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E-Filing Services for Industrial License under Central Scheme in India

Posted in DIPP

Filing of Industrial License under Central Scheme

Dated: 23/12/2016

 

Description:-

The Government’s liberalization and economic reforms program aims at rapid and substantial economic growth which is integrated with 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.

Licensing is done under Industries (Development & Regulation) Act 1951. Post 1991 de-licensing, presently below industries are under compulsory licensing:

  1. Electronic aerospace and defence equipment
  2. Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches
  3. Cigars and cigarettes of tobacco and manufactured tobacco substitutes
    [Fresh Licenses are not being granted for manufacture of this item on health grounds since 1999]
  4. Specified hazardous chemicals i.e (i) hydrocyanic acid and its derivatives (ii) Phosgene and its derivatives and (iii) Isocyanates & disocyanates of hydrocarbon not elsewhere specified (example methyl Isocynate)

Industrial undertakings which fall under above categories are required to submit online application in the prescribed format, i.e. “Form IL”, through e-Biz Portal. If Industry does not belong to any of above mentioned category, an Industrial Entrepreneur Memorandum application needs to be filed.

Prerequisites:-

  • 1. Before applying for IL, applicant needs to make sure that Local zoning and land use regulations of a State Government or regulations of Ministry of Environment which do not permit setting up of an industry at a location should be adhered to.
  1. In case of multiple operating locations, details of all the locations should be attached in ‘Other attachments’
  2. Details of self-declaration by the company and its directors should be uploaded in this format. The proforma should be duly signed by authorized signatory.
  3. It is mandatory to furbish ‘information on foreign investment’ and ‘information in respect of Directors/ Key executives’ along with the Industrial License application. The following formats are available.

    1. Format for seeking information of Board of Directors
    2. Format for furnishing information relating to foreign investment

Payment Details:-
Submission of IL form requires a fee of Rs.2500/- (Rupees Two Thousand Five Hundred only) to be paid online.

Invocation Frequency:-
Applicant can apply for IL at any time of the year.

Processing Steps:-

Your application, once submitted will flow through the following status before the request is completed. You may use this information to track the status of your application.

  1. Submitted
  2. Re-submission Required*
  3. Clarified
  4. Application Acknowledgement
  5. Industrial License*
  6. Rejected*

Frequently Asked Questions:-

1. For what items is Industrial License required?

Answer: Licensing is done under Industries (Development & Regulation) Act 1951. Post 1991 de-licensing, presently only five industries are under compulsory licensing:

Electronic aerospace and defence equipment
Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches
Cigars and cigarettes of tobacco and manufactured tobacco substitutes
[Fresh Licenses are not being granted for manufacture of this item on health grounds since 1999]
Specified hazardous chemicals i.e (i) hydrocyanic acid and its derivatives (ii) Phosgene and its derivatives and (iii) Isocyanates & disocyanates of hydrocarbon not elsewhere specified (example methyl Isocynate)
2. Are there any items reserved for manufacture by Micro and Small Enterprises (MSE) Sector ?

Answer: Earlier, 20 items in the Schedule III of the Notification No. 477(E) dated 25/07/1991, were reserved for exclusive manufacture by MSE units. However, these items have now been de-reserved. (Notification No.S.O.998(E) dated 10/04/2015 refers). Presently no item is reserved for exclusive manufacture by MSME Units.

3. What is the Foreign Direct Investment (FDI) Policy in Defence Sector?

Answer: FDI Policy in Defence Sector is as follows:-

49% Foreign Investment is allowed in Defence Industry under Automatic route, subject to Industrial license under the Industries (Development & Regulation) Act, 1951.

Above 49% Foreign Investment is allowed under Government route on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country.

The other conditions are as follows:-

Infusion of fresh foreign investment within the permitted automatic route level, in a company not seeking industrial license, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require Government approval.

License applications will be considered and licenses given by the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, in consultation with Ministry of Defence and Ministry of Home Affairs, State Govt. and other Members of Licensing Committee.

Foreign investment in the sector is subject to security clearance and guidelines of the M/o Defence.

Investee company should be structured to be self-sufficient in areas of product design and development. The investee/joint venture company along with manufacturing facility, should also have maintenance and life cycle support facility of the product being manufactured in India.

[Consolidated FDI Policy dated 12/05/2015 refers]

4. Is there any list of items, which categorizes the Defence items for which IL application can be filed?

Answer: Defence Products List has been issued vide Press Note No. 3 (2014 series), which is available on DIPP’s website for guidance to the entrepreneurs. Items listed in Column III of Annexure to the Press Note 3(2014) will require Industrial License.

