jute of Chapter 53 if imported by jute industries 
7. Traditional calendar (Patro);  unused postage stamps, post car ds, aerograms, passports and ex cise stamps imported by the 
government of Nepal, printed books of headings 4901, 4903 and books under the heading 4904 
If these products are printed outside Nepal by Nepalese publishers, distributors, sole  agents, their importation is subject to a 
Customs duty of 15% of the cost of commercial printing char ges (paper, printing cost, transportation cost and insurance) 
8. Transfers of ownership of vehicles in the name of a legal spouse (husband or wife) of an expired person, who imported the 
vehicles on duty privilege for personal use 
9. Crude petroleum oil and crude oil from bituminous minera ls of heading 2709, produced in and imported from India 
10. Unprocessed mineral products of the following subheadings, produced in and imported from India: 
25020000, 25041000, 25049000, 25101000, 25111000, 25112000, 25131000, 25132000, 25199000, 25210000, 25251000, 
25281000, 25289000, 25309000, 26011100, 26011200, 26012000, 26020000, 26030000, 26040000, 26050000, 26060000, 
26070000, 26080000, 26090000, 26100000, 26110000, 26121000, 26122000, 26131000, 26139000, 26140000, 26151000, 
26159000, 26161000, 26169000, 26171000, 26179000 
11. Partially oriented yarn (POY) imported by  a yarn industry registered in the VAT, a nd all kinds of man-made staple fibre of 
Chapters 54 and 55 
12. Chassis, engine, motor, battery ch arger imported by a registered industry  that produces electric, solar or battery-operated 
three wheelers or four-wheel vehicles or transport vehicles 
13. Imports by the Nepal Red Cross of plastic bags to preserve blood, transfusion sets, testing kits, reagents, and equipment a nd 
chemicals necessary for ma king blood test reagents 
14. Import of goods used by blind persons 
15. Import of goods by disabled persons 
Source:  Ministry of Finance, Financial Ordinance 2010/11.  
(iv) Other duties and charges (ODCs) 
28. Customs collects tariffs, VAT, excise tax, and ot her fees at the border.  Nepal relies heavily 
on taxes collected at the border by Customs for its revenue, alt hough this dependence has been 
lowered across the years (Table III.4). 
                                                      
5 Department of Customs, Customs Tariff 2011-2012, p. 421. WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 36 
  
Table III.4  
Tax collected at the border, 2002-10 
(Nr billion and % in total tax revenue) 
  2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 
Total tax revenue 42.6 48.2 54.1 57.4 71.1 85.2 117.1 156.3 
Revenue from Customs (imp + 
exp + others) 14.2 15.6 15.7 15.3 16.7 21.1 26.8 35.1 
Percentage in tax revenue (%) (33%) ( 32%) (29%) (27%) (23%) (25%) (23%) (22%) 
Revenue from imports 10.6 10.7 12.3 11.7 13.6 17.1 22.0 29.9 
Percentage in tax revenue (%) (25%) ( 22%) (23%) (20%) (19%) (20%) (19%) (19%) 
 
Source:  Ojha P., Chandra K. Ghimire, and S.R. Bhatt (2010), Nepal's WTO Compliance and Resulting Economic Gains (A 
Critical Assessment) , p. 19;  and information provide d by the Nepalese authorities. 
29. A customs service fee of Nr 565 per declarati on is charged for each import consignment with 
a value above Nr 5,000 (Nr 678 for exports).  There are no other customs fees. 
30. Before acceding to the WTO, Nepal levied a number of fees on its imports, such as the local 
development fee, the agriculture development fee,  the cigarettes and alcohol fee, and the alcohol 
control service fee.  The local development fee was levied at 1.5% of the import value, to support local development, and to generate  fiscal revenue.  Other duties a nd charges were in the range of 
2.5-11.5% on industrial goods, a nd 2.5-14.5% on agricultural goods .  These non-tariff charges were 
applied to the c.i.f. value of the imported goods.   
31. At the time of accession, Nepal committed to el iminate these other duties and charges (ODCs) 
for all tariff lines over a period of two to ten years.  Ten years after accession, all ODCs should be zero.  Nepal also committed not to introduce new ODCs.  Since its accession to the WTO, Nepal has 
not introduced any additional ODCs,  has eliminated some fees and charges levied on agriculture and 
other products, and has gr adually phased out ODCs in line with its commitments.
6  The only 
remaining ODC is the agriculture reform fee, wh ich is to be removed by 2013 (previously the 
agriculture development fee).7  It is levied at 5% of the value of imported agricultural goods but it is 
not levied if the imports are subject to customs tari ffs.  According to the authorities, the agricultural 
reform fee is levied only on imports from I ndia and the Tibet Autonomous Region of China. 
(v) Contingency measures  
(a) Anti-dumping and countervailing measures 
32. Nepal notified in April 2010 that it has not est ablished a competent authority to initiate and 
conduct anti-dumping investigations, a nd has not taken any anti-dumping actions to date.  It does not 
anticipate taking any anti-dumping ac tions for the foreseeable future.8  Moreover, Nepal does not have 
legislation dealing with countervailing measures,  and has not taken any such measures.    
33. According to the authorities, Nepal is curre ntly preparing a draft Bill on anti-dumping and 
countervailing.   
                                                      
6 Ojha et al (2010). 
7 Financial Ordinance 2010/11. 
8 WTO document G/ADP/N/193/NPL, 12 April 2010. Nepal WT/TPR/S/257/Rev.1 
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(b) Safeguard measures 
34. The Export and Import Control Act, 1957  (amended in November 2006), authorized the 
Government to initiate safeguard measures to protec t its balance of payments situation.  Agencies 
involved are the Ministry of Industry, Ministry of Commerce and Supplies, and the Central Bank (Nepal Rastra Bank).  
35. Nepal has not taken any safeguard actions. 
(vi) Import prohibitions, restrictions, and licensing 
36. The Export and Import Control Act 1957 provides that the Government may impose import 
and export restrictions or prohibitions for the obj ectives of protecting national security, maintaining 
public morals, conserving exhaustible  natural resources (in conjuncti on with restrictions on domestic 
production or consumption), and ensuring the avai lability of raw materials essential for domestic 
processing industries with potential for competitive capacity. 
(a) Import prohibitions 
37. In accordance with the above objectives, va rious products are prohibited from importation 
(Table III.5).  Imports of second-hand automobiles are prohibited but they may be imported by 
diplomats.   
Table III.5 
Products banned from importation 
 Product description 
1. Narcotic and intoxicating substances harmful to health, such as hashish,  marijuana, and opium 
2. Beef 
3. Harmful azure colour prescribed from time to time by the Government of Nepal publishing a notice in Nepal Gazette  
4. Cut pieces of plastics and plastic bags and sheet having thickne ss less than 20 micron 
5. Incandescent light bulbs to emit more carbons 
6. Items restricted in accordan ce with other prevailing laws 
Source:  Nepal Gazette , 2066/07/16 (2 November 2009). 
(b) Import restrictions and licensing 
Import restrictions and non-automatic licensing 
38. Non-automatic import licensing is required for imports of certain products (Table III.6).  
Licences are issued by the Department of Comme rce, and permission may be required from other 
agencies (such as the Ministries of Agriculture, H ealth, Information and Communications, and Home 
Affairs). 
39. According to the authorities, the Department of Commerce may refuse a licence application 
for only one reason:  that the applicant fails to meet the basic requirements (for example, importers 
must register their business in the Department of Commerce, and obtain their VAT registration certificate from the Inland Revenue Office).  An app licant is advised of the reason for refusal.  An 
applicant may appeal against a refusal to the Mi nistry of Commerce and Supplies within 35 days.  
According to the authorities, there have been no cases  of licensing refusal or appeal, as applicants are 
advised to fulfil the requirements and the licences are granted. 
 WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 38 
  
