INTRODUCTION

For the organized growth and development of industrial India, Parliament has enacted the
Industrial (Development and Regulation) Act, 1951. The IDR Act provisions apply to
industrial undertakings, which means an undertaking pertaining to a scheduled industry
carried on in one or more factories by any person or authority.
Chapter III of the Act pertaining to the regulation of scheduled industries makes it
mandatory for every existing industrial undertaking to seek registration with the Central
Government. Also, every new industrial undertaking has been mandated to obtain a license
by the Central Government.
Moreover, a registered or a licensed industrial undertaking is restricted from manufacturing
a new article unless the license for new article has been obtained or prior license has been
amended to include the article, as the case may be.
The rules regarding the granting of registration certificates and licenses are provided under
The Registration and Licensing of Industrial Undertaking Rules, 1952 and Notification
477(E) dated July 25, 1991, of the Department of Industrial Policy and Promotion.
Presently, an industrial license is required for industries retained under compulsory
licensing, the manufacturing of items reserved for the small scale sector by larger units, and
when the proposed location attracts restrictions.

MEANING
An industry is a group of manufacturers or businesses that produce a particular kind of
goods or services.
A licence is a written permission granted to am enterprise by the Government according to
which the product mentioned therein can be manufactured by the enterprise .
Industrial Licensing is a marketing and brand extension tool that is widely used by everyone
from major corporations to the smallest of small business. Entertainment, sports and
fashion are the areas of licensing that are most readily apparent to consumers, but the
business reaches into the worlds of corporate brands, art, publishing, colleges and
universities and non-profit groups, toys, games and beyond. Licensing can extend a
corporate brand into new categories, areas of a store, or into new stores overall. It's a way
to move a brand into new businesses without a major investment in new manufacturing
processes, machinery or facilities.

OBJECTIVES
The main objectives of licencing are The prevention of crime and disorder :Medway Council, as the licensing authority, may take into account and recognise that
certain criminal activity or associated problems may be taking place or have taken
place despite the best efforts of the licensee and the staff working at the premises. In
such circumstances, the council is empowered to take any necessary steps to remedy
the problems. Its role is to promote the licensing objectives in the interests of the
wider community rather than determine guilt or innocence of individuals. Such issues
are for the courts of law.
If you are considering objecting, reviewing a licence or making a complaint, you must
provide evidence that you have seen an issue in relation to the following at first-hand:
breaches of licensing conditions, authorised activities or authorised hours;
a criminal offence (which should be reported to the police first);
anti-social behaviour.
Public safety :The council, as the licensing authority, cannot take into account any issues that are
dealt with in other legislation, such as public health, cleanliness or hygiene.
If you are considering objecting, reviewing a licence or making a complaint you must
provide evidence that you have seen an issue in relation to the following at first-hand:
overcrowding (leading to an increased risk of violence or to the safety of
people in the premises);
fire issues (which should be reported to the fire service first);
anyone being hurt or having an accident in licensed premises (who should
seek medical care and report to the relevant authorities).
The prevention of public nuisance :Public nuisance is given a statutory meaning in many pieces of legislation. It is,
however, not narrowly defined in the Licensing Act 2003 and retains its broad
common law meaning. The issues mainly concern noise nuisance, light pollution,
noxious smells and litter.
Objections and complaints from interested parties
Public nuisance could include low-level nuisance, perhaps affecting a few people
living locally as well as major disturbance affecting the whole community. Examples
of nuisance could include:

noise;
threats to community safety;
litter;

odour;
smoke;
lights.