5. For manufacture of which items in the Defence sector, would an Industrial License be required?

Answer: The Industrial License will be required for manufacture of those Defence items which have been mentioned in the 3rd Column of the Annexure to the Press Note No. 3 (2014 Series) dated 26/06/2014.

The following items shall not require Industrial License:

Dual use items, having military as well as civilian applications and

Items/ parts/ components/ castings/ forgings/ test equipments, which are not part of the defence products list issued vide Press Note 3 (2014 Series)

6. What is the Ministry of Defence’s Policy relating to Dual Items?

Answer: Department of Defence Production, Ministry of Defence has clarified that dual use items, having military as well as civilian applications, other than those specially mentioned in the Defence Product list issued vide Press Note No. 3 (2014 series), would not require Industrial License from Defence angle.

7. Whether Industrial License is required for manufacture of “Civil Aerospace” Items?

Answer: Manufacture of items for “Civil Aerospace” is under compulsory licensing. Industrial license for manufacture of such items is issued on the recommendations of Department of Defence Production, Ministry of Defence.

8. Is there any clarification regarding Indian Offset Partner (IOP)?

Answer: D/o Defence Production has clarified that the Indian Offset Partner shall, besides any other regulations in force, also comply with the guidelines/ licensing requirements stipulated by the DIPP as applicable. Possession of defence industrial license, is not a pre-requisite for becoming an IOP and it is mandatory only if it is required under the licensing requirements/guidelines issued by DIPP.

9. Is IL needed to fulfill offset obligations?

Answer: Industrial License is needed only for the items which are covered under Defence Product List. The Defence List is available at the DIPP website for guidance to the entrepreneurs.

10. What is the policy relating to licensing for EoU Units or Units in SEZ Area?

Answer: Department of Commerce will consider the Licensing applications for EoU Units or Units located in SEZ area.

11. What is the policy relating to the Extension of Validity of Industrial License?

Answer:
✔ Initial validity of Industrial License for Defence Sector is Fifteen Years with a provision to grant extension for a period of three years. Press Note 10 (2015 Series) refers.
✔ The Licensee has to submit progress report (form ‘G’) on six monthly basis, until commencement of commercial production. (Form ‘G’ is provided with the Industrial License)
✔ If the licensee commences the commercial production within validity period, the license continues to be valid and there is no need for applying for extension of validity.
✔ In case, the licensee fails to commence commercial production within initial validity period, they may directly apply to the concerned Administrative Ministry for extension of validity of their Industrial License, as the extension of validity of IL is processed by the concerned Administrative Ministry.
✔ Initial validity of an Industrial License (other than Defence Sector) will be for a period of three years. The licensee can apply twice, for extension of validity for a period of two years each. Press Note 9 (2014 Series) refers.
✔ The total period of validity of the Industrial license (other than Defence Sector) will be seven years, within which the commercial production has to commence. Press Note 9 (2014 Series) refers
✔ In case the commercial production is not commenced within this period the license would be rendered invalid.

12. Will the guidelines mentioned in Press Note No.5 (2014 series) regarding ‘Extension of Validity’ be applicable from prospective effect i.e. 2nd July 2014 or are also applicable to the licenses issued prior to the issue of Press Note No.5 (2014 series).

Answer: The initial validity of Industrial Licensed has been increased to three years, irrespective of whether the license has been issued before or after 2nd July 2014. (Date of issue of Press Note No. 5 of 2014). The licensee (other than Defence Sector) has to apply for extension of validity after three years, as applicable.
Vide Press Note 10(2015 Series), the validity for defence sector has been increased to 15 years. Hence, the Defence Sector licensee has to apply for extension of validity after fifteen years for further three years. (For details please see Q.No.11)

13. Whether partial commencement of production, i.e. if the licensee commences the production of one of the many items covered under Industrial License, will be treated as commencement of commercial production?

Answer: The partial commencement of commercial production is accepted as the commencement of commercial production in respect of the entire Industrial License.

14. Is there any procedure relating to change of owner of the Registered Industrial Undertaking who has been granted an Industrial License?

Answer: Rule 19(A) (2) of the Registration and Licensing of Industrial Undertakings 1952 Rules (RLIU) may be referred to.

15. What is the procedure relating to Change of Name in the License?

Answer: Rule 19(A) of the Registration and Licensing of Industrial Undertakings 1952 Rules (RLIU) may be referred to. The company would be required to file their request for change of name of the company with a copy of the fresh ROC Certificate. The proposal for change of name would be processed in consultation with the concerned agencies/ Ministries/Departments.