Table III.6 
Imports requiring a licence or permission 
 Product description 
1. Narcotic and intoxicating medicine and chemistry thereof 
2. Arms and ammunition and explosive materi als:  materials required to make explosiv e materials, guns and cartridges thereof, c aps 
without papers and other explosive materials and arms and ammunition 
3. Wireless, walkie-talkies, transmitter receivers, link radio equi pment and other similar word recorders, voice recorders, vid eo 
recorders, data recorders, radio devi ces, except the following radio devices: 
(a)  GSM mobile phone sets 
(b)  WLL telephone sets 
(c)  Satellite telephone sets to be connected to a network of  a satellite service provider with a GMPCS licence from Nepal 
Telecommunication Authority 
4. Item imposed quantitative restriction:  animal feed containing opium 
Source:  Nepal  Gazette , 2066/07/16 (2 November 2009).  
Quantitative restrictions 
40. At the time of its accession to the WTO, Nepal co mmitted to eliminate, and not to introduce, 
re-introduce or apply quantitative restrictions on  imports or other non-tariff measures, such as 
licensing, quotas, bans, permits, prior authorizati on requirements, and other restrictions having 
equivalent effect, and that cannot  be justified under the provisi ons of the WTO Agreement.  If 
balance-of-payments measures were necessary, they would be imposed in a manner consistent with 
the relevant WTO provisions, including Article  XII and Article XVIII of the GATT and the 
Understanding on Balance-of-Payments Provisions of the GATT 1994.9  
41. According to the authorities, Nepal does not currently apply import quotas.  However, the 
Nepal  Gazette  lists quantitative restrictions on imports of animal feed containing opium (Table III.6). 
No licensing required for other imports 
42. According to the authorities, Nepal has a "de-li censing" system, i.e. there is no need for a 
licence to import, except for restricted goods (non-a utomatic import licensing).  The only condition to 
import is that business firms and companies are regist ered either with the Department of Commerce, 
or with the Office of the Company Registrar.  As licences are not required, registered importers must 
open letters of credit (L/C) from commercial banks  for imports.  This L/C document must be 
presented at the Customs office.    
43. Automatic import licensing is required for goods in  transit through India to Nepal, to ensure 
that the transit of goods does not violate Articles 8 and 9 of the Transit Treaty.10  To obtain this 
licence, only one recommendation letter from th e Department of Commerce is required. 
(2) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Customs procedures 
44. The same declaration requirements and tariff nome nclature are used for imports and exports.  
As for imports, the Customs Act and Rules 2007 re duced the number of documents required for 
customs declaration (from 14 to 9), and the number of days taken to export goods, although transit 
from Nepal to the Indian border still takes time.   
                                                      
9 WT/ACC/NPL/16, p. 16. 
10 WT/ACC/NPL/16, p. 15. Nepal WT/TPR/S/257/Rev.1 
 Page 39 
 
 
(ii) Certificate of origin 
45. Exporters may obtain origin certification for their exports from the Federation of Nepalese 
Chambers of Commerce and Industry (FNCCI).  As  of May 2010, in addition to the FNCCI, the 
Nepal Chamber of Commerce (NCC), Confederati on of Nepalese Industries (CNI), and Trade and 
Export Promotion Centre (TEPC) may also issue cer tificates of origin for Nepalese exports.  
Application documents comprise:  document certifyi ng the origin of goods, export declaration form, 
invoice, letter of credit, packing list, visa for ready-made garments. 
(iii) Export prohibitions, licensing, and restrictions 
46. Nepal prohibits or restricts the export of so me products, and levies e xport taxes on others.  
These export restraints may not be the best way to  achieve some of the Government's objectives.  
(a) Export prohibitions 
47. Nepal bans the export of certain produc ts for various reasons (Table III.7).   
Table III.7 
Products banned from exportation  
Name of the product Rationale for export ban 
Articles of archaeological, hist orical, and religious importance 
- National or foreign coins 
- Idols of gods and goddesses, palm leaf inscriptions (Tad Patra), plant leaf 
  inscriptions (Bhoj Patra) 
- Pauva (Thanka or traditional cloth paintings) of historical importance Culture and religion reasons 
Protected wildlife, protected body part s of wildlife, and endangered wildlife 
- Untreated skin (including dry salted) 
- Unprocessed wool and hair (fur) of wild animals Protection of wildlife  
Narcotic substances 
- Intoxicating and narcotic drugs such as marijuana, opium, hashish (as defined in 
  the Single Convention of Narcotics 1961,  and the UN Convention Against Illicit 
  Traffic in Narcotic Substan ces and Psychotropic Substance 1988) Human health 
Explosive materials and ammunitions 
- Explosive materials and fuses or materials needed therefor 
- Materials used in the production of arms and ammunition  Public security  
Industrial machines, spare parts, and raw materials 
- Industrial mills, machinery and spare parts thereof To promote the developm ent of small cottage 
industries 
Forest resources related to biodiv ersity and environment conservation 
- Dactylorhiza hatagirea and Juglans regia 
- Non-processed valeriana jatamansi, Ro ck Exudat, Parmelia sps and other  
  (Lichen sps), Abies spectabilis, Cinnamomum glaucescens To conserve the biodiversity and environment 
Petrol and petroleum products 
- Petrol 
- Diesel 
- Kerosene oil 
- LP Gas 
- Air fuel (except international flights)  All these are imported products.  The export 
ban is to maintain the regular supply and 
distribution in Nepal 
Other products  
- Mamira (a medicinal herb) 
- Logs and timber from naturally grown plants  Exhaustible natural resources:  most are from 
naturally grown plants.  Their exportation is 
banned, and their domestic consumption restricted  
Source:  Information provided by the Nepalese authorities. WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 40 
  
(b) Export restrictions and licensing 
Export quotas 
48. In accordance with the Nepal Gazette , quantitative restrictions are in place for exports of:  
paddy, rice, wheat, sugar, and items related to gr ains (lintels, pigeon pa, pulses, soybean, gram, vetch 
seed, pea).11  The Ministry of Commerce and Supplies may change the list of items, taking into 
consideration the supply situation in Nepal.  Expor ters must obtain permission before exporting any of 
these goods. 
Export licensing 
49. According to the authorities, permission is re quired for exports of some timber products and 
forest resources, related to biodiversity an d environment conservation (neo-picrorhiza 
scrophulariifolia, nardostachys grandiflora, Rauvolfi a serpentine, orchids, taxus baccata, dioscorea 
deltoidea, talauma hodgsonii, and michelia cham paca, shorea robusta, accacia catechu, dalbergia 
latifolia, pterocarpus marsupium, bombax ceiba).  Perm ission is issued by the Department of Forestry. 
50. Like for imports, Nepal applies an open "d e-licensing" regime, with a view to reducing 
government interference in trade:  apart from restri cted products (i.e. those requiring export quotas or 
special permission), no export licences are required. 
(iv) Export charges and levies, and rebates 
51. Customs charges Nr 678 fo r each export declaration for each  consignment with a value above 
Nr 5,000.  There are no other export service charges. 
52. VAT and excise tax are fully rebated on exports.  
53. Export taxes are levied on some products.  Accord ing to the authorities, they are levied to 
protect the environment (discourage environment degradation), ensure food security, and discourage 
trade diversion to neighbouring countries (such as India).   In 2010/11, export taxes were levied on 101 
tariff lines at the HS 8-digit level, down from 189 lines  in 2003 (Table AIII.2).  They comprise mainly 
vegetables, maize, rice, wheat, oil cake, sand and ston es, and some wood.  In particular, the export tax 
on some wood and wood products rai sed questions even within the Government.  There has been a 
growing demand for wood and wood pr oducts in neighbouring countries, such as China and India, as 
well as other countries, and levying the export ta x tends to discourage exportation or divert wood 
exports to informal trade.  Th e authorities state that export tax on wood is needed to protect the 
environment. 
(v) Duty drawbacks 
54. Nepal grants duty drawback on imported raw materials incorporated into exports under 
Article 15 of the Industrial Enterprises Act 1997, wh ich stipulates that the customs duty, VAT, and 
excise duty levied must be reimbursed.  Exporters submit documents to the Single Window 
Committee in the Ministry of Industry, which examines and approves the duty refund. 
55. In accordance with the Cust oms Regulation 2007, industries in bonded warehouses are 
allowed to import raw materials and auxiliary raw materials such as packing materials not 
manufactured in Nepal under bank guarantee.  If the raw materials are incorporated into exports, and 
                                                      
