3) What is an industrial license? Enumerate the circumstances under which it is necessary.

 

IGNOU ASSIGNMENT 

Course Code : MCO – 04 

Course Title : Business Environment 

Assignment Code : MCO - 04 /TMA/2022-23 

Coverage : All Blocks 

3) What is an industrial license? Enumerate the circumstances under which it is necessary.

An industrial license is a legal document issued by the government of a country that allows a company or an individual to establish, operate, or expand an industrial enterprise in that country. It is a regulatory measure that helps the government to monitor and control the growth of industrial activities in a country, particularly those that are considered sensitive or strategic.

• In India, an industrial license was required until 1991 for the establishment of a new industrial undertaking or for the expansion of an existing one. However, in 1991, the government of India abolished the industrial licensing system for most industries to promote economic liberalization and to attract foreign investment.
• Currently, industrial licenses are required only for a few industries that are considered sensitive for national security or public safety, such as defense, explosives, hazardous chemicals, and electronics. In such cases, the industrial license is issued by the Department for Promotion of Industry and Internal Trade (DPIIT), which is a government agency responsible for promoting industrial development and formulating policies related to industrial licensing.
• To obtain an industrial license in India, the applicant needs to submit a detailed application to the DPIIT, along with supporting documents such as a project report, a feasibility study, and a detailed business plan. The DPIIT will review the application and may seek additional information or clarification before granting the license.

In summary, an industrial license is a legal document issued by the government that allows a company or individual to establish, operate, or expand an industrial enterprise in a country. In India, industrial licensing has been abolished for most industries, except for those that are considered sensitive for national security or public safety.

In India, industrial licenses are required under certain circumstances, including:

1. For Industries Reserved for Public Sector: The government may reserve certain industries, such as defense, railways, and atomic energy, exclusively for the public sector. In such cases, an industrial license is required to establish, operate, or expand such industries.
2. For Industries Listed Under Annexure-1: Annexure-1 of the Industrial Licensing Policy lists industries that require an industrial license for establishment, operation, or expansion. Some of the industries listed under Annexure-1 include hazardous chemicals, electronic aerospace and defense equipment, and aerospace and defense items and components.
3. For Industries Located in Border Areas: Industries located in border areas, such as Jammu and Kashmir, Himachal Pradesh, Uttarakhand, and the northeastern states, require an industrial license from the government.
4. For Industries Engaged in the Manufacture of Items Reserved for Small Scale Sector: Certain items are reserved for the small-scale sector, such as handmade paper, stationery items, and sporting goods. Industries engaged in the manufacture of such items require an industrial license from the government.
5. For Industries Engaged in the Manufacture of Items Reserved for Exclusive Manufacture in the Small Scale Sector: Certain items are exclusively reserved for manufacture in the small-scale sector, such as khadi and village industries, agarbattis, and locks. Industries engaged in the manufacture of such items require an industrial license from the government.
6. For Industries Requiring Environmental Clearance: Industries that are likely to cause pollution or have a significant impact on the environment require an environmental clearance from the government, which is granted along with the industrial license.
7. For Industries Requiring Technological Collaboration: Industries that require technological collaboration with foreign companies or individuals also require an industrial license from the government.
8. Setting up a new industrial undertaking: If a company wants to establish a new industrial unit in India, it may require an industrial license depending on the nature of the industry and the location.
9. Expanding an existing industrial undertaking: If a company wants to expand its existing industrial unit, it may require an industrial license if the expansion involves an increase in the installed capacity or a change in the nature of the industry.
10. Setting up an industry in a notified backward area: If a company wants to set up an industry in a notified backward area, it may require an industrial license to avail certain incentives and benefits offered by the government.

In summary, industrial licenses are required in India under various circumstances, including industries reserved for public sector, industries listed under Annexure-1, industries located in border areas, industries engaged in the manufacture of items reserved for the small-scale sector or for exclusive manufacture in the small scale sector, industries requiring environmental clearance, and industries requiring technological collaboration.