𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐚𝐥 𝐋𝐚𝐧𝐝𝐬𝐜𝐚𝐩𝐞 𝐒𝐡𝐚𝐩𝐞𝐝 𝐁𝐲 𝐒𝐞𝐫𝐯𝐢𝐜𝐞 𝐒𝐞𝐜𝐭𝐨𝐫 𝐀𝐧𝐝 𝐂𝐨𝐭𝐭𝐚𝐠𝐞 𝐄𝐧𝐭𝐞𝐫𝐩𝐫𝐢𝐬𝐞𝐬

…𝒓𝒆𝒈𝒊𝒐𝒏𝒂𝒍 𝒊𝒎𝒃𝒂𝒍𝒂𝒏𝒄𝒆 𝒂𝒏𝒅 𝒊𝒏𝒇𝒓𝒂𝒔𝒕𝒓𝒖𝒄𝒕𝒖𝒓𝒆 𝒄𝒐𝒏𝒔𝒕𝒓𝒂𝒊𝒏𝒕𝒔 𝒖𝒏𝒅𝒆𝒓𝒍𝒊𝒏𝒆 𝒏𝒆𝒆𝒅 𝒇𝒐𝒓 𝒊𝒏𝒄𝒍𝒖𝒔𝒊𝒗𝒆 𝒅𝒆𝒗𝒆𝒍𝒐𝒑𝒎𝒆𝒏𝒕 𝒔𝒕𝒓𝒂𝒕𝒆𝒈𝒚

By Kezang Choden

According to the Annual Industry Report 2024-2025 released by the Department of Industry (DoI), there are a total of 30,666 active industrial licenses in the country as of June 20, 2025. However, not all licenses represent operational businesses, with some still under construction or reserved for future use. The current figure marks a 2.84 percent increase from the 29,819 licenses recorded in the previous year but remains lower than the 2023 total of 31,707, reflecting a modest recovery following an earlier decline.

he rise in active licenses is mainly attributed to the growth of cottage industries, alongside stable performance in small, medium and large-scale enterprises. Thimphu holds the highest number of industries, followed by Chukha, Samtse, Paro, Sarpang and Samdrupjongkhar. These regions show a balanced mix of small and medium-scale industries, indicating their continued relevance in the national industrial landscape.

The data highlights the continued dominance of the service sector, which holds the highest number of licenses across all industry sizes. The sector is particularly strong in the small-scale category with 15,466 licenses, followed by 8,510 under the cottage-scale category. The production and manufacturing sector follows with 2,613 cottage-scale and 1,348 small-scale licenses.

Dzongkhags with trade access, such as Chukha, Sarpang and Samtse, continue to see a concentration of large-scale industries. In contrast, other dzongkhags remain largely dominated by small-scale units. Pemagatshel and Paro report a more even distribution of small and medium industries, while Mongar and Trashigang maintain a moderate business presence. The construction sector, although the smallest among the main industry categories, still accounted for 1,441 small-scale and 31 cottage-scale licenses.

Gasa, Lhuentse and Haa recorded the lowest number of registered industries. The report attributes this to geographical isolation, limited infrastructure, a smaller market size and low population. Across all sectors, medium and large industries represent only a small share of the total, underlining that Bhutan’s industrial landscape remains predominantly small-scale.

In Lunana Gewog under Gasa Dzongkhag, the industrial gap is particularly evident. The Gup of Lunana Gewog shared that the community remains heavily dependent on the collection of cordyceps as the primary source of income. Despite the gewog’s abundant natural resources, including a wide range of herbal plants, residents have not started any businesses that could generate income through alternative means.

One of the main barriers is the remoteness of the gewog. Located in a high-altitude area, Lunana faces harsh weather conditions throughout the year. The absence of a proper road network makes the transportation of goods and raw materials extremely difficult. In addition, limited access to electricity and modern tools has prevented residents from pursuing home-based production or small-scale industries.

“The area is rich in medicinal plants that could be processed into herbal products,” the Gup said. “But there has been little effort to make use of these resources. Without electricity, we cannot operate machines for processing or packaging, and this has held us back.”

The Gup also pointed out that market access remains a major challenge. With no convenient way to transport goods to urban centres, residents find it more practical to continue relying on cordyceps collection, which has an established market and brings quick returns. He called for targeted support from relevant agencies, stressing the need for infrastructure, road access, reliable electricity and assistance with product development to help establish sustainable cottage industries in Lunana.

The report also outlines how Bhutan’s industrial structure has changed between 2023 and 2025. The number of small-scale industries declined from 20,603 in 2023 to 18,255 in 2025, mainly due to business closures. Medium-scale industries dipped in 2024 but slightly recovered, reaching 821 licenses in 2025. Large-scale industries remained relatively steady, with a marginal increase from 427 to 436 over the past year. On the other hand, cottage industries have shown consistent growth, rising from 9,738 in 2023 to 11,154 in 2025, indicating expansion at the grassroots level.
The construction sector continues to face challenges. Licenses dropped from 2,325 in 2023 to 1,852 in 2025. Meanwhile, the production and manufacturing sector improved, increasing from 3,712 to 4,351 licenses. Despite a decrease from 25,670 licenses in 2023 to 24,463 in 2025, the service sector remains the most active segment of Bhutan’s industry.

M/s Nor-Zang Construction Private Limited shared the difficulties currently faced by the construction sector. The company explained that the COVID-19 pandemic and the subsequent lockdowns had a severe impact on their operations. Essential materials were stuck in various locations due to transport restrictions, and many project-related bills remained unsettled.

“Our project work was at a standstill during the lockdown,” said a representative from the company. “We were unable to bring materials to the site, and payments were delayed. We struggled to pay our workers on time and could not maintain a steady flow of supplies. This slowed project completion and created financial strain.”
They also highlighted the continued rise in construction material costs, driven by high demand and limited supply. “Prices have increased across the board, and this makes it harder for us to recover from the pandemic’s impact,” the representative noted.

In addition to supply and financial issues, the company expressed concern over potential penalties for project delays. “If our work does not resume at the pace it used to, there will be no profit at all,” the contractor said. “Without profit, we cannot repay our loans, and the whole construction sector will begin to decline.”
In response to these challenges and to encourage industrial growth, the Department of Industry has introduced several reforms and initiatives. These include a scale-based industry categorization system, new guidelines for commercial alcoholic beverage production, and updated standard operating procedures for land leases, licensing and compliance. Hotel licensing procedures have also been revised.

The department has improved post-license business support, fiscal incentives and digital services. These include online licensing, a helpdesk on social media platforms and a one-stop industry portal to assist businesses more efficiently. The report also highlights infrastructure upgrades in industrial estates and enhanced environmental monitoring systems, reflecting the department’s commitment to fostering an inclusive and competitive industrial environment.
The clustering of industries in Thimphu and a few southern dzongkhags, along with the limited number of large-scale industries, points to the need for more balanced regional development. While the increase in active licenses and the growth of cottage industries is encouraging, regional and sectoral disparities remain significant.

The Department of Industry’s report is expected to guide policy under the 13th Five Year Plan to ensure that industrial growth supports broader national economic goals. Authorities are encouraged to promote the development of medium and large-scale industries in key areas while maintaining support for small and cottage industries. The strong presence of the service sector suggests that Bhutan’s industrial structure is still service-oriented. The lack of sectoral diversity in several dzongkhags highlights the importance of encouraging more diverse industrial clusters across the country.