11 Nepal Gazette , 2066/07/16 (2 November 2009). Nepal WT/TPR/S/257/Rev.1 
 Page 41 
 
 
exported within 11 months of their import, and the value-added over the imported raw materials is at 
least 10%, the bank guarantee is released by Customs within one month of submission of the application.  
56. Industries outside bonded warehouses that import raw materials (and auxiliary materials), 
may pay a cash duty deposit at the customs office.  If the raw materials are incorporated into exports 
and exported within 12 months, and if the value- added is over 10%, the cash deposit is released by 
Customs within one month of submission of the documents. 
(vi) Export facilitation  
57. Nepal has been promoting its exports through partic ipating in international trade fairs.  Major 
agencies involved are the Commercial Council, Trade Promotion Centre, and Trade Promotion Board.  
The Government intends to promot e, in particular, exports of:  
- agricultural commodities such as lentils, Niger seeds, tea and coffee, ginger, cardamom, 
vegetable seeds, honey, sweet orange, vegetables, essential oi ls, flowers, silk and silk 
products, medicinal herbs, fruits, instant noodles, etc.;  
- industrial goods such as woollen carpets, read ymade garments, leathe r and leather products, 
cotton products, woollen sweater s, and woollen mufflers; 
- traditional handicraft products; 
- products of cottage and small industries; 
- hydro-electricity;  and 
- other products such as computer software. 
58. There is no export insurance company in Nepal. 
59. Imports into Nepal have been increasing rapidl y in recent years, while exports have lagged 
behind (Chapter I).  The Government is aware that one of the main obstacles to increasing Nepalese exports has been supply constraints.   
(3) M
EASURES AFFECTING PRODUCTION AND TRADE  
(i) Taxation and tax incentives 
(a) Taxation 
60. Tax revenue accounted for 85% of Nepal's tota l government revenue in 2010/11. Major taxes 
include value-added tax, income tax,  tariffs, and excise tax (Table III.8). 
Income tax  
61. Nepal's income tax appears rather complicated, with different tax rates for personal income 
(depending on marriage status and income leve l), corporate income (depending on the line of 
business), and foreigners income, as well as income  from export-related activities (Table III.9). 
 WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 42 
  
Table III.8  
Tax revenue, 2005-11 
(Nr billion) 
  2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 
Total government revenue 72.3 87.7 107.6 143.5 179.9 201.0 
Tax revenue 57.4 71.1 85.2 117.1 156.3 171.8 
Indirect taxes 43.5 52.1 62.1 82.7 114.5 124.5 
Consumption (excise) tax 6.5 9.3 11.2 16.2 24.3 26.4 
Value-added tax 21.6 26.1 29.8 39.7 54.9 61.7 
Tariffs 14.6 16.2 20.6 26.1 34.4 35.7 
Direct taxes 14.0 19.0 23.1 34.3 41.8 47.0 
Enterprise income tax 7.6 11.6 13.3 19.6 24.1 41.7a 
Remuneration tax 1.8 2.0 2.5 3.2 4.4 .. 
Income tax on investment 1.5 2.1 3.3 4.2 5.1 .. 
Tax on houses, land, and other property 3.0 3.2 4.0 7.1 7.9 3.1
House and land registration fees 2.2 2.3 2.9 5.2 5.5 3.2
Total government expenditure 110.9 133.6 163.3 219.7 259.1 .. 
.. Not available. 
a Income tax figure for 2010/11 contains the enterprise inco me tax, remuneration tax, a nd income tax on investment. 
Source:  Ministry of Finance.   
 
Table III.9 
Income tax  
Income tax  Tax rate 
Personal income tax – individual  
Annual income below Nr 160,000 1% 
Annual income between Nr 160,000-260,000  15% + Nr 1,600 
Annual income between Nr 260,000-2,500,000 25% + Nr 16,600 
Annual income above Nr 2,500,000 35% 
Personal income tax –couple   
Annual income below Nr 200,000 1% 
Annual income between Nr 200,000-300,000  15% + Nr 2,000 
Annual income between Nr 300,000-2,500,000 25% + Nr 17,000 
Annual income above Nr 2,500,000 35% 
Other: Individual income derived from special indus try (industries other than liquor and tobacco-based 
industry), or export business 20% 
Corporate income tax:  general 25% 
Corporate income tax:  special  
- Banks, financial institutions, general insurance busin esses, or entities conducting petroleum work   
under Petroleum Act, 2040 30% 
- Entities engaged in an industrial enterprise, or ope rating a road, bridge, tunnel, ropeway, or flying 
bridge  20% 
- Construction business or any trolley bus or tram manufacturing business 20% 
- Entities engaged in power generation, transmission, or distribution 20% 
- Entities wholly engaged in project s building public infrastructure , owning/operating/transferring to 
the Government of Nepal in power generation/transmission/distribution 20% 
Income tax applied to foreigners   
   Personal income tax  25% 
   Repatriated income of a foreign permanent es tablishment of a non-resident person in Nepal 5% 
Table III.9 (cont'd)  Nepal WT/TPR/S/257/Rev.1 
 Page 43 
 
 
Income tax  Tax rate 
Other income tax:   
Export business:   15% 
Dividend tax for companies  5% 
Capital gains tax:  individual in come derived from shipping, air transport, telecommunications, etc., 
residents and non-residents 5% 
Source:  Information provided by the authorities. 
62. Royalties, technical service fees, and management fees are taxed at a concessionary rate of 
15%.  Interest on foreign loans is taxed at a rate of 6%. 
VAT12 
63. Under the Value Added Tax Act 1996, Nepal applies a consumption-based VAT on goods 
and services consumed in Nepal.  Small ve ndors with commercial transaction values below 
Nr 2 million for goods, Nr 1 million for services, and Nr 1 million for mixed business for the previous 12 months do not need to register for VAT, although  they may register voluntarily.  Importers with 
commercial imports of less than Nr 10,000 at a time do not need to register for VAT purposes.  
64. A standard VAT of 13% is applied to most  goods and services, both domestically produced 
and imported.  Some goods and services are exempted (T able AIII.3);  others may be zero rated, i.e. 
exported goods and services, and goods and services im ported by accredited diplomats (Table AIII.4).  
According to the authorities, VAT rates and exempti ons are applied equally to domestically produced 
and imported goods/services.  However, according to  Ministry of Finance online information, if 
batteries used in equipment generating energy fr om solar power are produced and supplied by any 
domestic industry, zero rate VAT is applied to that industry on that transaction on the 
recommendation of Alternative Energy Promotion Centre and in accordance with the procedures 
specified by the Electricity Development Department.  Also, if any machinery, equipment, tools and 
their spare parts, penstock pipes or iron sheets required for hydro-power projects are produced and 
supplied by any domestic industry, zero rate VAT is a pplied to that industry on that transaction, on the 
recommendation of the Alternative Energy Promoti on Centre, and/or the Electricity Development 
Department (Table AIII.4 items 6 and 7).  
(b) Excise duties
13 
65. Under the Excise Act 2001, excise duties are levied on domestically produced goods and 
imported goods, at the same rates (Table AIII.5).  Licences are required to produce, import, sell or 
store excisable goods.  Excise tax is applied to dom estically produced goods based on their ex-factory 
price, and to imported goods based on c.i.f. price.  Currently, excise tax does not apply to services.  
66. The authorities pointed out that Chyang and beer are subject to different excise duty rates 
(Nr 20 per litre for Chyang, and Nr 72 per litre fo r beer), because they are completely different 
products. 
(c) Incentives 
67. In accordance with the Industrial Enterprises Act 1992, most incentives are provided in the 
form of tax exemptions (Chapter IV).  According to the authorities, the purpose of these tax incentives 
                                                      
