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Industrial licence validity extended to three years

ET Bureau Jul 3, 2014, 07.14AM IST

In yet another effort to enhance the ease of doing business in the country, the Narendra Modi-led government has extended the validity period of industrial licence to three years with a provision for further extension of two years.

“In supersession of all earlier Press Notes, the period of validity of industrial licence is being extended from two years to three years as a measure for ease of doing business,” commerce ministry said in a note issued on Wednesday. The extension would now be granted by the concerned ministry and the applicant will not have to go back to the licensing committee.

However, in the case of industrial licence in defence and explosive sectors, the request has to be forwarded to the home ministry and the concerned state government, which, after seeking comments of these agencies, would consider granting the extension.

According to the note, 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 government had recently de-licensed several defence products for the private sector besides upgrading the National Industrial Classification Code with a view to making business climate more investor friendly.

India ranks 134 among 189 economies in the World Bank’s ease of doing business list The ruling BJP had in its election manifesto said that it would ensure “that a conducive, enabling environment is created making ‘doing business’ in India easy. We will focus on cutting red tape, simplifying procedures and removing the bottlenecks”. Henceforth, companies that fail to start commercial production of items within three years of issue of licence will have to submit the application for extension of licence to the concerned administrative ministry 60 days prior to the expiry of the three-year period, in the absence of which a written justification has to be issued.

However, the extension would be granted only to applicants who have acquired land, either under ownership or on lease, for a minimum of 30 years and the construction on the projects has commenced under which orders for plant and machinery should have been placed.

Welcoming the move, CII director general Chandrajit Banerjee said, “It is heartening to see that companies will not have to go back to the licensing committee for extension. Instead, it can now be done with the approval of the concerned joint secretary of the ministry.”