Wine:
Wine is an alcoholic beverage made by fermenting the juice of grapes. The fermentation process converts the natural sugars in the grapes into alcohol. Wine can be classified into various types, such as:
- Red wine – made from dark-colored grape varieties
- White wine – made from green or yellowish grapes (or from red grapes with the skins removed)
- Rosé – partially fermented with grape skins for a pink color
- Sparkling wine – contains carbon dioxide, such as champagne
Legal definition (general):
Wine is a fermented alcoholic drink produced from the natural fermentation of grape juice with or without the addition of permitted substances.
Cider:
Cider is an alcoholic beverage made from the fermented juice of apples. Like wine, it undergoes fermentation, where the natural sugars in apples are converted into alcohol. It can range from sweet to dry and may be still or sparkling.
- Hard cider – refers to alcoholic cider (especially in the U.S.)
- Sweet cider – may refer to non-alcoholic apple juice (especially in North America)
Legal definition (general):
Cider is an alcoholic beverage obtained from the fermentation of apple juice, with or without the addition of sugar or other permitted ingredients.
Nepalese laws for wine production
Nepal’s wine production industry is regulated by several key laws and regulations. The primary legislation governing alcohol production is the Liquor Act 2031 (1974), which provides the framework for manufacturing, distribution, and sale of alcoholic beverages. Additionally, the Food Act 2023 (1966) and its subsequent amendments ensure quality control and safety standards for all food and beverage products, including wine.
| Laws/Purpose | Purpose |
| Liquor Act 2031 | Governs alcohol production and distribution |
| Food Act 2023 | Ensure quality and safety measures |
| Industrial Enterprises Act 2076 | Regulated industrial operations |
Licensing bodies and authorities
- To establish a wine factory in Nepal, you’ll need to interact with several government bodies:
- Department of Industry (DOI)
- Office of Company Registrar
- Inland Revenue Department
- Department of Food Technology and Quality Control (DFTQC)
- Local Municipality Office
Documentation needed for production of wine and Cider in Nepal
- Citizenship certificate or Passport
- Company Registration Certificate
- PAN( Permanent account number ) Certificate
- VAT ( Value added tax) Certificate
- Environment Impact Assessment ( EIA) certificate
- Land ownership or lease agreement
- Business plan and feasibility study report
- No objection Certificate ( NOC) from local authorities
Process of obtaining a wine production license in Nepal
Step 1: Register your company at the Department of Industry.
Step 2: Acquire land and obtain a building permit for the production unit.
Step 3: Submit an application with business plan and technical layout.
Step 4: Conduct Environmental Impact Assessment (EIA) if required.
Step 5: Apply for and obtain the Wine Production License from the Department of Industry.
Standards for Establishing Wine and Cider Production Industries
Special Provisions Regarding Granting Permission to Establish Wine and Cider Production Industries:
(a)To establish an industry for the production of wine and cider, the applicant must deposit a security amount of NPR 100,000 (One lakh).
However, if the industry intends to use at least 50% of self-produced raw materials (including medicinal herbs and fruits), the required security deposit shall be NPR 50,000 (Fifty thousand).
This security deposit shall be refunded only after the industry begins commercial production as per the obtained license.
If the industry fails to operate in accordance with the terms and conditions of the license or the approved standards, the deposited security may be forfeited.
(b)If an already established wine and cider production industry applies for expansion of objectives or increase in production capacity, it must deposit NPR 50,000 (Fifty thousand) as a security deposit along with the application.
This security deposit shall only be refunded after the license is granted and the industry submits proof of commencing commercial production in line with the permitted increase in capacity.
(c)The person holding the license must retain at least 20% of the shares in their name until the industry begins commercial production.
(d)For a wine and cider industry that has received permission, the construction of the industry must be completed and commercial production must commence within 2 (two) years from the date of obtaining the license.
However, for industries that use at least 50% of self-produced raw materials (including medicinal herbs and fruits), the industry must be constructed and commercial production must begin within 4 (four) years from the date of obtaining the license.
If an application is submitted with reasonable justification by the license holder or institution, the deadline may be extended up to 4 times, each extension being 6 months.