12 Ministry of Industry and Ministry of Commerce and Supplies (2009), p. 35. 
13 Ministry of Industry and Ministry of Commerce and Supplies (2009), p. 35. WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 44 
  
is to ensure balanced industrial development, both regionally and sector-wise.  According to the 
authorities, data on tax revenue forgone, and on recipients are not available. 
(ii) Special economic zones 
68. Nepal does not have special economic zones (SEZs ).  The Government is preparing a bill on 
SEZs, with the intention of attracting investment a nd promoting exports.  Under the bill, a typical SEZ 
may contain an export processing area (an area devel oped to establish export-oriented industry), a 
special business area (an area developed to collect goods for export, through importation, storage, packaging, and assembling), or a tourism and entertainment area (an area developed to establish 
industry related to tourism and entertainment).  Firms established in SEZs may be exempt from VAT, 
excise tax, customs tariffs, and other taxes.  They may be exempt from income tax for various periods.  
These firms will have to export all goods and servi ces produced, but may be allowed to sell up to 25% 
to the domestic market. 
69. Nepal's 2010 NTIS suggested an amendment to the draft SEZ bill, to remove the 75% export 
requirement for enterprises based in the zone.
14  The SEZ bill is still under preparation, and there has 
been no change in this regard.  Nepal also proposed  six more SEZs in different areas in the country.  
70. According to the authorities, infrastructure cons truction for an SEZ in Bhairahawa is in its 
final phase and construction is to be finished by July 2012.  Land acquisiti on, compound construction, 
and construction of access roads are under way in Simara, while feasibility studies are being conducted in four sites:  Dhanga di, Panchkhal, Jhapa, and Nuwakot.  The Government is encouraging 
the private sector to establish ancillary industries to the export-oriented industries located in the 
export processing zone at Bhairahawa and the propo sed special economic zone at Birgunj.  Nepal also 
plans to use the under-utilized industrial zones of Rajbiraj, Butwal, and Nepalgunj as product-specific 
special economic zones.
15  However, lack of adequate legal provision and disputes in land acquisition 
has caused delays in establishing SEZs.   
(iii) State monopolies, state trading, pri ce controls, and essential commodities  
71. Structural reforms in Nepal commenced in 1985 and unilateral liberalization of the trade and 
investment regime started in 1992, when priva tization of its public enterprises commenced (see 
section below).   
72. Currently, Nepal has four statutory monopolies:  two are fully state owned (Nepal Oil 
Corporation and Nepal Electricity Authority) an d two have majority participation from private 
investors (Salt Trading Corporation and Kathmandu Valley Drinking Water).   
73. Petroleum and petroleum products, and iodine sa lt are the only products under state trading:  
the Nepal Oil Corporation, which is wholly state owned, trades in petroleum and petroleum products;  
and the Salt Trading Corporation, in which the Stat e holds 11%, conducts exclusive trading in iodine 
salt.  All other products may be imported and exported by private-sector companies.  
Correspondingly, only the prices of petroleum products (HS codes 2710, 2711) and iodine salt 
(HS code 2501) are controlled by their state-trading enterprises.  The authorities stated that no other products are subject to price controls in Nepal, although the Government reserves the right to control 
prices of essential items, if it deems necessary. 
                                                      
14 Ministry of Commerce and Supplies (2010a), p. 19. 
15 Ministry of Commerce and Supplies (2010b), p. 17. Nepal WT/TPR/S/257/Rev.1 
 Page 45 
 
 
74. Under the Essential Commodities Control (Authorization) Act 2017 (1961), to "maintain 
comfort of the general people in the society", th e Government may control/regulate the production, 
distribution, or trade of "essential commodities" (Table III.10).   
Table III.10 
Essential commodities  
 Definitions 
1. Paddy, rice, maize (corn), wheat, millet, barley and their flour, maida  or other identical food items 
2. Rahar  (yellow lentil), mugi, mas  (black lentil), gram, pea, soybeans, and flour  made thereof and other identical food items 
3. Linseed, mustard seed, sarisyuml (yellow mustard seed), sesame seed a nd other oilseed and all kinds of oil 
4. Milk or any other food item made from milk 
5. Sugarcane, molasses, sugar or other identical substances 
6. Cotton or wool for clothing 
7. Raw jute and goods prepared from jute 
8. Kerosene, petrol, di esel, air fuel, and LPG 
9. Iron and goods made from iron 
10. Cement, bricks, zinc plate, etc. th at are essential for construction works 
11. Means of transportation and tyres, tubes and parts essential for such means of transportation 
12. Salt 
13. Medicines 
14. Any other goods or commodities as prescribed by the Govern ment of Nepal, from time to time, by a notified order 
Source:  Essential Commodities Control (Authorization) Act 2017 (1961).  
75. The Government may issue licences, control the sale, fix the cost of purchase, or regulate or 
restrict commercial or economic transactions of these essential commodities.  For example, temporary 
export bans have been imposed on rice, paddy, and wheat in view of food shortages, and on mineral 
items such as gravel, boulders, and sand in  view of environment considerations.16  Temporary export 
quotas have also been applied on some essential fo od items, such as pulses and sugar, in view of 
shortages of supply in the domestic market.17  The authorities stated that these temporary export bans 
and quotas have all been removed.   
(iv) Public enterprises (PEs) and privatization 
76. The Government of Nepal began setting up public enterprises for manufacturing, services, 
and utilities in the early 1960s.  Currently, 36 PEs are ope rating with full or majority state ownership.  
Operating income from these PEs contributed 11.2% of  GDP in 2009/10.  In the same year, 22 PEs 
earned net profits, while 14 PEs showed losses (Table III.11).18  In general, public enterprises have 
not achieved the State's economic, social, and poli tical objectives for which they were established.19  
According to the authorities, these objectives in clude:  contributing to economic development, 
smoothing supply, stabilizing prices, providing employment, and ensuring public welfare. 
77. According to the authorities, PEs face problems of "excessive" employees;  the number of 
employees is expected to fall to 30,967 in 2010/11.  While this figure may appear low (less than 7% 
of total government employees), and the share in tota l labour force is negligible, the authorities stated 
that the situation is serious as many employees are redundant. 
                                                      
16 Ojha et al (2010) . 
17 Ojha et al (2010). 
18 Ministry of Finance (2011a).  
19 Ministry of Finance (2010).  Nepal also has another 37 enterprises with minority government share. WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 46 
  
