More reports on: Industry - general

Govt extends validity period of industrial licence to 3 yrs

02 July 2014

The government has decided to extend the validity period of industrial licences from 2 years to 3 years, with a provision for further extension of two years, in a move to streamline procedures and make it easier for investors to do business in India.

Nirmala SitharamanHowever, the licence will lapse automatically after five years in the absence of commencement of commercial production, the commerce and industry ministry said in a press note today.

The new guidelines are also applicable for extension of validity of industrial licence in cases where the licence holder has not commenced production even after two years, provided renewal is sought within three years of issue of the licence, the press note said.

The application for extension of licence should be submitted to the concerned administrative ministry, 60 days prior to the expiry of the three-year period or otherwise specified for commencement of commercial production. In case the application is not received in time, justification for late application has to be submitted along with the application.

At the time of applying for grant of extension of validity of licence the condition and status of the firm should be same as mentioned in the industrial license issued to the firm. Any amendment, viz, change in the name of the company, increases/changes in licence capacity, alteration or change in the premises, part shifting etc should have been endorsed in the licence.

Applicant should forward request to the ministry of home affairs and concerned state government and after seeking comments of these agencies, case should be considered for extension of validity. MHA may be consulted only if there is change in board of directors/key personnel.

Applicant should meet following conditions at the time of applying of extension:

  • Land should have been acquired, either under ownership or on lease for minimum period of 30 years;
  • The construction on the projects should have commenced (a certificate from appropriate local body viz municipal corporation) may be provided in this regard;
  • Orders for plant and machinery for the project should have been placed.

Cases involving transfer, suspension or cancellation of licence in the intervening period should not be considered for extension.

Renewal of licence would be allowed for a period of two years. Any Industrial licence, wherein commercial production has not started within a period of five years of issue of licence, will be treated as automatically lapsed.

The BJP, in its election manifesto, had promised to ensure "that a conducive, enabling environment is created making 'doing business' in India easy. We will focus on cutting the red tape, simplifying the procedures and removing the bottlenecks".

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