Permitted and restricted areas for establishing wine and cider industries based on raw materials (including herbs and fruits):
(a)As per the decision of the 132nd meeting of the Industrial Promotion Board, new distillery and brewery industries cannot be established within Kathmandu Valley and other municipalities.
However, in the case of wine and cider production industries, permission may be granted for their establishment in municipalities outside the metropolitan cities, sub-metropolitan cities, and municipalities within Kathmandu Valley, and outside other sub-metropolitan cities as well.
(b)According to the decision of the 176th meeting of the Industrial Promotion Board, medium and large-scale industries are to be established only at a minimum distance of 5 kilometers from international borders.
This provision shall also apply to wine and cider production industries.
(c)As per the decision of the 190th meeting of the Industrial Promotion Board, within the Lumbini Protected Area, the establishment of wine and cider industries is prohibited within an aerial distance of 15 kilometers from the southern boundary of the protected area (towards the Indian border), and similarly from the eastern, western, and northern sides of the boundary.
(d)Wine and cider production industries must be established at a minimum distance of 500 meters from:
- Sites of historical and religious significance (temples, monasteries),
- National parks, and
- Areas where the Government of Nepal has prohibited the establishment of such industries.
In addition, such industries must be located at least:
- 100 meters away from operating community hospitals and
- Community school areas.
Regarding Approval of Environmental Assessment Report and Industry Registration:
(a)For the purpose of industry registration, it is mandatory to publish a 15-day public notice in a national daily newspaper in accordance with the provisions specified in the Environment Protection Regulation, 2077 B.S.
In addition to the public notice, the following documents must also be submitted:
- Evidence of notice pasted publicly (mulyanka/muchulka),
- Acknowledgement of approval or no objection from local residents/neighbors (neighbors’ consent),
- Recommendation letter from the concerned Rural Municipality/Municipality, and
- The IEE (Initial Environmental Examination)/EIA (Environmental Impact Assessment) report must be approved by the concerned authority.
(b)Before operating the industry, a field inspection must be conducted (or arranged) by the concerned department to verify whether the Mitigation Measures mentioned in the IEE/EIA report have been implemented or not.
Physical Infrastructure and Technical Requirements:
(a)For establishing a wine and cider production industry, the minimum land area must be 1,500 square meters.
(b)If the industry intends to use at least 50% self-produced raw materials (including herbs and fruits), it must arrange for a minimum land area of 5,000 square meters.
(c)The factory building must be made of permanent construction (at least with solid walls and a secure roof). The factory premises must also be enclosed with a compound wall.
(d)The tanks and pipelines used in the industry must be made of stainless steel. However, wooden vats may also be used.
If plastic pipelines or fittings are used, they must be food grade only.
(e)There must be a Clean-in-Place (CIP) facility and a laboratory in place.
(f)The industry must employ at least one professional, such as an Alcohol Technologist, Food Technologist, or Microbiologist for production purposes.
(g)The alcohol content in wine and cider must be less than 15%.
(h)Before production begins, the industry must fully comply with the criteria prescribed or to be prescribed by the Department of Food Technology and Quality Control.
(i)Excise duty invoices (bills) must be issued only through the software program specified or provided by the Inland Revenue Department.
The software and computer system used by the producer or seller for invoice generation must allow the Inland Revenue Department continuous online access through online connectivity.
Monitoring:
(a)A Joint Monitoring Team shall be formed by the concerned department.
In the case of industries registered under the Department of Industry, the monitoring team shall consist of:
- Coordinator: A Director designated by the Director General of the Department of Industry
- Member: A representative from the Inland Revenue Department or another member designated by the concerned department
- Member Secretary: An authorized officer designated by the Director General of the Department of Industry
In the case of industries registered under the Cottage and Small Industries Department, the monitoring team shall consist of:
- Coordinator: A Director designated by the Director General of the Cottage and Small Industries Department
- Member: A representative from the Inland Revenue Department or another member designated by the concerned department
- Member: A representative from the concerned Cottage and Small Industry Office
- Member Secretary: An authorized officer designated by the Director General of the Cottage and Small Industries Department
(b)The monitoring team mentioned in clause (1) shall also monitor the following matters:
- Whether the standards, license conditions, and industry registration certificate requirements have been fulfilled or not
- Whether production has exceeded the approved capacity
- Matters related to revenue income, raw material consumption, recovery rate, etc.
