(1) The industry has been in operation for a minimum of five years from the date of commencement of its commercial production or business and has been operating at a capacity of thirty percent or less than the connected capacity of the industry for the last three consecutive years, not due to intentional or managerial weakness, and continuously operating at a loss during those three years. The existing industry can be recognized as a sick industry by adopting the prescribed procedure on the basis of the prescribed criteria.
(2) According to sub-section (1) the industry which is closed due to illness can resume operations if certain discounts, facilities or concessions are provided as prescribed on the basis that before the illness, it has contributed to earning foreign currency by creating jobs or import substitution or promotion of exports. If found, the Government of Nepal can make necessary arrangements for the revival, reconstruction and management of such industries as specified.