Industrial Enterprises Act, 2020

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Classification of Industry and Fixed Capital

17. Classification of Industry: (1) For the purposes of this Act, industries are classified as follows:-

(a) Micro Enterprise: An industry, other than an industry requiring permission under Section 8, having the following conditions shall be deemed a Micro Enterprise:-
 (1) Having a fixed capital of up to a maximum of twenty lakh rupees, excluding land and buildings,
 (2) The entrepreneur himself/herself is involved in the operation and management of the industry,
 (3) Having up to a maximum of nine workers including the entrepreneur,
 (4) Annual turnover is less than one crore rupees,
 (5) If engines, equipment, or machines are used, the capacity of the electric energy, fuel, or other oil consumed in the engine, equipment, or machine is twenty kilowatts or less.

(b) Cottage Industry: An industry having the following conditions shall be deemed a Cottage Industry:-
 (1) Based on traditional skills and technology,
 (2) Labor-intensive and based on specific skills or local raw materials and local technology, art, and culture,
 (3) If engines, equipment, or machines are used, using electric energy of a capacity up to a maximum of fifty kilowatts,
 (4) Industries as listed in Schedule 2.

(c) Small Industry: An industry, excluding Micro Enterprise and Cottage Industry, with a fixed capital of up to fifteen crore rupees.

(d) Medium Industry: An industry with a fixed capital exceeding fifteen crore rupees and up to fifty crore rupees.

(e) Large Industry: An industry with a fixed capital exceeding fifty crore rupees.

(2) The industries mentioned in sub-section (1) are further classified based on the nature of goods or services produced by such industries as follows:-

(a) Energy-based Industry: Industries listed in Schedule 3 engaged in the business of generating energy.
(b) Manufacturing Industry: Industries that produce goods by using or processing raw materials, auxiliary raw materials, or semi-processed raw materials.
(c) Agriculture and Forestry-based Industry: Industries listed in Schedule 4 relating to producing goods from raw materials based on agriculture or forest produce or related to agriculture or forest produce.
(d) Mineral Industry: Industries producing metals or non-metal minerals by mining or processing minerals.
(e) Infrastructure Industry: Industries listed in Schedule 5 that construct and operate physical infrastructure.
(f) Tourism Industry: Industries listed in Schedule 6 relating to tourism services.
(g) Information Technology, Communication Technology, and Broadcasting Technology-based Industry: Industries listed in Schedule 7 that provide information, communication, or broadcasting technology services by using technology for collection, processing, and transmission of information.
(h) Service-based Industry: Industries listed in Schedule 8 that produce or provide services.

(3) If capital expansion, capacity expansion, addition, change, or modification of objectives of an industry occurs as per Section 12, such industry shall be deemed automatically classified into the class it falls under as per sub-section (1).

(4) Notwithstanding anything contained elsewhere in this Section, the Government of Nepal may, upon the recommendation of the Board, by publishing a notice in the Nepal Gazette, include any industry in the classification of industries or make arrangements for an industry included in one class to remain in another appropriate class.

(5) If cooperative societies registered under the prevailing law, of the type as prescribed, wish to register an industry to be owned by such society, the industry may be registered under this Act.

(6) If industries registered before the commencement of this Act wish to be classified under this Act, the Industry Registration Body may update the classification by completing the procedure as prescribed.

(7) The Government of Nepal may, by publishing a notice in the Nepal Gazette, make necessary modifications to the classification under sub-section (1) or (2).