Table III.11  
Performance of public enterprises, 2009/10-2011/12 
Sectors Operating profit (Nr millio n) Number of employees 
Actual 
2009/10 Estimate 
2010/11 Projected 
2011/12 Actual 
2009/10 Estimate 
2010/11 Projected 
2011/12 
Industrial sector       
Dairy Development Corporation  14.8 -0.6 0.5 1,164 1,184 1,223 
Herbs Production and Processing Company  0.4 4.1 3.1 210 210 210 
Hetauda Cement Industries  116.3 54.6 258.6 615 595 561 
Janakpur Cigarette Factory  -510.9 27.3 - 985 947 - 
Nepal Drugs  -80.1 2.7 - 286 - - 
Udayapur Cement Industries  -109.6 -243.6 -47.3 549 548 548 
Nepal Orind Magnesite Pvt.  69.7 -81.3 -80.3 68 67 67 
Total -499.4 -236.8 134.6 3,877 3,551 2,609 
Trading sector       
Agriculture Inputs Company  182.5 178.8 173.0 215 215 215 
National Seeds Company  -6.1 2.0 5.3 73 73 73 
National Trading Corporation  52.1 - - 398 - - 
Nepal Food Corporation  212.4 239.1 255.0 577 577 577 
Nepal Oil Corporation  -928.1 -829.0 1,169.9 791 784 617 
The Timber Corporation of Nepal  217.6 204.8 222.5 363 296 - 
Total -269.6 -204.3 1,825.7 2,417 1,945 1,482 
Service sector       
Industrial District Management  8.6 -5.5 -8.5 196 198 265 
National Construction Company Nepal  2.6 6.1 5.0 103 75 44 
Nepal Transit and Warehouse Company  -3.1 2.9 5.4 115 115 115 
Nepal Engineering Consultancy Service Centre  -3.0 - - 12 12 - 
Nepal Airlines Corporation  287.9 - - 1,426 - - 
National Productivity and Economic 
Development Centre  -6.3 -3.1 -3.6 25 25 24 
Civil Aviation Authority of Nepal  2,061.4 - - 870 - - 
Total 2,348.1 0.4 -1.7 2,747 425 448 
Social sector       
Sanskritik Sansthan  -14.6 -12.8 -14.3 83 79 79 
Gorkhapatra Sansthan  11.0 12.0 2.4 706 - - 
Janak Shilsha Samagri Kendra  -97.3 -37.5 14.5 775 775 766 
Nepal Television  -26.7 15.2 4.9 389 389 - 
Rural Housing Company  3.5 16.4 30.8 84 84 116 
Total -124.1 -6.7 38.3 2,037 1,327 961 
Public utility sector       
Nepal Drinking Water Corporation  13.8 13.3 23.8 1,107 1,098 908 
Nepal Electricity Authority  -5,219.3 -6,923.0 -7,562.7 9,168 9,765 9,770 
Nepal Telecom (Nepal Doorsanchar Company)  12,278.3 15,193.7 15,296.1 5,803 8,104 8,104 
Total 7,072.8 8,284.0 7,757.2 16,078 18,967 18,782 
Financial sector       
Agricultural Development Bank  -1,220.3 180.8 695.0 2,974 3,261 3,250 
National Insurance Corporation (Life and 
nonlife) 608.5 725.9 736.4 234 248 319 
Table III.11 (cont'd)  Nepal WT/TPR/S/257/Rev.1 
 Page 47 
 
 
Sectors Operating profit (Nr millio n) Number of employees 
Actual 
2009/10 Estimate 
2010/11 Projected 
2011/12 Actual 
2009/10 Estimate 
2010/11 Projected 
2011/12 
Nepal Industrial Development Corporation  414.5 448.5 515.7 98 73 73 
Rastriya Banijya Bank  1,298.2 1,495.9 2,155.9 2,884 2,855 2,828 
Deposit and Credit Guarantee Corporation  127.9 41.1 270.8 18 31 31 
Nepal Housing Development Finance Company  21.6 38.1 57.2 18 18 18 
Nepal Stock Exchange  79.9 95.9 105.5 36 36 36 
Citizen Investment Trust 124.3 146.3 184.5 108 120 130 
Total 1,454.6 3,172.5 4,721.0 6,370 6,642 6,685 
Grand total 9,982.4 11,009.1 14,475.1 33,526 32,857 30,967 
Source:  Ministry of Finance (2011a), Annual Performance Review of Public Enterprises 2011 , July.   
78. With a view to increasing productivity, by improving efficiency, reducing the administrative 
and financial burden, and increasing private-sector pa rticipation, the Government began privatization 
of its PEs in 1993.  By the end of FY2008/09, Nepal had disinvested 30 PEs, with a total net value of 
Nr 133.74 billion. 
79. Privatizations were regulated by the Privatiza tion Act 1992 or sectoral legislation such as the 
Telecom Act.  Various methods have been used (T able III.12).  Nepal indicated that it was ready to 
adopt a more transparent mechanism through proper le gislation, although no new legislation has been 
considered.  The Privatization Act 1992 makes no mention of a review and appeal mechanism for 
unsuccessful tenders by investors (national or foreign) .  An unsuccessful participant, in principle, may 
approach the Court of Appeal under the Administration of Justice Act, 1991.  
Table III.12 
Disinvested, dissolved, and liqui dated public enterprises, 1992-2008 
No. Name of the public enterprise Year  privatized Mode of privatization Percentage of 
share sold 
1. Bhrikuti Paper Factory 1992 Assets and business sales - 
2. Harisidhhi Brick and Tile Factor y 1992 Assets and business sales - 
3. Bansbari Leather Shoe Factor y 1992 Assets and business sales - 
4. Nepal Film Development Company 1993 Share sales 51% 
5 Balaju Textile Industr y 1993 Share sales 70% 
6. Raw Hide Collection and Proce ssing Centre 1993 Share sales 100% 
7. Nepal Bitumen and Barrel Industry 1994 Share sales 65% 
8. Nepal Lube Oil 1994 Share sales 40% 
9. Nepal Jute Development and Trading Company 1993 Liquidation - 
10. Tobacco Development Company 1994 Liquidation - 
11. Nepal Metal Factory 1996 Share sales 51% 
12. Raghupati Jute Mills 1996 Share sales 65% 
13. Nepal Bank  1997 Share sales 10% 
14. Agriculture Project Service Centre 2001 Liquidation - 
15. Nepal Tea Development Corporation 2000 Share sales 65% 
16. Biratnagar Jute Millsa 2002 Management contract - 
17. Himal Cement Industry  2002 Liquidation - 
18. Cottage Handicraft Sales Emporium 2002 Liquidation - 
19. Nepal Coal  2002 Liquidation - 
20. Hetauda Textile Industry 2002 Liquidation - 
21. Nepal Transport Corporation 2002 Dissolved - 
22. Butwal Power Company 2003 Share sales 75% 
Table III.12 (cont'd) WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 48 
  
No. Name of the public enterprise Year  privatized Mode of privatization Percentage of 
share sold 
23. Birgunj Sugar Factory  2003 Liquidation - 
24. Agriculture Inputs Factory  2003 Liquidation - 
25. Bhaktapur Brick Factory  2004 Assets and business sales - 
26. Lumbini Sugar Factory 2006 Assets and business sales - 
27. Nepal Rosin and Turpentine Industry 2006 Assets and business sales - 
28. Agriculture Lime Industrya 2006 Liquidation - 
29. Nepal Drilling Company 2006 Liquidation - 
30. Nepal Telecom  2008 Share sales 8.53% 
 
a Dissolved by the Company Registrar. 
Source:  Ministry of Finance (2011a), Annual Performance Review of Public Enterprises 2011 , July. 
80. The Government is trying to privatize all re maining PEs.  There has not been any regular 
monitoring of the privatized enterprises;  it is  reported that some have been closed following 
privatization, while others are operating with  no increase in investment, production, and 
productivity.20  At present, the privatization process is on hold. 
(v) Standards and other technical requirements 
81. The authorities stated that Nepal's standards a nd technical regulations do not create technical 
barriers to trade.  Rather, it is difficult for Nepa lese exports to compete in global markets due to its 
weak standardization and conformity assessment infr astructure.  Nepal lacks an accreditation system 
and sufficient testing facilities.  Its traditional agricu lture exports (such as honey) have been restricted 
in international markets. 
(a) Standards and technical regulations 
82. Standards and technical regulations are regulat ed under the Nepal Standards (Certification 
Mark) Act 1980, and the Nepal Standards (Certific ation Mark) Regulations 1982.  A new bill on 
standards is being prepared, as well as a new bill of Nepal Accreditation Act.  
83. The Nepal Council for Standards (NCS), chaired by the Minister for Industry, is responsible 
for approving Nepal standards w ith regard to products, processes, and services.  Council members 
include the president of the Federation of Nepal ese Chambers of Commerce and Industry (FNCCI), 
and representatives from the Tribhuvan University.  The Council may invite specialists to its 
meetings.  Foreign organizations may participate in  setting standards in Nepal, but not in mandatory 
certification activities. 
84. The Nepal Bureau of Standards and Metrolog y (NBSM), which is the TBT enquiry point, 
prepares drafts of standards and technical regula tions (except for health and food products), and 
oversees all mandatory certification activities.  The prepared preliminary drafts of standards or technical regulations are submitted to relevant  technical committees under the NCS.  Technical 
committees, composed of technical personnel, expert s, and representatives from concerned public and 
private organizations and consumer forums, review , and if necessary, amend the drafts.  Technical 
committees' decisions are circulated to relevant ag encies for comments within 30 days.  A final draft 
incorporating comments from agencies is produced  by the NBSM and sent to the NCS.  The NCS 
reviews and if necessary, amends the draft, and d ecides whether to approve it.  Once approved, the 
                                                      
