This update aims to inform about the key developments in Nepal’s industrial regulatory framework that may affect the industrial compliance obligations.
1. Background on Industry Registration
Under the Industrial Enterprises Act, 2038 (1981), all industries in Nepal, regardless of their capital structure, were required to register with the Department of Industry (DOI). For reference, a sample of such a registration certificate is provided below.
This centralized system remained in place until the enactment of the Industrial Enterprises Act, 2049 (1992), which introduced a new classification of industries based on fixed capital investment.
2. Current Legal Framework and Classification
At present, the regulatory landscape is governed by:
- Industrial Enterprises Act, 2076 (2020)
- Industrial Enterprises Regulations, 2078 (2021)
These laws define industry categories and assign oversight as follows:
| Category | Fixed Capital | Regulatory Authority |
|---|---|---|
| Cottage and Small | Up to NPR 150 million | Department of Cottage and Small Industries (DOCSI) |
| Medium | NPR 150 million – NPR 500 million | Department of Industry (DOI) |
| Large | Above NPR 500 million | Department of Industry (DOI) |
3. New Compliance Requirements
Under the current framework, all industries are now required to:
- Submit annual reports within six (6) months of end of each fiscal year to their respective authority, and
- Obtain an Industry Update Letter confirming their operational status.
- This requirement is mandatory, regardless of when and where the industry was originally registered.
4. Recent Implementation
From the latest fiscal year, the DOI and DOCSI have actively begun accepting annual reports and issuing either:
- An Updated Industrial Registration Certificate, or
- An Industry Update Letter, depending on the case.
This reflects the full implementation of the update process outlined in the Industrial Enterprises Act, 2076 (2020) and Regulations, 2078 (2021).
5. Why is immediate action required?
Failure to comply with the new requirements may result in fines as set out in the Industrial Enterprises Act, 2076 (2020). To avoid such risks, we strongly advise that industries—especially those previously registered with the DOI—submit the necessary documents and apply for the Industry Update Letter without delay.
Please note that while this step is not to guarantee the immediate issuance of the Updated Industry Registration Certificate or Industry Update Letter; or to waive any fines already accrued, it is a proactive measure that can help avoid further fines for non-compliance under the current framework.
If you need any assistance with preparing the documents or determining your correct industry classification, our team is available to guide you through the process.