INDUSTRIAL LICENSING PROCEDURES

In the new industrial policy, the Government has prepared a list of industries for which industrial licensing is compulsory. For setting up a unit for the manufacture of any item listed in this list all entrepreneurs have to necessarily obtain an industrial license irrespective of the category to which they belong and the investments involved. In case of small scale sector, if an item is listed in Annexure II and is also listed in the list of reserved items for small scale sector, the small scale unit does not require an industrial license whether it is existing unit or a new unit proposing to manufacture that item. The existing manufacturers of these items (Annexure II) not possessing an industrial license or those who have received SIA or DGTD registrations for the manufacture of these items and have either already set up their units or are in the process of setting up their unit, however are not required to apply afresh for an industrial license for the manufacture of these items.

• For setting up a unit for the manufacture of any other items or any substantial expansion in its manufacture (provided its manufacture is permissible for the category to which the entrepreneur belongs) the entrepreneur has to submit a "Industrial Entrepreneurs Memorandum' in the prescribed form in requisite number of copies along with a fee of Rs.1000/= only in the form of a crossed Demand Draft payable at State Bank of India,
  Nirman Bhavan,
  New Delhi-110001
  in favour of The Pay & Accounts Officer, Department of Industrial Development , Ministry of Industry, Government of India, New Delhi to The Secretariat for Industrial Approvals (SIA), Department of Industrial Development, Department of Industry, Udyog Bhavan, New Delhi - 110001.
• A similar "Industrial Entrepreneur Memorandum' in the prescribed form in requisite number of copies without
  any fee has to be submitted again to The Secretariat for Industrial Approvals(SIA), Department of Industrial Development, Ministry of Industry, Udyog Bhavan, New Delhi - 110001, when the unit is commissioned and commercial production starts. The Government requires this information basically for records and statistical purposes
• In the application for industrial license or for submitting the 'Industrial Entrepreneurs Memorandum' to the SIA,
  the entrepreneur is required to quote the ITC(HS Classification) Code No. of the article he intends to manufacture and also a fuller description of the item in words. The Government permits existing and new units to manufacture new products other than those for which are licensed or have submitted 'Industrial Entrepreneurs Memorandum' without any permission from the government or submitting a fresh or new 'Industrial Entrepreneurs Memorandum' to the Government provided no additional investment(in capital goods) is made or is required to be made for the manufacture of the new product and the new product is not included in the list of industries requiring compulsory industrial licensing or reserved for the small scale sector or the public sector.
• The Government permits all units to expand substantially (expand their capacity by more than 25%) provided the item of manufacture for which substantial expansion is planned is neither reserved for the public sector nor for the small scale sector.
• In case the item is included in Annexure II, the unit may apply for a substantial expansion and if the item is not listed in Annexure II, the unit may submit 'Industrial Entrepreneurs Memorandum' to the SIA for that as in the case of new units.
• All existing units other than the small scale units, however, which are located in areas other than those conforming to the locational policy of the Government of India, have to apply for an Industrial license for undertaking substantial expansion.
• The application for industrial license is required to be made in a prescribed form titled " FORM IL " available from the Public Relations & Complaints Officer, Ministry of Industry, Udyog Bhawan, New Delhi.
• The application form is required to be filled in and submitted with all the necessary enclosures with 11 spare
  copies to The Secretariat for Industrial Approvals, Central Receipt & Despatch Section, Ministry of Industry, Government of India, Udyog Bhawan, New Delhi - 110001, with a crossed demand draft for Rs.2500 in favour of the Pay & Accounts Officer, Department of Industrial Development), Ministry of Industry, Government of India, New Delhi - 110001 payable at The State Bank of India, Nirman Bhavan, New Delhi - 110001.
• Requests for extension of validity period of letter of intent can be addressed to the Deputy Secretaries of the administrative Department concerned.
• Applications for extension beyond a total period of 2 years, in two steps of one year each, are normally not considered.
• Letters of intent which remain unimplemented for a period of more than five years are treated as automatically lapsed and the applicant has to apply afresh if he wants to pursue the project.
• Requests for revalidation of letters of intent should be made prior to the expiry of this period of 3 years to the concerned administrative ministry.
• The administrative ministry scrutinizes the various steps taken for the implementation of the project and brings the proposal before the Approvals Committee with its recommendations, in case it finds any justification for revalidation of the letter of intent.
• Once the conditions given in the letter of intent are fulfilled, the applicant can apply for conversion of letter of intent into an industrial license.
• The application should be made to the administrative ministry, and a copy of the application should also be sent to the Secretariat for Industrial Approvals.
• There is no prescribed form for this application and no fee is payable along with the application. Photostat copies of the following documents to the extent they are relevant with the letter of intent issued for the project may be enclosed with the application, to avoid unnecessary correspondence, as proof of fulfillment of various conditions laid out in the letter of intent.

