- 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.
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Structure of Nepalese Industrial Sector:
- 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
- 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
- Classification on the basis of nature of output
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Performance:
- 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)
- 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.
- Capital investment: The amount of capital investment is one indicator of the performance of industries:
d. Capacity Utilization:
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- 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:
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- 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:
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- Average growth rate from 2005/06 to 2013/14 is 3.29%.
- Growth rate of 2013/14 is 6.19%
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4. Problems of Industrial Sector in Nepal
- Political instability
- Government policy and regulation
- Lack of energy
- Lack of security
- Quality of product
- Weak technology
- Low capacity utilization
- Lack of physical infrastructure
- Labour regulation and labour unions