Industrial licensing in India

List of industries with compulsory licensing[edit]

Industrial licensing is compulsory for the following industries:[1][2]
1. Large and Medium Industries: Items reserved for the Small Scale Sector
2. All Industries:
1. All items of electronic aerospace and defense equipment, whether specifically
mentioned or not in this list.
2. All items related to the production or use of atomic energy including the carrying
out of any process, preparatory or ancillary to such production or use, under
the Atomic Energy Act, 1962.
Comprehensive list for which industrial licensing is compulsory:
1.
2.
3.
4.
5.
6.
7.
8.

Coal and lignite

Petroleum (other than crude) and its distillation products.
Distillation and brewing of alcoholic drinks
Sugar
Animal fats and oils, partly or wholly hydrogenated
Cigars and cigarettes of tobacco and manufactured tobacco substitutes
Asbestos and asbestos-based products
Plywood, decorative veneers, and other wood-based products such as particle board,
medium density fiber board, and black-board
9. Raw hides and skins, leather chamois and patent leather
10.Tanned or dressed furskins
11.Motor cars
12.Paper and Newsprint except bagasse-based units (i.e. except units based on minimum 75%
pulp from agricultural residues, bagasse and other non conventional raw materials)
13.Electronic aerospace and defence equipment: all types
14.Explosives including detonating fuses, safety fuses, gunpowder, nitrocellulose and matches
15.Hazardous chemicals
16.Drugs and Pharmaceuticals (according to Drug Policy)
17.Entertainment electronics (VCR's, color TV's, CD players, tape recorders)
18.White goods (domestic refrigerators, domestic dishwashing machines, programmable
domestic washing machines, microwave ovens, air conditioners)
Industrial License
Applications for small and medium indutries are done at the councils around the country and large
scale isa done at the Department of Industrial Affairs.

NEW APPLICATION
The following documents should accompany an application for industrial license:
1.

Business background or Executive Summary

2.

Form AIL (1), which is completed in duplicate

3.

Certified copies of the Certificate of Incorporation of the company and share certificates.

4.

A detailed description of the Production Process to indicate or explain how each of the
products will be produced.

5.

An Environmental Impact Assessment Report.

6.

A Health Inspection Report, from the City, town or district Council within which the
envisaged business will operate.

7.

A report from the Physical Planning Unit confirming the zoning of the place of operation.

8.

Provide a valid lease agreement for the premises

9.

Certified copies of Work and Residence Permits should be submitted for foreign promoters'
i.e. Shareholders, Directors and Managing Director.

10.

Certified copies of identity cards for citizen promoters

11. Pay a sum of P50.00 with the application form as administrative fee.
The following documents should accompany an application for a new industrial licence.
As requirements for a new industrial licence also to include;

Commitment letter for waste collection

copy of a waste carrier licence as approved by the Department of Waste Management &
Pollution Control.

Industrial Licensing: Norms and Policy

For the organized growth and development of industrial India, Parliament has enacted the
Industrial (Development and Regulation) Act, 1951. The IDR Act provisions apply to industrial
undertakings, which means an undertaking pertaining to a scheduled industry carried on in one or
more factories by any person or authority.
Chapter III of the Act pertaining to the regulation of scheduled industries makes it mandatory for
every existing industrial undertaking to seek registration with the Central Government. Also, every
new industrial undertaking has been mandated to obtain a license by the Central Government.
Moreover, a registered or a licensed industrial undertaking is restricted from manufacturing a new
article unless the license for new article has been obtained or prior license has been amended to
include the article, as the case may be.

The rules regarding the granting of registration certificates and licenses are provided under The
Registration and Licensing of Industrial Undertaking Rules, 1952 and Notification 477(E) dated
July 25, 1991, of the Department of Industrial Policy and Promotion.
Presently, an industrial license is required for industries retained under compulsory licensing, the
manufacturing of items reserved for the small scale sector by larger units, and when the proposed
location attracts restrictions.
The industries requiring compulsory licensing are:
Distillation and brewing of alcoholic drinks
Cigars and cigarettes of tobacco and manufactured tobacco substitutes
Electronics
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
The government has reserved certain items for exclusive manufacturing in the small-scale sector.
Non-small-scale units can undertake the manufacturing of items reserved for the small scale sector
only after obtaining an industrial license. In such cases, the non-small-scale unit is required to
undertake an obligation to export 50 percent of the production of small-scale industry (SSI)
reserved items. This has been done to protect indigenous manufacturers from competitive exotic
substitutes so as to ensure a level playing field for domestic manufacturers.

With regards to locational limitations, industrial undertakings are free to select the location of their
projects. Industrial licenses, however, are required if the proposed location is within 25 kilometers
of the standard urban area limits of 23 Indian cities having a population of at least 1 million. The
locational restrictions, however, do not apply in the case of electronics, computer software and
printing and any other industry which may be classified in the future as a non-polluting industry.
The location of industrial units is subject to the applicable local zoning and land use regulations
and environmental regulations so as to maintain ecological discipline.
The application for registration has to be made to the Secretary of Industrial Assistance, Central
Government. After due consideration, the government then issues the Certificate of Registration.
Similarly, an application (Form IL-FC) for obtaining a license by a new undertaking has to be
made to the Central Government along with the fee, after which the Ministry issues a license.
Industrial licenses are granted by the Secretarial of Industrial Assistance (SIA) on the
recommendation of the Licensing Committee.
After a an industrial undertaking has obtained a license or permission as above, it becomes eligible
to the allotment of controlled commodities and for the issuance of an import license for goods
required for the construction and operation of the industrial undertaking.
De-licensed industries
These are industries which do not require compulsory licensing, do not fall under locational

restrictions, and are not reserved for small-scale industries. There is no exhaustive list specified by
the Department of Industrial Policy and Promotion. As a process of liberalization of industrial
policy, many items have been exempted from compulsory licensing and attention is reserved only
for those which are vital for public health, safety and national security. Industries exempted from
the provisions of industrial licensing are required to file an Industrial Entrepreneurs Memorandum
along with a fee.
The Governments liberalization and economic reforms program aims at rapid and substantial
economic growth, and integration with the global economy in a harmonized manner. The industrial
policy reforms have reduced the industrial licensing requirements, removed restrictions on
investment and expansion, and facilitated easy access to foreign technology and foreign direct
investment.
Press Releases
INDUSTRIAL LICENCE POLICY
Date : 23 Aug 2005
Location : New Delhi

Review of the Policy on Industrial Licensing is an ongoing process. Since January 2002,
upto June 2005, 476 applications for grant of Industrial Licence have been received and
377 applications were disposed off. Statement showing state-wise position is annexed.
As a measure of further simplification of procedures, announced vide Press Note No.4
(2003 series) dated 10/10/2003, Industrial Licences are being granted directly against
applications instead of issuing Letters of Intent (LOIs) in the first instance and its
subsequent conversion in to Industrial Licence. This procedure does not apply to the
applications relating to manufacture of items reserved for exclusive production in the
small-scale sector where a Letter of Intent is first issued and is converted into Industrial
Licence on execution of undertaking for export obligations.
This was stated by Shri E.V.K.S. Elangovan, Minister of State for Commerce & Industry,
in a written statement in the Lok Sabha today.
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SB/MRS