16. What is the procedure relating to endorsement of Change or addition of location in the License?

Answer: The applicant has to apply to DIPP with the copy of the Industrial License; information relating to Investment in Plant and Machinery duly certified by a Chartered Accountant in r/o each IL held by the Company and documents relating to the details of the new location as per the Col. No. IV(1) and (2) of the IL application form.

17. Whether Department of Industrial Policy & Promotion grant industrial License for manufacture of small arms?

Answer: The work related to issuance of license for manufacture of small arms was transferred to Ministry of Home Affairs since 2011 as MHA is the appropriate authority for grant of licenses for manufacture of Small Arms and Ammunitions under Arms Act 1959 and Arms Rules, 1962.

18. Where an Industrial License application can be filed?

Answer: Online filing of Industrial License (IL) and Industrial Entrepreneur Memorandum (IEM) has been introduced w.e.f. 20/01/2014 to provide single-window, transparent and integrated electronic services to investors, industries and business. The eBiz portal will provide entrepreneurs 24X7 Services in respect of online filing of applications, tracking of the status and obtaining online approvals of IL/ Acknowledgement of IEM at ebiz.gov.in. Online filing has been made mandatory w.e.f. 15/05/2014. Application for IL is no more accepted in hard copy.

19. Is an Industrial License required for Maintenance, Repair and Overhaul (MRO) activities?

Answer: The MRO activities in Defence sector will be treated as Services and would not be subjected to the Industrial License under IDR Act unless it actually involves manufacturing of any components/sub-assemblies which are licensable and that product would remain the property of the same customer after MRO operation.

20. Who is the licensing authority for manufacture of alcohol?

Answer: For setting up of distillery and fermentation unit for manufacturing denatured spirit, rectified spirit and other alcohol, containing more than 80% alcohol, Industrial License is not required. Entrepreneur needs to file an Industrial Entrepreneur Memorandum (IEM) with the Secretariat for Industrial Assistance, Department of Industrial Policy and Promotion.

Manufacture of Potable Alcohol containing less than 80% alcohol, is covered under compulsory licensing. However, grant of license for this comes under the exclusive domain of the State Government. In this regard Hon’ble Supreme Court had delivered a judgement in the matter of Bihar Distilleries Vs UOI dated 29/01/1997, which inter-alia stated that Potable Alcohol comes under the exclusive domain of the State Government with regard to manufacture, possession etc. This decision was reiterated by the Apex Court on 23/02/2008 in C.A. No.2185/2802, as under the Constitutional Scheme regulatory of manufacture and sale of potable alcohol was vested with the State Government. The DIPP had stopped processing of applications/request for amendments etc. The license for Potable Alcohol is presently being granted by the concerned State Governments.

21. Is there any list of items, which categorizes the Defence items under Defence Security Manual for Licensed Industry?

Answer: A list of Defence Products categorized in A & B category from security angle prepared by Department of Defence Production, Ministry of Defence, is available at DIPP’s website under the head Investors Guidance, sub-head Defence items requiring Industrial License category wise.

22. Which NIC Code is presently being followed?

Answer: Presently, the Industrial Classification NIC Code -2008 is being followed.

23. Which items fall under category “Body Armours or protective garments” requiring compulsory licensing?

Answer: The items meeting the protective requirements of level III (NIJ 0101.06, July 2008 or national equivalent and above as per the Defence Products List (Press Note 3 of 2014) would be covered under the category of “Body Armours or protective garments” requiring compulsory licensing.

24. Are there any new procedures stipulated in the Industrial License?

Answer:
✔ The annual capacity for defence items in the Industrial License has been deregulated. This would however entail submission of half yearly production return to Department of Industrial Policy and Promotion and Department of Defence Production, Ministry of Defence in the prescribed format.
✔ The licensee shall be allowed to sell Defence items to Government entities under the control of Ministry of Home Affairs, State Governments, Public Sector Undertakings and other valid Defence Licensed Companies without prior approval of the Department of defence Production. However, for sale of the items to any other entity, the Licensee shall take prior permission from the Department of Defence Production, Ministry of Defence.

The applicant has to apply online using their DSC & there after needs to submit the hard copies at SIA, DIPP Udyog Bhawan, New Delhi.

 

For further facilitation in obtaining the IL please contact the undersigned-

CP: Mr. Ravi Jha

Mob: +91-9999005379

Email: intelconsul@gmail.com or rsj@sjeximtech.com

Web: www.sjeximtech.com

FB: www.facebook.com/sjeximservices

G+: https://plus.google.com/100040845267168622593?hl=en

Disclaimer:  Please refer to official sources before effecting a decision
“We Provide Specialized Service / Consultancy on the subject matter. For a Quote Please provide a detailed outline of your Query / Requirement through email.”

 

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