The government has paved the legal way for the private sector to build and operate industrial zones.
These facilities, operated by the private sector, will enjoy the same benefits as government-run industrial zones, as per the Industrial Zone Declaration and Operation Work Procedure, 2025 approved last week. The work procedure was approved following a minister-level decision.
The new legal arrangement is expected to complement the government’s ‘One Local Unit, One Industrial Zone’ program announced in 2018. Although 120 out of 753 local units had announced plans to build industrial zones under the program, only three–Mellekh of Achham, Anbukhaireni of Tanahun and Madane of Gulmi– have operational industrial zones at present.
Since the government’s vision of building at least one industrial zone in each local unit has failed to materialize due to lack of interest from local governments, the government is now bringing the private sector on board.
According to industry ministry officials, the new work procedure allows private investors to acquire land, and develop, construct, operate and manage industrial zones in coordination with local governments.
Private companies interested to invest in industrial zones must apply to the concerned local governments with documents such as a pre-feasibility study report, land ownership documents, survey report, and a commitment letter to operate the industrial zone for at least 20 years.
If the local government deems the proposal feasible, it will recommend that the ministry declare the area as an industrial zone. The ministry will then submit the proposal to the cabinet for approval under Section 55 of the Industrial Enterprises Act.
The private sector can also build industrial zones through partnerships with local governments. Firms may develop zones by entering into land-leasing agreements with local governments or forming partnerships with local governments. The work procedure also permits local governments to hire private entities to manage industrial zones built by them.
These zones should be spread over at least 25 ropanis of land in mountainous districts, 35 ropanis in hilly districts, and seven bighas in Tarai districts. Sites selected for industrial zones should be at least 500 meters away from human settlements, should have access roads with 10-meter width, and an 11 kVA electricity supply. Only micro, cottage, and small industries are eligible to operate in these zones, with priority given to enterprises run by women, youth (below 30), or foreign returnees.
