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Introduction of Industry
Industry refers to the economic activities involved in the production of goods and services within a particular sector of the economy. It includes the transformation of raw materials into finished products or the provision of services to meet the needs and demands of society.
The activities undertaken in an industry typically aim at creating value by manufacturing products, generating income, and contributing to the overall economic development of a country.
Industries can be broadly categorized into various types based on the nature of their output and the processes involved. These categories include primary industries (which involve the extraction of raw materials), secondary industries (which focus on manufacturing and processing), and tertiary industries (which provide services rather than goods).
The industrial sector plays an important role in reducing the trade deficit by transforming Nepal's import-dependent economy into a production and export-oriented economy.
This sector has helped in the utilization of local resources and technology, availability of goods and services, and employment creation.
In the fiscal year 2079/80 (2022/23), the contribution of the industrial sector to Nepal's total gross domestic product reached 5.42%.
Types of Industry:
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Primary Industry: Includes the extraction and collection of natural resources, such as agriculture, mining, fishing, and forestry.
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Secondary Industry: Includes the transformation of raw materials into finished products. Examples include manufacturing, construction, and energy production.
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Tertiary Industry: Includes the provision of services rather than the production of goods. This includes sectors like retail, banking, education, healthcare, and tourism.
Classification of Industry in Nepal
The Government of Nepal has implemented the Industrial Business Act, 2076 (2019) with the objective of providing impetus to the industrial sector. According to this Act, the industries of Nepal have been classified as follows:
(a) Micro Industry: An industry is called a micro industry if it has a fixed capital of up to five million rupees excluding land and buildings, the entrepreneur is directly involved in the operation and management of the industry, it employs a maximum of nine workers including the entrepreneur, its annual turnover is less than fifteen million rupees, and if it uses an engine, equipment, or machinery, the electrical power of the engine, equipment, or machinery used is up to 10 kilowatts or less. Industries that need to obtain approval/permission from the Industry and Investment Promotion Board before registration are not included under micro industries.
(b) Cottage Industry: Industries based on traditional skills and technology, labor-intensive and focused on skills or local raw materials and local technology, art, and culture, and if they use an engine, equipment, or machinery, the electrical power used is up to 10 kilowatts fall under cottage industries.
(c) Small Industry: Industries with fixed capital up to ten crore rupees, excluding micro and cottage industries, are called small industries.
(d) Medium Industry: Industries with fixed capital of more than ten crore rupees and up to twenty-five crore rupees are called medium industries.
(e) Large Industry: Industries with fixed capital of more than twenty-five crore rupees are called large industries.
The industries mentioned above have been classified based on the nature of the goods or services produced by these industries as follows:
(a) Energy-Based Industry: Industries involved in the business of producing energy are energy-based industries. This includes industries that generate energy from water resources, wind, solar power, coal, natural oil and gas, biogas, or other sources, and industries that manufacture machinery/equipment used to generate such energy. Currently, there are 283 such licensed industries in operation.
(b) Manufacturing Industry: Industries that produce goods by using or processing raw materials, auxiliary raw materials, or semi-processed raw materials are called manufacturing industries.
(c) Agriculture and Forest Product Based Industry: Industries that produce any goods from raw materials based on agriculture or forest products, or industries related to agriculture or forest products,
(d) Mineral Industry: Industries that extract or process minerals to produce any metal or non-metallic mineral products fall under mineral industries.
(e) Construction Industry: Industries that construct and operate physical infrastructure fall under construction industries.
(f) Tourism Industry: Industries related to tourism services are called tourism industries.
(g) Information, Broadcasting and Communication Technology Based Industry: This includes industries that provide information, communication, or information technology services by using technology for information collection, processing, and dissemination.
(h) Service Industry: This includes industries that produce or provide services.
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