20 Ministry of Finance (2011a). Nepal WT/TPR/S/257/Rev.1 
 Page 49 
 
 
standard or technical regulation is published:   technical regulations are published in the 
Nepal Gazette , while standards are published in booklet form.    
85. Once a standard is published and implemented,  the Government may make them mandatory, 
upon recommendations from relevant ministries;  these recommendations are made without seeking 
advice from the technical committee.   The new bill on standards is to revise this practice.  The 
existing legislation also allows for different  standards on imported a nd domestically produced 
products, although this has never been  applied in practice.  The new bill is to unify the standards on 
imports and domestically produced goods.   
86. Nepal is a member of the ISO and IEC (Intern ational Electrical Committee).  Nepal tends to 
base its standards on international standards, such as those of the ISO, the British Standard Institute, 
the International Electrical Committee, Indian Standards, and the CODEX (if required).  For 
indigenous products, where international standard s are unavailable, NBSM generally sets standards 
based on national requirements.  NBSM is in th e process of adopting good practices on standards. 
87. Nepal has 867 national standards, of which eight  are technical regulations (i.e. mandatory).  
They cover, inter alia,  steel and bar for concrete reinforcemen t, G.I. wire, CGI sheet, LPG cylinders, 
dry cell batteries, ordinary Portland cement, and so me other cement.  These technical regulations are 
intended to protect public health and consumer safety. 
88. Standards relating to, inter alia , environment, food, and drugs  are developed by relevant 
ministries, and are published in Nepal Gazette .  For example, the Department of Food Technology 
and Quality Control under the Ministry of Agricu lture and Cooperatives prepares standards for food 
products.  
(b) Testing and certification 
89. The NBSM is in charge of a National Certification Mark (NCM) system, a voluntary system 
for products for which technical regulations and st andards exist in Nepal.  Before authorizing a 
company the right to use the certification mark, th e NBSM conducts inspections and testing, and 
examines whether the company meets other requirements, such as having in house laboratory, 
necessary skilled manpower, and quality manuals.  After authorization, the NBSM undertakes 
inspections and testing in the industries and in the market.   
90. The authorities noted that NBSM laboratories carry out testing and calibration services to 
assist standards development and product certifica tion.  They also provide services to regulatory 
bodies, semi-government bodies, the private sector and the general public.  NBSM has 12 laboratories 
covering chemical, microbiological, food, textile, leat her, paper, building materials, electronics, pipe 
testing, mechanical, and calibration services.  It is preparing for ISO 17025 accreditation for some of 
its laboratories to support standardization and produc t certification and thus international trade, as 
well as to protect domestic consumer safety.  
91. In addition, Nepal has laboratories provi ding services in testing chemical, food, 
pharmaceutical, physical, and construction materials.  According to the authoriti es, these laboratories 
need to be accredited.  The NBSM has appl ied for accreditation from the Indian National 
Accreditation Board for Testing and Calibration La boratories for chemical and food laboratories, 
while an application is in preparation for textiles. 
92. Nepal introduced a voluntary management certifi cation system in 2010.  Two companies have 
obtained HACCP (Hazard Analysis and Critical Cont rol Points) certification for their food safety WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 50 
  
management system.  Two companies have obtaine d the QMS (quality management system) ISO9001 
certification.  
93. The authorities stated that Nepal has signed one MOU on an inspection scheme, with China. 
(c) Sanitary and phytosanitary regulations 
94. Nepal has made 14 notifications on its SPS m easures (excluding documents with the "Add" 
symbol (Table III.13)).  All the notifications were made by the Ministry of Agriculture and Cooperatives.   
Table III.13 
Notifications on sanitary and phytosanitary measures, October 2011  
Date of 
notification/symbol 
of document Products covered Objective/rationale Title of notified document/major descriptions 
15/07/2005 
G/SPS/N/NPL/1 All products Plant protection, protect 
people from animal/plant 
pest or disease, protect the 
territory from other damage from pests Compulsory provision for phytosanitary certificate 
Set up plant quarantine checkpoints at the border 
Assigns the Plant Protection Directorate as the "National 
Plant Protection Organization" 
20/03/2006 G/SPS/N/NPL/2 All live birds and 
their products Animal health, protect 
people from animal/plant pest or disease Prohibit the import of live birds and their products, and 
poultry production materials from any country where avian influenza is reported by OIE 
30/11/2006 G/SPS/N/NPL/3 Maize, wheat, 
paneer, cinnamon power, and fortified wheat flour Food safety Quality standards for these food products:  as a 
compulsory provision under food law and regulation;  to 
monitor their export/import; to make available safe and quality food products to consumers 
30/11/2006 G/SPS/N/NPL/4 All plants and plant 
products Plant protection, protect the 
territory from other damage from pests Phytosanitary Operation Manual for Exp/Imp 
Certification;  National Pest Status Record of Nepal, 2005 
28/01/2008 G/SPS/N/NPL/5 All food products Food safety Directives  on Export-Import Inspection and Quality 
Certification System 
04/04/2008 
G/SPS/N/NPL/6 Animal, animal 
products and animal 
production inputs Animal health, protect 
people from animal/plant 
pest or disease Animal Health & livestock Se rvices Act and Regulations 
04/04/2008 
G/SPS/N/NPL/7 Animal, animal 
products and animal 
production inputs Animal health, protect 
people from animal/plant 
pest or disease Animal Slaughterhouse & Meat Inspection Act and 
Regulation 
04/04/2008 G/SPS/N/NPL/8 Animal, animal 
products and animal 
production inputs Animal health, protect 
people from animal/plant 
pest or disease Animal Quarantine Working Procedure 2007 
07/04/2008 
G/SPS/N/NPL/9 Animal, animal 
products and animal 
production inputs Animal health, protect 
people from animal/plant 
pest or disease Quarantine standards for: day old chicks, table egg, 
fingerlings, hatching egg 
07/04/2008 G/SPS/N/NPL/10 Animal, animal 
products and animal 
production inputs Animal health, protect 
people from animal/plant 
pest or disease Notification regarding the establishment of animal 
quarantine check posts 
26/11/2008 G/SPS/N/NPL/11 All plants and plant 
products Plant protection, protect 
territory from other damage 
from pests Plant Protection Act 2007 
27/07/2009 
G/SPS/N/NPL/12 Corn flakes, 
preservatives, heavy 
metals (lead, 
cadmium, mercury, etc.), fennel, green 
tea, luncheon meat, 
and rice Food safety Proposed quality standard  for corn flakes, preservatives, 
heavy metals, fennel, green tea, luncheon meat, and rice 
Table III.13 (cont'd)  Nepal WT/TPR/S/257/Rev.1 
 Page 51 
 