  a. Letter of approval of foreign collaborations, if any.
  b. Letter approving import of machinery or import license from the appropriate authorities such as SIA, Central or Regional Import Licensing authorities.
  c. If any export obligation is imposed in the letter of intent, a letter conveying acceptance of the bond executed for undertaking export obligation issued by Chief Controller of Imports & Exports/Directorate General of International Trade or any other licensing authority.
  d. Proof of Submission of loan application to the financial institutions if it was proposed to take loans from financial institutions to meet a part of the cost of the project.
  e. Letter from the State Pollution Control Board conveying acceptance of the scheme submitted by the entrepreneur for proper pollution control.
  f. If the letter of intent was originally obtained by the entrepreneur in his individual name and he desires to obtain the industrial license in the name of a company which he has formed subsequent to obtaining the letter of intent for implementing the project, or otherwise, a certificate of incorporation issued by the Registrar of Companies and the Memorandum and Articles of Association of the company.
  g. The change in the name of the implementing agency such as from an individual to a company formed by the individual ( by signing the Memorandum and Articles of Association of the company as a signatory and subscribing to at least 10% of the paid-up equity capital of the company) and from a company to its wholly owned subsidiary is permitted by the administrative ministry.
  h. Letter agreeing to abide by the other conditions, stipulated in the letter of intent and the additional conditions if any indicated in the annexure attached thereto.
  i. If other conditions like sub-contracting of components to small scale sector or ancillarization etc., are stipulated in the letter of intent, letter from the appropriate Government authority in token of having settled such conditions to the satisfaction of the authority concerned.

On receipt of recommendation from the administrative machinery, the SIA issues a conversion license to the applicant provided all the necessary information has been furnished by him and the letter of intent has not expired or revoked in the meanwhile. The validity period of an industrial license is two years within which commercial production must start. The administrative ministry can grant two extensions of one year each in the validity period of the license if there are good and sufficient reasons for the delay in commissioning of the project in spite of the best efforts made by the entrepreneur. Requests for extension of validity period should be made to the administrative ministry concerned. Ministry of Food Processing Industries is the administrative ministry for:

• Processing and Refrigeration of specified dairy products such as Milk powder, Infant milk food, Malted milk food, Condensed milk, Ghee, Butter, Cheese, and other dairy products
• Poultry and eggs
• Meat and meat products
• Processing of fish
• Marine fishing and deep sea fishing beyond territorial waters,
• Fruit and vegetable processing,
• Food grains milling industries,
• Bread
• Breakfast foods
• Biscuits
• Confectionery
• High Protein food
• Protein Isolate
• Extruded food products and Ready-to-eat foods,
• Non-molasses based alcoholic drinks,
• Beer
• Aerated Drinks

INVESTMENT INTO MACHINERY IN SMALL SCALE SECTOR

• The investment ceilings in plan and machinery in small scale and ancillary industrial undertakings has been fixed at Rs.60 lakh and Rs.75 lakh, respectively.
  
