Industries will no longer be required to conduct Environmental Impact Assessment (EIA) and Initial Environmental Examination (IEE) in order to increase capital. Previously, under the existing Industrial Enterprises Act, 2076 (2020), any industry had to mandatorily carry out EIA and IEE when raising capital.

Since the EIA and IE are done before an industry comes into operation, the private sector had been suggesting to the government to remove this provision for a long time stating that the obligation to repeat these assessments during capital expansion has been seen as an additional cumbersome process.

An ordinance introduced by the government to amend certain Nepal laws related to improving the economic and business environment and enhancing investment has made such provisions at a time when many industries, despite their desire, are reluctant to increase capital due to the additional burden of EIA and IEE requirements.

By amending this act, the government has also included a provision that if the government has to transfer from one province to another, the approval of the Department of Industry is not required.

The Industrial Business Act mentioned that EIA and IEE are required in case of capital increase, capacity increase, purpose addition, change, relocation or relocation of the industry.

The EIA and IEE typically take between six months to one year. The private sector has been advocating for the removal of the mandatory requirement to conduct EIA and IEE repeatedly for capital increase, arguing that it causes delays and prevents the initiation of other projects, leading to various issues.