ABSTRACT In Nepal, the industrialization process is stagnant; the contribution of Manufacturing Sector to the national economy is minor and most of the factories are of small scales. The fifth decennial survey of small manufacturing establishments (SSME) 2008-2009 is one of the primary source of industrial statistics which covers all functioned manufacturing activities of the nation with a formal registration that engage less than 10 persons. The sampling survey undertaken by the Central Bureau of Statistics in establishment approach has provided complementary information of the Census of Manufacturing Establishments (CME) which is summarized in a set of 101 tables. This information is based on the responses of 614 questions interviewed by permanent staffs in 3737 randomly selected sample establishments. The survey report has quantified the size, composition, and distribution of the small manufacturing sector including ten principal indicators by internationally comparable and standard industrial classification at Development Region level. There were 32326 small manufacturing establishments found active during mid July 2008 to mid-July 2009, the reference period of the survey when the listing operation had conducted in all districts. In this period, they had altogether contributed Rs. 11.5 Arab value added in the national economy and generated employment for 122 thousand persons. Moreover, there were 75 types of industries which produced 154 items using 186 types of raw materials in the reference period. The survey has disclosed that grain milling, wearing apparel sewing, furniture making, and jewellery designing are the top four small manufacturing activities in Nepal. Share of which are nearly 39, 17, 10, and 7 percent of total in number; and they contribute about 20, 14, 14 and 7 percent of total value added in the small manufacturing sector. Geographically, the Central Development Region has the largest number of small factories. It belongs to 45 percent establishments and contributes 50 percent value added to the small manufacturing sector in Nepal which follows by Eastern Development Region with 27 percent establishments and 24 percent value added. Finally, the survey has told about the capacity utilization status and problem faced by the small industries. Only 32 percent of the industries utilized 60 percent or more than their installed capacity during the reference period and their major problem is the lack of electricity followed by capital dearth in national level. The ratio of capital utilization and problem faced by those establishments are found vary from industrial activity to activity and region to region. SCOPE The survey covers all small manufacturing establishments defined in the Nepal Standard Industrial Classification (NSIC 2000) within division "D" having - less than 10 persons engaged, and - a registration in any government body. The NSIC is the Nepali version of the International Standard Industrial Classification of all economic activities third revision (ISIC rev 3). Manufacturing, as per the ISIC rev 3, is the physical or chemical transformation of materials or components into new products, whether the work is performed by power-driven machines or by hand. Establishments are described as an economic unit, which is under a single ownership or control, engaged in one or predominantly one kind of economic activity at a single physical location. A manufacturing establishment is one, which is predominantly engaged in manufacturing activities. The survey collects information on the profile of small manufacturing establishments in terms of: - Employment - Purchase of fuels - Purchase of raw materials - Production and Sale of Goods - Costs of and receipts from industrial and other services - Stocks - Indirect taxes and fees - Loan transactions - Utilization of production capacity - Fixed assets - Environment - Major problems faced COVERAGE Geographic Coverage (1) National Geographic Coverage (2) 5 Development Regions Geographic Coverage (3) Urban-Rural Universe The survey covered all active manufacturing establishments in Nepal that engage less than 10 persons and have a legal registration.