S J EXIM Services

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

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.

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]

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.

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)

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.

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.

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.

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.

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

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.

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)

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

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

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.

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.

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.

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.

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.

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.

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.

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

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.