Industrial License: Overview

In India, certain regulations and limits apply to the establishment of certain industries. This is accomplished by making it mandatory to get an Industrial License prior to establishing such a business.

Industrial licenses are granted under the Industrial Development and Regulation Act (IDRA) of 1951 and are approved by the Secretariat of Industrial Assistance (SIA) based on the recommendations of the industrial licensing committee.

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The IDRA Act specifies that industries must get a new license in order to manufacture the new products. Manufacturing in India demands industrial license in the following industries:

• Compulsory licensing industries,
• Industrial projects that are subject to geographic restrictions

Remember: The licensing requirement also applies to existing industrial units that are being expanded.

Industries that require Compulsory Licencing in India

Businesses wishing to set up industries in India to produce any of the following commodities must first obtain a mandatory license:

• Tobacco cigarettes, cigars, and manufactured tobacco alternatives
• Electronics, aerospace, and defense systems
• Alcoholic beverage distillation and brewing
• Industrial explosives - Detonating fuses, safety fuses, gun powder, nitrocellulose, and matches.
• Hazardous chemicals, such as items that endanger human health and safety

1. hydrocyanic acid and its derivatives
2. Phosgene and its derivatives
3. Isocyanates and diisocyanates of hydrocarbon not elsewhere specified (example methyl Isocyanate)

Because of environmental, safety, and strategic concerns, many businesses are subject to mandatory licensing. The Ministry of Industrial Development is in charge of mandatory licensing.

Geographical Constraints for Industries in India

Industries located within 25 kilometers of the periphery of cities with a population of at least one million people must get an industrial license from the DPIIT under this provision of the IDRA legislation.

The following situations are exempt from the locational restriction:

• Non-Polluting Industry
• Before July 25, 1991, industries that were located in an area were defined as an "industrial area."

To ensure ecological discipline, industrial units are subject to proper local zoning, land use restrictions, and environmental regulations.

India's Unlicensed Industries

The Department for Promotion of Industry and Internal Trade does not specify a full list of de-licensed industries (DPIIT).

Industries exempted from the provisions of the industrial license must, however, file an Industrial Entrepreneur's Memorandum (IEM) with the Ministry of Commerce & Industry's Department for Promotion of Industry and Internal Trade (DPIIT).

Procedure for Submitting an Application

• Access DPIIT's G2B portal and click the Registration button on the front page to apply for an industrial license.

• Provide the required information in the user registration form and click the Continue button. The link will take the applicant to the next page, where they must enter their user name and password.

• An OTP will be given to the registered mobile number and email address when you accept the terms and conditions. The G2B user ID will be produced when you fill out the form. An entrepreneur can log in to the portal using his or her User Name and Password after successfully registering.

Industrial license

Click on Industrial License to begin the process of obtaining an industrial license. There will be two parts: IL – Under IDR Act 1951 and IL – Under Arms Act 1959.

Industrial License under the Arms Act of 1959

The following items are covered by DPIIT's Licensing Authority powers under the Arms Act of 1959, and Manufacturing License Applications must be submitted in Form A6:

• Spacecraft, Defence aircraft, and their parts
• Armored fighting vehicles, such as tanks
• All types of warships
• Other than a small arm of caliber up to 12.7 mm and parts, components, and ammunition for such small weapons, arms and ammunition, and linked articles of military equipment; parts and accessories thereof

Industrial License's Validity

An Industrial License will be valid for three years at first. Until commercial production begins, the trader must provide a progress report (form 'G') on a six-monthly basis.

Remember: The Industrial License comes with Form 'G.'

• There is no need to seek a validity extension if the entrepreneur begins commercial production during the validity period.
• If the industry owner does not begin commercial production within the initial validity term, they may apply directly to the competent Administrative Ministry for an extension of the validity of the Industrial License (IL), as IL extensions are processed by the concerned Administrative Ministry.
• The owner can seek a two-year extension of the validity of the IL twice.
• The Industrial license (IL) is valid for a total of seven years, during which time commercial production must begin.
• If commercial production does not begin within this time frame, the license will be revoked.

Necessary Documents for Industrial License

• To receive an Industrial License, you must upload the following documents:
• Certificate of Incorporation
• Proof of Ownership
• Memorandum of Association (MoA)/Article of Association (AoA)
• Board resolution certificate
• The undertaking of the country of concern
• Foreign Direct Investment (FDI)
• Other documents that are important
• Briefly describe the steps involved in the production of the items
• Details about any legal actions taken against the company/Director'
• Government approval for automatic route

Industrial License - Under The IDR Act of 1951

The first entrepreneur must fill out the following information in accordance with the IDR Act 1951 of Industrial License:

• Description of the Industrial undertaking
• The Company's existing activities
• Information about the foreign investment that is engaged
• Information on Companies/Firms (Indian/Foreign)
• Investment

Once the information is correct, the applicant must upload the required documents in order to continue with the Industrial License application.

Following the successful submission of documentation, the entrepreneur must pay the application cost. Following the submission of the form, the "Payment" option will appear, and the entrepreneur must select "Pay Now." To complete the transaction, enter your credit card information.

Obtain an Industrial License

All applications submitted through the DPIIT's G2B portal will be reviewed in the 'industrial license Section' for verification of the 'Incorporation Certificate,' 'Memorandum of Article (MOA),' 'Article of Association (AOA),' and 'Codes related to NIC and Administrative Ministry/Department,' among other things.

Once the verification is completed and confirmed to be proper, the Department grants an Industrial License through the G2B portal, and a physical copy of the Industrial License is mailed.

Industrial License – Under The Arms Act 1959

• To continue, click on Under Arms Act 1959 IL after logging in to the portal and complete in the following information:
  1. Applicant's name
  2. Address of the Registered Office
  3. Email ID
  4. Name of the Person in Charge
  5. Description and proof testing of the firearms to be made
  6. Annual capacity proposed
• After correctly filling out the information, upload the relevant documents to complete the form, and then click the Final Submit button.
• The application submitted through the DPIIT's G2B portal will be reviewed for verification in the 'Industrial License Section.'
• DPIIT forwards the location to concerned administrative ministries, Ministry of Home Affairs, Interested State Government, and other concerned agencies for their views if the applications for the award of license are complete in all respects and include all essential papers.
• Files are reviewed and forwarded to the Licensing Committee for consideration after receiving comments from the relevant Ministries.
• Based on the comments received and the Committee's considerations, the licensing committee will recommend that the proposal be granted a license. The Industrial license will be issued after a recommendation and the approval of the Minister in Charge of DPIIT.