If you are considering objecting, reviewing a licence or making a complaint, you must
provide evidence that you have experienced a nuisance issue at first hand. Please
make sure that you have:
reported the incident to the relevant authorities in the first instance and
the incident has happened on a repeated basis.
The protection of children from harm:This objective relates to the protection of children from moral, psychological and
physical harm. This includes protecting them from early exposure to:

strong language,
sexual expletives,
adult entertainment,
drinking alcohol,
drug-taking,
gambling,
violence.
Objections and complaints from interested parties ,The Secretary of State for
Culture, Media and Sport recommends that the council, as the licensing
authority, develops family-friendly environments that should not be frustrated
by overly-restrictive conditions relating to children.
Nevertheless, the council also has a responsibility to protect children.
If you are considering objecting, reviewing a licence or making a complaint you
must provide evidence that you have seen actual or potential harm for children
at first-hand. Please make sure that you have:
reported the incident to the relevant authorities in the first instance, for
example, the sale of age-restricted products (this includes sales of alcohol
and tobacco to children or young people who are under-age);
details of the children affected.
Mentioned above are most important points of industrial licencing but rather
than this there are many other objectives which are less important than above
points, they are; To regulate the location of industrial unit so as to secure a balanced
regional development .
To limit the industrial capacity within the targets set by the plans.

 To foster technology and economic improvement in industries by insuring

development of units of economic size and adopting modern processes.
To protect small -scale industries against undue competition with large scale industries.
To encourage new entrepreneurs to start industrial units, thus broadening
the entrepreneurial base.
To prevent both monopoly and concentration of wealth.
To direct investment in industries according to plan priorities.

Evolution of licencing in india

The Licence Raj or Permit Raj (rj, meaning "rule" in Hindi) was the elaborate system of
licences, regulations and accompanying red tape that were required to set up and run
businesses in India between 1947 and 1990.
The Licence Rule was a result of India's decision to have a planned economy where all aspects
of the economy are controlled by the state and licences are given to a select few. Up to 80
government agencies had to be satisfied before private companies could produce something
and, if granted, the government would regulate production.
Reforms since the mid-1980s have significantly reduced regulation, but Indian labour laws still
prevent manufacturers from reducing their workforce without prohibitive burdens.
The term plays off "British Rule", the period of British rule in India. It was coined by India
statesman Chakravarthi Ruleagopalachari, who firmly opposed it for its potential for political
corruption and economic stagnation and founded the Swatantra Party to oppose these
practices.
The architect of the system of Licence Rule was Jawaharlal Nehru, India's first Prime
Minister.Private players could manufacture goods only with official licences. The quantity of
goods they were allowed to produce was determined by the licence regime, not by freemarket demand.
The key characteristic of the Licence Rule is a Planning Commission that centrally administers
the economy of the country. Like a command economy, India had Five-Year Plans on the lines
of the Five-Year Plans in the Soviet Union.
Before the process of reforms began in 1991, the government attempted to close the Indian
economy to the outside world. The Indian currency, the rupee, was inconvertible and high
tariffs and import licensing prevented foreign goods reaching the market. India also operated
a system of central planning for the economy, in which firms required licences to invest and
develop. This bureaucracy often led to absurd restrictions: up to 80 agencies had to be
satisfied before a firm could be granted a licence to produce, and, even then, the state would
decide what was produced, how much, at what price and what sources of capital were used.
The government also prevented firms from laying off workers or closing factories. The central
pillar of the policy was import substitution industrialisation, the belief that countries like India
needed to rely on internal markets for development, not international trade, a belief
generated by a mixture of socialism and the experience of colonial exploitation. Planning
commission and the state, rather than markets, would determine how much investment was
needed in which sectors.

