1. General Overview:
    • Government target to uplift from least developed country to developing country by 2022.
    • Industrialization begins in Nepal from 1936 by the establishment of Biratnagar Jute mills, Morang Cotton Mill (1941), Morang Sugar Factory ( 1946), Raghupati Jute Mill (1946) Juddha Match Factory ( 1946).
    • After the establishment of democracy in 1950 (2007 BS), the pace of industrialization is found to be accelerated.
    • After restoration of Democracy in 1990 (2046/2047 BS) and adoption of modern liberalization policy the pace of industrialization is found to be accelerated significantly.
    • As per the data 2013/14 the total number of industries in Nepal reached to 5,931 with employment to 4,94,407 person.

  2. Structure of Nepalese Industrial Sector:

    1. Classification on the basis of nature of output
      • Agro and forest based industries
      • Manufacturing industries
      • Export oriented industries
      • Energy based industries
      • Mineral industries
      • Tourism industries
      • Construction industries
      • Information and communication industries
      • Service industries
    2. Classification on the basis of size and investment:
      • Micro-enterprises (fixed assets from0.2 million to 2 millions)
      • Cottage industries
      • Small industries : fixed assets upto 50 millions
      • Medium industries : fixed assets more than 50 millions upto 150 millions
      • Large industries: more than 150 millions

  3. Performance:

    1. Capital investment: The amount of capital investment is one indicator of the performance of industries:
      • Energy sector: 60.2%
      • Production oriented sector :17.9%
      • Service sector :8.6% (2013/14 data)
    2. Employment Generation:
      • Production oriented sector (278,062 person)
      • Services sector: 102,305
      • Tourism sector : 47,206

    The total employment generated in 2013/14 is 14,501.Out of which tourism sector contribute highest 29.79%, production oriented 23.62% and service sector 22.40%.

    c. Foreign Investment
      • Total foreign investment reached 17,888.65 million in 2013/14.
      • 3172 industries generating 201720
      • services 32.28%
      • Production oriented 28.50%
      • Tourism 27.55% (2013/14 )
      • 305 industries obtain license in 2013/14 which is less by 3.78 % preceding year.

         d. Capacity Utilization:

    • Average capacity utilization by industries is 51.3%. (2013/14)
    • Tea industries 93.4% (highest )
    • Rice 13.4 % (lowest) (due to floods)
    • Issuance so industrial loan increased by 12.4%

          e. Contribution to GDP:

    • Contribution is decreasing
    • 16.08 % in 2006/007
    • 14.46% in 2013/14 (lack of investment climate ,political condition and energy crisis)

           f. Growth rate:

      • Average growth rate from 2005/06 to 2013/14 is 3.29%.
      • Growth rate of 2013/14 is 6.19%

4. Problems of Industrial Sector in Nepal

  1. Political instability
  2. Government policy and regulation
  3. Lack of energy
  4. Lack of security
  5. Quality of product
  6. Weak technology
  7. Low capacity utilization
  8. Lack of physical infrastructure
  9. Labour regulation and labour unions