Industrial Licensig Services
The Industrial Development and Regulation Act (IDRA), 1951 provides a basic framework for the growth and development of industries in India. According to the law, an ‘industrial undertaking’ is a planned industry that is carried on in one or more factories owned by an individual or authority, including government.
Industrial licensing in India
Since the liberalization and deregulation of the Indian economy in 1991, most industries have been exempt from obtaining an industrial license to start manufacturing in India. Government attention is reserved only for those industries that may impact public health, safety, and national security. In India, industrial licenses are regulated by the IDRA, 1951 Act, and are approved by the Secretarial of Industrial Assistance (SIA) on the recommendation of the licensing committee.
Industries that require industrial licensing for manufacturing in India include:
- Industries under compulsory licensing
- Industrial undertakings attracting locational restrictions
- The licensing provision also applies to the expansion of the existing industrial units
Recent amendment to industrial licensing rule :
Earlier, large industries that manufactured items that were exclusively reserved for Micro, Small, and Medium Enterprises (MSME) also needed to obtain an industrial license. MSMEs were previously known as Small Scale Industry (SSI). The provision was aimed at protecting indigenous manufacturers from unequal competition with large scale industries. However, in April 2015, the government de-reserved these items to encourage greater investment, incorporate better technologies, and enhance competition in the Indian and global market for the products.
Large industries are now permitted to manufacture items such as – bread, wood, firework, pickles and chutneys, mustard oil, groundnut oil, steel chairs and tables, padlocks, stainless steel and aluminum utensils, without obtaining an industrial license.
Businesses planning to establish industries to produce any of the following items in India must obtain a compulsory license:
- Distillation and brewing of alcoholic drinks
- Cigars and cigarettes of tobacco and manufactured tobacco substitutes
- Electronics and aerospace and defense equipment
- Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches
- Hazardous chemicals including items hazardous to human safety and health and thus fall for mandatory licensing.