 
Date of 
notification/symbol 
of document Products covered Objective/rationale Title of notified document/major descriptions 
28/04/2010 
G/SPS/N/NPL/13 All plants and plant 
products Plant protection, protect the 
territory from other damages from pests Plant Protection Rule 2010 
16/08/2010 
G/SPS/N/NPL/14 Fortified wheat flour Food safety Proposed ma ndatory quality standard for fortified wheat 
flour 
Source:  WTO documents. 
95. Where applicable, Nepal follows internationa l standards in its SPS requirements.  Nepal 
approved its membership in the International Pl ant Protection Convention (IPPC) on 8 May 2006.  It 
signed the FAO "Plant Protection Agreement for th e Asia and Pacific Region" in 1965, and is a 
member of the Asia Pacific Plant Protection Commission (APPPC), a regional organization adhering to IPPC charters for harmonizing the implementati on of phytosanitary measures.  Nepal is also a 
member of the OIE (World Organization for Animal Health) and the Codex Alimentarius 
Commission, and participated in the Plenipotentia ry Conference in Rotterdam (September 1998) for 
signing the Pesticides and Industrial Chemicals (PIC) Convention. 
96. Nepal's SPS regulations, which reflect internati onal standards, include the Plant Protection 
Act 2007 and the Plant Protection Rule 2010, Contag ious or Infectious Disease Act 1963, Animal 
Health and Livestock Services Act 1998, Food Act 1967, Food Rules 1970, Pesticides Act 1991 and 
Pesticides Rules 1993, Drug Act 1978, Drug Regist ration Regulation 1981, and Directives on 
Export-Import Inspection and Quality Certification System  2006.  
97. The Department of Food Technology and Qua lity Control (DFTQC), under the Ministry of 
Agriculture and Cooperatives, is responsible fo r SPS-related issues for food, plants and plant 
products, animals and animal-related products, and agricultural products.  It is also the enquiry point 
under the WTO SPS Agreement.  Phytosanitary cer tificates issued by the exporting country are 
required for these imports.  Phytosanitary certificates for exports of these products are issued by the 
Ministry of Agriculture and Cooperatives.  Nepal set up 15 check points at the border to examine the 
importation/exportation of these products. 
98. The Department of Drug Administration ( DDA) (under the Ministry of Health and 
Population) is the competent agency for medicine s and health-related products.  The DDA aims to 
maintain, safeguard, and promote the health of people by making the country self-reliant in drug 
production;  to ensure the availability of safe, effect ive, standard quality drugs at an affordable price 
in sufficient quantities to cover the domestic need s;  and to manage effectively all drug-related 
activities.  To achieve these objec tives, DDA has taken measures such as:  providing technical inputs 
in drug production and quality assurance;  lowering custom duties on the importation of raw 
materials, machinery, and analytical instruments to  1% of the invoice value;  and providing foreign 
currency needed for purchasing raw materials a nd machinery.  Currently, Nepal has 44 domestic 
pharmaceutical companies producing about 40% of the national demand for drugs (up from 25 companies and 20% of demand at the time of accession).
21  Import, export, manufacture, sale, 
distribution, and use of medicine is regulated under the Drug Act 1978.  Enforcement of industrial 
property rights in respect of pharmaceuticals is the responsibility of the Department of Industry  (DOI) 
(under the Ministry of Industry). 
                                                      
 21 Association of Pharmaceutical Producers of Ne pal (APPON) online information.  Viewed at:  
http://www.appon.org [18/04/2011]. WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 52 
  
(d) Labelling requirements 
99. Labels must be clearly written. For domesti cally produced goods sold for the domestic 
market, their labels must be in Nepalese.  For imported processed food products, labels must be in 
English. 
(vi) Government procurement  
100. The Public Procurement Monitoring Office (PPM O) estimated that some 60% to 70% of the 
annual national budget goes to public procurement22, accounted for around 13%-15% of GDP.  Nepal 
is not a party or an observer to the WTO Plurilate ral Government Procurement Agreement (GPA).   
101. Nepal issued the Public Procurement Act and its  implementation rule in 2007, aiming to make 
procedures, processes, and decisions relating to publ ic procurement open, transparent, objective, and 
reliable, and to obtain maximum returns for public expenditure.23  The Law also aims at harmonizing 
Nepal's procurement procedures with  international practice, to improve donor community confidence. 
102. The Law applies to the procurement of goods, services, and construction services by, 
inter alia , government bodies (central and local), and pu blic enterprises with full or majority state 
ownership.  There is no threshold, and the Law app lies to procurement of any value.  Procurement is 
carried out by individual government departments or  agencies, or public enterprises, not through a 
central procurement body.  Procurem ent of goods is not reserved for local industry, but priority is 
given to Nepalese products if the price difference with foreign products is not more than 10%.  
Information on the share of government procur ement purchased from foreign suppliers was not 
available to the Secretariat. 
103. Under the public procurement legislation, g overnment procurement must be conducted in a 
transparent manner.  Chapter 13 of the Procuremen t Rules sets out provisions on transparency.  
Documents relating to procurement proceedings must be made available in advance, and the public entity must display a notice on its Notice Board within three working days of concluding a 
procurement contract.  Tender notices must be publis hed in national dailies, and in the case of global 
tender, may also be published in an y international communication media. 
104. A Review Committee was set up for complaints  related to public procurement;  the PPMO 
works as secretariat of the Comm ittee.  Information regarding re views conducted by the Committee 
was not available to the Secretariat.  
105. The PPMO was set up under the Office of the Prime Minister and Council of Ministers to 
monitor procurement activities.  However, a strategi c study in 2010 found that public procurement is 
inadequately monitored because of underfunding and in sufficient and inadequately motivated staff in 
PPMO.
24  In addition, procurement process and met hods have not been defined, a procurement 
reporting system has not been established, an e-proc urement system does not exist, and IT application 
has not been introduced.  These and other problem s lead to poor compliance with to the public 
procurement legislation and unfair competition. 
                                                      
22 PPMO (2010).  
23 PPMO online information.  Viewed at:  http://www.ppmo.gov.np/act_regulation.php?pg_id=2 
[20/04/2011]. 
24 PPMO (2010).  Nepal WT/TPR/S/257/Rev.1 
 Page 53 
 
 
(vii) Competition policy  
106. The Competition Promotion and Market Protection Act 2007, enacted in 2007, and its 
Implementing Regulation, approved in 2010 are intended to make Nepal's economy more open, 
liberal, market-oriented and competitive, through fa ir competition between persons or enterprises 
producing or distributing goods and services.  Nepal also intends to enhance productivity and business 
capacity by encouraging competition.  All busin esses, including public enterprises, are regulated 
under the Law.   
107. The Law prohibits:  anti-competitive agreements , abuse of dominant position, merger or 
amalgamation with intent to control competition, bi d rigging, exclusive dealing, market restriction, 
tied selling, and mislea ding advertisement. 
108. However, the Law does not apply to export bu siness (which is regulated under the Trade 
Promotion Board), and business relating to cottage a nd small industries.  Neither does it apply to the 
following activities, which according to  the authorities, are regulated by relevant ministries such as 
the Ministry of Agriculture, and Ministry of Industry:  agricultural products produced by small 
farmers, and agricultural cooperative business;  proc urement of raw materials;  activities for labours' 
right to collective bargaining;  research and development related activities;  management 
collaboration;  and collaboration made for organizational and pro cedural improvements intended to 
enhance trade capacity. 
109. The Competition Promotion and Market Protec tion Board, established under the Law is 
chaired by the Secretary of the Ministry of Co mmerce and Supplies, and comprises representatives 
from various ministries, including the ministries of Industry, Finance, Law, Justice and Parliamentary Affairs, and Commerce and Supplies.  The Board oversees competition-related issues.  
110. As the competition legislation is still new, the authorities do not have figures related to 
competition policy enforcement.  Market monitoring inspectors have been established in 30 districts 
to apply the legislation, and the Department of Commerce is preparing to establish further inspectors 
in other parts of the country.  
(viii) Intellectual property rights 
111. Nepal's policy objective for intellectual propert y is to provide effective and adequate 
protection for all categories of intellectual property rights in conformity with the TRIPS Agreement.  
The legislation and enforcement arrangement for IPRs  is listed in (Table III.14).  Current legislation 
does not cover layout designs, geographical indications, plant varieties, or undisclosed test or other data.  As an LDC, Nepal is not required to apply the provisions of the TRIPS Agreement (other than 
Articles 3, 4, and 5) until 1 July 2013.
25 
112. Formulation of policy and the necessary regul ations on industrial property is under the 
Ministry of Industry;  the Department of Industr y (DOI) is the implementation and execution agency.  
The Ministry of Industry is preparing comprehensiv e industrial property protection legislation, which 
will cover all categories of industrial property rights;  preparation is at its final stage.   To facilitate the 
implementation of IPR legislation, the Governme nt has established the Trademark Information 
Centre, Industrial Design Information Centre, an d Industrial Patent In formation Centre.  A 
Layout-designs Information Centre will be set up onc e the industrial property legislation is enacted. 
 
