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Industrial licensing in India is a mandatory rule put forth by the government of India for enterprises belonging to certain industries. The rule was passed under the Industries (Development and Regulation) Act, 1951, also known as IDR Act.
This license is compulsory for them to function as a legal establishment. Online applications for the licence are done on the G2B portal josted by the Department for Promotion of Industry and Internal Trade (DPIIT)
IDR Act for Industrial licensing
The IDR Act passed a rule which dictated that enterprises with ventures from a specific list of industries like defence must possess an industrial licence to be legal entities in India. The act has mentioned a specified list of products under each industry which require licensing. This means that companies manufacturing these products must have an industrial licence.
Have a look at the list of industries and the products for which industrial licensing is mandatory for companies:
The authority that grants licences to the companies under defence sector is the Ministry of Commerce & Industry, DPIIT. Given below are the list of products for which industrial license is necessary for their manufacturing:
- Defence aircraft
Under the defence aircraft section these are products that require a license according to the IDR act for industrial license for defence production in India:
- Military aircrafts including helicopters, lighter-than-air vehicle
- Unmanned Aerial Vehicles (UAVs), Remotely Piloted Vehicles, autonomous programmable vehicles, unmanned lighter than air vehicle fitted with weapon, sensor and other payloads, defence communication frequency for military applications (including all variety of manned and unmanned airborne vehicles, target systems, loitering missiles, drones, balloons, blimps, aerostat, parachutes, paragliders, and their launchers, specially designed for military application)
- Warships of all kinds
- Vessels of war (surface or underwater)
- Other surface vessels (Fitted with automatic weapons having a caliber of 12.7 mm or higher, Chemical Biological Radiological and Nuclear protection, active weapon countermeasure systems)
- Special naval equipment
- Hull penetrators and connectors specially designed for military use
- Air Independent Propulsion (AIP) systems (nuclear or conventional) designed for submarines
- Allied items of Defence equipment
Electronic equipment products specially designed for military use under this category that requires industrial licensing as follows:
- Electronic Equipment used for electronic counter measure (ECM) and electronic counter countermeasure (ECCM), surveillance, intelligence, command and control systems
- Jamming equipment
- Data processing, storage and transmission security equipment, identification and authentication equipment (including identification Friend or Foe and non-Cooperative Target Return Identification systems)
- Guidance and navigation equipment
- Troposcatter-radio communication equipment
- Military Information Security assurance systems and equipment (like cryptographic devices including military Cryptographic key management and Cryptanalytic systems)
- Communication equipment, frequency modules and secrecy devices
Products belonging to the armoured or protective equipment category under the defence sector for which licensing is mandatory is given below:
- Constructions of metallic or non-metallic materials, or combinations thereof, specially designed to provide ballistic protection for military systems
- Body armour or protective garments of level III (NIJ 0101.06, July 2008 or national equivalent and above).
Products which require an industrial licence under imaging or countermeasure equipment category is as follows:
- Recorders and image processing equipment
- Image intensifier equipment including interactive environment systems
- Infrared or thermal imaging equipment
- Imaging radar sensor equipment
- Countermeasure or counter-countermeasure equipment
Under explosive sector companies manufacturing industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches must apply for a licence under the industrial licensing policy of India.
Other sectors which are compulsory licensing industries in india include:
- Specified hazardous chemical including Hydrocyanic acid and its derivatives, and Phosgene and its derivatives
- Isocyanates and disocyanates of hydrocarbon not elsewhere specified (For example, methyl Isocynate)
- Cigars and cigarettes of tobacco and manufactured tobacco substitutes (Fresh Licenses are not being issued for manufacture of this item on health grounds since 1999)
How to apply for an industrial licence?
All applications for Industrial License under IDR Act, 1951 can now be applied online on G2B Portal. All Companies manufacturing any of the products mentioned above must first register on the G2B portal and then proceed to apply for the industrial licence.
Once you finish registration you will get a login ID and password which you can use to login to the portal. Once you login into the portal, navigate to ‘Services’ section and click on ‘Industrial Licensing service’. Selecting the ‘Apply’ button will take you an application form where you must fill the following details:
- About the company
- Existing activities of the company
- Any foreign investment
- Details of investment
These are the documents required for application:
- Business proof
- Certificate of Incorporation
- Memorandum of Association/Article of Association
- Board resolution certificate
- Foreign Direct Investment
- Document indicating the production process involved in the manufacture of items
IEM (Industrial Entrepreneur Memorandum)
All industrial undertakings exempted from industrial licensing under IDR Act, 1951 must file IEM on the G2B portal. “Companies having an investment in plant and machinery of ₹50 Crore and above or turnover of ₹250 Crore and above, including existing units, New Undertaking (NU) and New Article (NA), may file an IEM, i.e. “Form IEM” in the prescribed format ‘Part A’,” according to the G2B portal.
All online IEM applications will be scrutinised and documents including Incorporation certificate, Memorandum of Article, Article of Association, Master data, PAN card and Codes related to Administrative Ministry/Department and NIC code, etc., will be verified. If DPIIT is satisfied with the veracity of the documents, it will electronically issue an IEM Acknowledgement to the applicant.