• In the case of small scale units that undertake to export atleast 30% of the annual production by the end of the third year from the date of commencement of commercial production, the limit of investment in fixed assets in plant and machinery has been fixed at Rs.75 lakh.

LIST OF INDUSTRIES RESERVED FOR PUBLIC SECTOR:

• Arms and ammunition and allied items of defence equipment, defence aircraft and warships
• Coal and Lignite
• Atomic energy
• Mineral Oils
• Mining of iron, manganese and chrome ore, gypsum, sulfur, gold and diamond
• Mining of copper, lead, zinc, tin, molybdenum and wolfarm
• Minerals specified in the schedule to the Atomic Energy
• Railway Transport

ANNEXURE II

COMPULSORY INDUSTRIAL LICENSING

Sugar Cane sugar, refined Other sugar, including centrifugal sugar Animal fats and oils Animal fats and oils partly or wholly hydrogenated Edible mixtures or preparations of animal fats and oils Non-edible mixtures or preparations of animal fats and oils

List of Industries for Automatic Approval of Foreign Technology Agreement/ 51% Foreign Equity Participation / 100% Foreign Equity Participation by Non-Resident Indians And Overseas Corporations Predominantly held by Non-Resident Indians:

• All food processing industries other than milk food, malted foods & flour, but excluding the items reserved for small scale sector.
• Sausages and similar products, of meat or meat offal; food preparations based on these products.
• Other prepared or preserved meat or meat offal
• Extracts and juices of meat, fish on crustaceans, molasses or other aquatic invertebrates
• Prepared or preserved fish
• Crustaceans, molasses and other aquatic invertebrates, prepared or preserved
• Pasta, whether or not cooked or stuffed (with meat or other substances) or otherwise prepared.
• Tapioca and substitutes therefore prepared from starch, in the form of flakes, grains, pearls, siftings or in similar forms.
• Prepared foods obtained by the swelling or roasting of cereals or cereal products; cereals, other than maize (corn), in grain form, pre-cooked or otherwise prepared.
• Tomatoes prepared or preserved otherwise than by vinegar or acetic acid.
• Mushrooms and truffles, prepared or preserved otherwise than by vinegar or acetic acid.
• Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, frozen.
• Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen.
• Fruit, nuts, fruit-peel and other parts of plants, preserved by sugar (drained, glace or crystallised).
• Fruit jellies, marmalades, fruit or nut pure and fruit or nut pastes, being cooked preparations, whether or not containing added sugar or other sweetening matter.
• Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not, containing added sugar or other sweetening matter or spirit, not elsewhere specified or included.
• Fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter.
• Sunflower-seed, safflower or cotton-seed oil, extracted and upgraded
• Other fixed vegetable oils (minor), extracted and upgraded
• Soya texture proteins: Protein concentrates and texturised protein substances of soya
• Soya protein isolates: Protein isolates of soya
• Soya protein concentrates: Protein concentrates and textureised protein substances of soya
• Other specialised products of soyabean: Soya sauce
• Winterised and deodourised refined Soyabean oil: Refined soya been oil, winterised and deodourised.

LIST OF ITEMS RESERVED FOR EXCLUSIVE MANUFACTURE OF SMALL SCALE SECTOR:

• Ice Cream
• Pickles & Chutneys
• Vinegar
• Rice Milling
• Dal Milling
• Bread
• Biscuits
• Pastry
• Confectionery (excluding Chocolates, Toffees and Chewing Gums)
• Rapeseed oil except solvent extracted (other than cases of state Agro-co-operative and Growers Co-operatives
• Sesame oil / except solvent extract
• Groundnut oil except solvent extracted
• Sweetened Cashewnut products
• Poultry feed except in pellet form
• Ground and processed spices other than Spice Oil and also Resin Spices
• Tapioca sago
• Tapioca flour
• Synthetics syrups

PACKAGING MATERIAL RESERVED FOR THE SMALL SCALE SECTOR:

• Waxed paper
• Corrugated paper and boards
• Paper bags
• Paper cups/plates