- Other issues as specified by the concerned department
(c)The monitoring team shall submit its report to the concerned departments after the monitoring is completed.
License Cancellation and Penalties:
(a)If it is found that the industry has not operated in accordance with the prescribed standards, the license may be cancelled, and actions and penalties may be taken as per the Industrial Enterprises Act and other prevailing laws.
Control and Restriction on Liquor Activities under Liquor act 2031 B.S.
Liquor” refers to any alcoholic substance made by fermenting grains, fruits, or starches. It includes beverages like jaad, chhyang, whisky, rum, gin, brandy, vodka, beer, wine, as well as industrial and rectified spirits.
The Liquor Act, 2031 (1974) imposes strict controls on all aspects of liquor-related activities. The key legal provisions include:
- Production Control:
No individual or entity is allowed to produce liquor without a valid license. Even with a license, production must strictly follow the terms and conditions specified therein. - Sale and Distribution Control:
It is illegal to sell, distribute, or operate any bar, restaurant, or shop offering liquor without a license. License holders must operate in accordance with the license’s specific terms. - Packaging Ban:
Production, sale, and distribution of liquor in plastic pouches is strictly prohibited. - Age Restriction:
- Liquor must not be sold to individuals below 18 years of age.
- Persons under 18 are also barred from selling or distributing liquor.
- Export and Import Control:
Exporting or importing liquor requires a specific license, and such activities must also comply with all prescribed conditions.
No person can produce, sell, distribute, export, or import liquor without obtaining a license issued as per the Excise Duty Act, 2058 and the Excise Duty Rules, 2059.
Power of Search, Seizure, and Arrest
Under the Liquor Act, 2031:
- Excise Duty Officers are empowered to search any place if they reasonably believe an offense under the Act has been committed.
- A notice stating the reason must be provided to the owner or user of the premises before the search.
- If illegal activity is found, related goods can be seized.
- If there is a risk of escape, the officer may arrest the suspected person without a warrant.
- Officers have the same powers as the police under existing laws during search and arrest.
- All actions must be carried out in the presence of a local representative.
- Additional procedures are to be followed as prescribed by law.
Punishments and Penalties
The Liquor Act, 2031 imposes the following penalties for violations:
- Anyone who:
- Evades excise duty,
- Produces or imports liquor without a license, or
- Uses fake or forged documents
shall be punished with a fine equal to the amount involved, imprisonment up to 1 year, or both.
- Attempting, instigating, or aiding such offenses carries half the main penalty.
- Forfeiture applies to:
- Tools, machines, equipment, or vehicles used in the offense.
- If the vehicle was used without the owner’s consent, the owner is fined Rs. 25,000, and the driver may face up to 3 months imprisonment or a fine up to Rs. 15,000.
- If the vehicle was knowingly used by the owner (e.g., rented out), it is subject to forfeiture.
Reward for Reporting Offenses
The Liquor Act, 2031 provides monetary rewards to individuals who help expose or apprehend liquor-related offenses:
- 10% of the amount involved to anyone who informs about the offense.
- 20% to a person who arrests the offender or seizes the liquor.
- 30% to a person who arrests both the offender and seizes the liquor.
- The reward is calculated based on the auction proceeds of confiscated liquor and goods.
- If auction isn’t possible, the Government may grant an appropriate reward.
- If multiple people are involved, the reward is shared proportionally.
Appeal Process
- Decisions made by the Excise Duty Officer can be appealed to the Revenue Tribunal.
- Decisions made by the Government of Nepal or its designated authority can be appealed to the concerned High Court.
- A copy of the appeal must be submitted to the relevant office within 15 days of filing the appeal.
Conclusion
Establishing wine and cider industries in Nepal requires following clear legal and technical standards, environmental rules, and licensing procedures. Compliance ensures quality production, environmental safety, and smooth operation within the regulated framework.