                                                      
25 WTO document IP/C/40, 30 November 2005. WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 54 
  
Table III.14 
IPR legislation 
Intellectual property rights 
and legislation Term of protection Competent agency 
Copyright 
Copyright Act 2002  Author's rights:  50 years from the death of the author Copyright Registrar Office, Ministry 
of Culture Work published in volumes:  50 years from the date of first publication of such work or the date on which the work is made public, whichever is earlier 
Cinematographic or audiovisual  works:  50 years from the 
first publication 
Performers:  50 years from the first publication 
Producers of phonograms:  50 years from the first publication 
Producers of film:  50 years from the first publication 
Broadcasting organizations:  50 years from the first publication 
Photographs:  25 years from the year of preparation of such work 
Patents 
Patent, Design, and 
Trademark Act, 1965  7 years, with a possibility of two renewal periods of 7 years 
(maximum 21 years)  Department of Industry (DOI), 
Ministry of Industry 
Trade marks 
Patent, Design, and 
Trademark Act, 1965  7 years, and may be renewed indefinitely for 7-year periods Department of Industry (DOI), 
Ministry of Industry 
Industrial designs 
Patent, Design, and 
Trademark Act, 1965  5 years, may be renewed for two further terms of 5 years 
(maximum 15 years) Department of Industry (DOI), 
Ministry of Industry 
Source:  Copyright Act 2002, and Patent, Designs, and Trademark Act 1965.  
113. The current legislation does not address parallel  imports, and does not provide for compulsory 
licensing of intellectual property rights in general.  In accordance with the TRIPS Agreement, Nepal 
may issue compulsory licensing in case of public h ealth emergencies.  The comprehensive industrial 
property protection legislation, which is being prep ared, is expected to address the General Council 
Decision on the implementation of paragraph 6 of the Doha Declar ation on the TRIPS Agreement and 
Public Health. 
114. Fees for the registration and renewal of intell ectual property rights are the same for foreign 
and domestic applications (Table III.15).  
Table III.15 
Registration and renewal fees, 2011  
(Rupees) 
 Particulars of fees Patent Design  Trade mark  
1. Application 2,000 1,000 1,000 
2. Application amendment 500 500 500 
3. Registration 10,000 7,000 5,000 
4. Transfer of ownership 5,000 3,000 2,000 
5. Changes in record 2,000 1,000 1,000 
6. Search of registration 750 750 500 
7. Complain and oppositio n 1,000 1,000 1,000 
8. Copy of registration certificate 1,000 500 500 
9. Renewal (annual rate) 
a. For the first term 
b. For the second term n.a. 
5,000 
7,500 n.a. 
1,000 
2,000 500 
n.a. Not applicable. 
Source:  Department of Industry online inform ation.  Viewed at:  www.doind.gov.np.  Nepal WT/TPR/S/257/Rev.1 
 Page 55 
 
 
(a) Copyright 
115. In accordance with the Copyright Act 2002 and the Copyright Regulations 2004, registration 
is not required for copyright protection.  Terms of  protection for various copy rights are listed in 
Table III.14.  The Copyright Registrar Office is th e authorized agency for royalty collection, and 
administration of royalty collection societies.  Copyrights may be registered with the Copyright Registrar Office.   
116. Punishment for copyright infringement may take the form of a fine of Nr 10,000-100,000, 
imprisonment for a maximum of 6 months, or both.  For repeat infringement, the fine is raised to 
Nr 20,000-200,000, and imprisonment to a maximu m of one year.  Persons importing unauthorized 
copies of any work are punished with a fine of Nr 10,000-100,000, and the unauthorized copies are 
seized.  For any other copyright infringement, punishment  is a fine of Nr 5,000-50,000.  In all cases, 
compensation must be provided to the right holder. 
117. Copyright protection is a relatively new concept in  Nepal, and there is a lack of knowledge in 
both the public (including copyright owners), a nd the administrators such as the police.  The 
Government intends to promote copyri ght protection through more campaigns. 
(b) Trade marks, including service marks 
118. Application to register a trade mark must be ma de to the Department of Industry (DOI);  the 
DOI registers the trade mark in the name of the applicant and issues a trade mark certificate.  
Registration is denied if the trade mark filed for th e registration is considered to harm the prestige of 
any individual or institution, or adversely affect public conduct or morality, or  undermine the national 
interest, or the reputation of the trade mark of any other person, or if the proposed trade mark is found 
to have already been registered to another person. 
119. Trade marks are for products, while service ma rks are for companies.  Trade marks and 
service marks are registered and protected for seven years, renewable for an indefinite number of 
seven-year periods. 
120. At end 2009/10, a total of 28,333 trade marks had been registered in Nepal, of which, 
6,971 were from foreign companies.  
(c) Industrial designs 
121. Application to protect the design of any article is made to the Department of Industry (DOI), 
which will register the design in the name of the ap plicant and issue a certificate.  Registration is 
denied if the design harms the prestige of any indi vidual or institution, or adversely affects public 
conduct or morality, or undermines the national interest, or in case such design had already been registered in the name of any other person.  Regi stration of industrial designs is for five years, 
renewable for two more terms of five years.   
122. According to the authorities, 73 industrial d esigns have been registered in Nepal. 
(d) Patents 
123. Applications for exclusive rights over an invention  are registered in the Department of 
Industry (DOI).  The DOI conducts investigations to assess whether the subject matter mentioned in 
the application is an invention, and decides whether to  register the patent.  Patents are available for all 
kinds of products and processes without discrimination as to the technological field.  Patent rights are WT/TPR/S/257/Rev.1 Trade Policy Review 
Page 56 
  
protected for seven years with a possibility of two re newal periods of seven years.  The patent holder 
has the exclusive right to transfer or licence a patent and to request the third person to stop 
infringement, and may claim compensation in case of infringement.   
124. The current legislation does not include provisions for the protection of prior user rights nor 
for compulsory licensing. 
125. In 2010, one patent was granted by the Patent Office;  69 patents have been registered in 
Nepal. 
(e) International agreements 
126. Nepal had been a member of the World Intellectual Property Organization (WIPO) since 
4 February 1997.  It signed the Paris Convention on 22 June 2001, and the Berne Convention on 
11 January 2006.  Nepal plans to join the Rome Conve ntion, although the procedure has been delayed.  
Nepal is in the process of joining the Madrid Ag reement and Protocol, and the Lisbon Agreement and 
Protocol.    
(f) Enforcement 
127. Enforcement of IPR protection at the border is the responsibility of Customs.   Under  
Section 68 of the Customs Act 2007, Customs may onl y act following a complaint.  According to the 
authorities, there have been no cases of customs actions in IPR enforcement at the border.