Amendment to Industrial Enterprises Act 2076 (2020)

The Ministry of Industry' Commerce and Supplies ("MoICS") has amended Schedule 8 of Industrial Enterprises Act 2076 (2020) ("IEA") by publishing a notice in the National Gazette dated March 22, 2021 ("Notice"). According to the Notice, following categories of industries have been excluded from Schedule 8 of IEA which lists service-based industries:

• e-commerce

• wholesale and retail industries

• mobile food stalls

The amendment was made by the MoICS exercising its power under section 65 of IEA.

The Notice has a significant implication from the foreign investment law perspective. Foreign Investment and Transfer of Technology Act 2075 (2019) ("FITTA") - the primary legislation governing foreign investment in Nepal, allows investment only in industries established in accordance with the law relating to industrial enterprises, i.e., IEA. Pursuant to the amendment, foreign investment may not be allowed in e-commerce, wholesale and retail industries and mobile food stalls as they are excluded from the definition of 'industry'.