New industrial licencing in india

As a result of various changes made in the licencing policy in 1970, the following are the main
changes made In the licencing policy in india : Compulsory licensing :- The new industrial policy has abolished the industrial licencing
irrespective of the levels of investments for all industries except five specific
industries. These are alcohol, cigarettes, hazardous chemicals, electronic aerospace,
defence equipments and industrial explosives.
In respect of de licensed industry, no approval is required from the government.
However , entrepreneurs are required to submit an Industrial Entrepreneur
Memorandum (IEM) to the Secretariat for Industrial Approval (SIA) which
acknowledged receipt.
Industries reserved for public sector :- Now only three industries are reserved
exclusively for the public sector atomic energy, mineral specified in the schedule to
the atomic energy (control of production and use order ) 1953 , rail transport.
Industrial Location policy Liberalized:- In a departure from the earlier locational
policies for industries, new locational industries provided that in location other than
cities of population more than 1 million. There will be no requirement of obtaining
approval from the centre , except for the Industries subject to the compulsory
licensing. In cities of population more than 1 million , industries other than those of
non-polluting nature, were required to be located 25 km outside the periphery.
Imported Capital Goods:- In projects where imported goods are required, automatic
clearance will be given in cases where foreign exchange availability is ensured through
foreign equity, or if the GIF value of imported capital goods required is less than 25%
of total value (net of taxes) of plant and equipment upto a maximum value of Rs. 2
crore.
On other cases, imports of capital goods will require clearance from the Secretariat of
Industrial Approval (SIA) in the Department of Industrial Development according to
availability of foreign exchange resources.
Other provisions : No licence is required for the expansion of production capacity.
The list of protected items for small scale industry is still applicable.
The new policy lays greater stress on preventing unfair trade practices in
monopoly rather than on the size of the business houses.

Procedure for obtaining industrial licence.

With progressive liberalization and deregulation of the economy, industrial license is
required in very few cases. Industrial licenses are regulated under the Industries
(Development and Regulation) Act 1951 made by the Central Government. At present,
industrial license is required only for the following:
Industries retained under compulsory licensing .
Manufacture of items reserved for small scale sector by larger units.
When the proposed location attracts locational restriction
The following industries require compulsory license:

Alcoholics drinks.
Cigarettes and tobacco products.
Electronic aerospace and defense equipment.
Explosives.
Hazardous chemicals such as hydrocyanic acid, phosgene, isocynates and diisocynates of hydro carbon and derivatives.

Procedure for obtaining an industrial license

Industrial license is granted by the Secretariat for Industrial Assistance in Department of
Industrial Policy and Promotion, Government of India. Application for industrial license is
required to be submitted in Form FC-IL to Department of Industrial Policy and Promotion.
FORM FC-IL - Composite form for Foreign Collaboration and Industrial Licence.
After due consideration, the government then issues the Certificate of Registration.
Similarly, an application (Form IL-FC) for obtaining a license by a new undertaking has to be
made to the Central Government along with the fee, after which the Ministry issues a
license. Industrial licenses are granted by the Secretarial of Industrial Assistance (SIA) on the
recommendation of the Licensing Committee.
After a an industrial undertaking has obtained a license or permission as above, it becomes
eligible to the allotment of controlled commodities and for the issuance of an import license
for goods required for the construction and operation of the industrial undertaking.

Criticism of Present Industrial Policy

Corruption and Delay:- The requirements for licenses, permits and inspections at the
State and Local levels continue to be onerous and extract a heavy toll in term of effort and
resources from industrial units. It takes 89 days to start a business in India, as compared
to 41 days in China , 50 days in Malaysia and just 22 days in South Korea. The State
Government have to act as front line implementors of reforms. In short what we are
advocating is the need for removing chains , buy putting Watch dogsin order, with the
qualifying remark that over-regulation derives away the goose that lays golden eggs.
Consumers rights ignored:- There are no regulatory bodies to keep a check on the
conduct specially with respect to pricing , so that the rights of the consumers are
adequately protected . There are of course, in existence two incomplete institutions or
legislation in the form of MRTP Act and The Consumer Protection Act, both of which do
not have the same legal status as that of say in the UK to regulate industrial price.
Lengthy Procedure :- For obtaining industrial licence, the entrepreneur has to take
approval from various Government departments, like Department of Industries ,
Department of Company Affairs, Department of Controller of Capital Issue, Department
of electricity and so on.
Conflicting objectives :- Licensing involve conflicting objective like, on one hand ,
Government wants to increase industrial production in the economy, on the other hand,
Government restricts the activities of industrial units like substantial expansion,
production of new articles etc.
Poor Follow up:- There is poor follow up in the present industrial Licensing policy because
after granting license authorities do not check whether the business unit is following the
provisions of licensing or not.