(1) For the purpose of this Act, the industries are classified as follows:-
(a) Micro Enterprises: An industry having the following conditions shall be considered as a micro enterprise:-
(1) Having a fixed capital of up to five lakh rupees, excluding real estate,
(2) The entrepreneur himself is involved in the operation and management of the industry,
(3) Having a maximum of nine workers including the entrepreneur,
(4) The annual turnover is less than fifty lakh rupees, and
(5) If an engine, equipment or machine is used, the electrical energy, fuel or other oil consumed in the engine, equipment or machine is of twenty kilowatts or less. However, regardless of what is written in sub-section (1) to (5), the industry that requires approval as per Schedule-1 shall not be considered as a small scale enterprise.
(b) Cottage Industry: An industry having the following conditions shall be considered a cottage industry:-
(1) Based on traditional skills and techniques,
(2) Labor-intensive and based on special skills or local raw materials and local technology, art and culture (3) If an engine, equipment or machine is used, electric energy of a maximum capacity of ten kilowatts is used, and
(4) Industries mentioned in schedule-2.
(c) Small scale industries: Industries with fixed capital up to ten crore rupees excluding small scale enterprises and cottage industries,
(d) Medium Industries: Industries having fixed capital exceeding Rs.10 crores up to Rs.25 crores,
(e) Large Industries: Industries having a fixed capital of more than twenty five crore rupees.
(2) The industries mentioned in sub-section (1) shall be classified as follows on the basis of the nature of goods or services produced by such industries:-
(a) Energy-generating industry: The industries mentioned in schedule-3 involved in the business of producing energy.
(b) Manufacturing industries: Industries that produce goods by using or processing raw materials, auxiliary raw materials or semi-processed raw materials.
(c) Industries based on agriculture and forest produce: Manufacturing any product from raw materials based on agriculture or forest produce or related to agriculture or forest produce.The industries mentioned in Schedule-4.
(d) Mineral Industry: Industries that produce any metal or non-metal mineral by extracting or processing minerals.
(E) Construction Industry: The industries mentioned in Schedule-5 that operate by building physical infrastructure.
(f) Tourism Industry: Industries mentioned in Schedule-6 related to tourism services.
(G) Industries based on information, broadcasting and communication technology: Industries mentioned in Schedule-7 that provide information, communication or information technology services using technology for information collection, processing and broadcasting.
(h) Service industries: Industries mentioned in Schedule-8 that produce or provide services (3) If an industry wants to change or modify its fixed capital as mentioned in sub-section (1), it may submit an application to the industry registration body as prescribed.
(4) If an application is received according to sub-section (1), the industry registration body may change or modify the fixed capital of such industry.
(5) If the fixed capital of an industry is changed or modified according to sub-section (4), such industry shall be considered to be classified in the same category as per sub-section (1) according to the change or modification of the fixed capital.
(6) Notwithstanding anything else written in this section, upon the recommendation of the Board, the Government of Nepal may include any industry in the classification of industries by publishing a notice in the Nepal Gazette.