Discuss the licensing policy in India in 1951
Answers
Since the liberalization and deregulation of the Indian economy in 1991, most industries have been exempt from obtaining an industrial license to start manufacturing in India. Government attention is reserved only for those industries that may impact public health, safety, and national security.
In India, industrial licenses are regulated by the IDRA, 1951 Act, and are approved by the Secretarial of Industrial Assistance (SIA) on the recommendation of the licensing committee.The provisions of the Act restrict a licensed industrial undertaking from manufacturing a new article unless the license has been renewed or a new license has been obtained to include the new article.
Industries that require industrial licensing for manufacturing in India include:
Industries under compulsory licensing; and,
Industrial undertakings attracting location restrictions. The licensing provision also applies to the expansion of the existing industrial units.
Removal of manufacturing curbs on products previously reserved for MSMEs
Earlier, large industries that manufactured items that were exclusively reserved for Micro, Small, and Medium Enterprises (MSME) also needed to obtain an industrial license.
MSMEs were previously known as Small Scale Industry (SSI). The provision was aimed at protecting indigenous manufacturers from unequal competition with large scale industries.
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Industrial Licensing in India: Norms and Policy
August 18, 2020Posted byIndia BriefingReading Time:4 minutes
Industrial licensing
Since the liberalization and deregulation of the Indian economy in 1991, most industries have been exempt from obtaining an industrial license to start manufacturing in India. Government attention is reserved only for those industries that may impact public health, safety, and national security.
In India, industrial licenses are regulated by the IDRA, 1951 Act, and are approved by the Secretarial of Industrial Assistance (SIA) on the recommendation of the licensing committee.
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The provisions of the Act restrict a licensed industrial undertaking from manufacturing a new article unless the license has been renewed or a new license has been obtained to include the new article.
Industries that require industrial licensing for manufacturing in India include:
Industries under compulsory licensing; and,
Industrial undertakings attracting location restrictions. The licensing provision also applies to the expansion of the existing industrial units.
Removal of manufacturing curbs on products previously reserved for MSMEs
Earlier, large industries that manufactured items that were exclusively reserved for Micro, Small, and Medium Enterprises (MSME) also needed to obtain an industrial license.
MSMEs were previously known as Small Scale Industry (SSI). The provision was aimed at protecting indigenous manufacturers from unequal competition with large scale industries.
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However, in April 2015, the government unreserved these items to encourage greater foreign investment, incorporate better technologies, and enhance competition in the Indian and global market for the products.
Large industries are now permitted to manufacture items, including bread, pickles and chutneys, mustard oil, groundnut oil, wooden furniture, firework, steel chairs and tables, padlocks, stainless steel and aluminum utensils, glass bangles, exercise books and registers, wax candles, laundry soap, safety matches, agarbattis, etc. without obtaining an industrial license.
Industries subject to compulsory licensing in India
Businesses planning to establish industries to produce any of the following items in India must obtain a compulsory license:
Tobacco items
Defense aerospace and warships
Hazardous chemicals
Industrial explosives
These industries require compulsory licensing because of environmental, safety, and strategic considerations.
The Industries (Development and Regulation) Amendment Act, 2016 excluded the production of alcohol for potable purposes (domestic consumption) from the ambit of the Act. (The Supreme Court in a 1997 judgment demarcated the regulation of production of alcohol between the central government and the states. Thus, the central government regulates the production of alcohol for industrial use and states regulate the production of alcohol for domestic consumption.)
Answer:
Discuss the licensing policy in India in 1951
Government attention is reserved only for those industries that may impact public health, safety, and national security. In India, industrial licenses are regulated by the IDRA, 1951 Act, and are approved by the Secretarial of Industrial Assistance (SIA) on the recommendation of the licensing committee.