Government of Tamil Nadu
Ease of doing business in Tamilnadu
  • Ease of doing business in Tamilnadu

Industrial Licensing Policy

  • Industries licensing policy are regulated under the Industries Development Regulation Act 1951
  • At present Industrial Licensing for manufacturing is required in case of :-
    • Industries under compulsory licensing
    • Manufacture of item reserved for SSI sector by non SSI units
    • Project location attracts locational restrictions

       Compulsory Licensing
      Following industries require compulsory industrial licence under the provisions of IDR Act, 1951.

  • Distillation and brewing of alcoholic drinks.
  • Cigars and cigarettes of tobacco and manufactured tobacco substitutes;
  • Electronic Aerospace and defence equipment: all types;
  • Industrial explosives, including detonating fuses, safety fuses, gun powder, nitrocellulose and matches;
  • Hazardous chemicals;
    • Hydrocyanic acid and its derivatives
    • Phosgene and its derivatives
    • Isocyanates and di-isocyanates of hydrocarbon, not elsewhere specified (example: Methyl Isocyanate).

Large Enterprises undertaking manufacture of items reserved for SSI units
The Government has reserved certain items for exclusive manufacture in the small scale sector. Non-small scale units can undertake the manufacture of items reserved for small scale sector, only after obtaining an industrial license. In such cases, the non-small scale unit is required to undertake an obligation to export 50% of the production of SSI reserved items.
Locational Restrictions
Industrial undertakings are free to select the location of their projects. Industrial licence is however required if the proposed location is within 25 km of standard urban area limits of 23 cities having a population of one million as per 1991 Census.
The Locational restriction however does not apply:

  • If the unit were to be located in an area designated as an “industrial area” before the 25th July, 1991.
  • In the case of Electronics, Computer software and Printing and any other industry, this may be notified in future as “non polluting industry”.

The location of industrial units is subject to applicable local zoning and land use regulations and environmental regulations.
Procedure for obtaining Industrial License
Industrial license is granted by the Secretarial of Industrial Assistance (SIA) on the recommendation of the Licensing Committee. For this purpose, Online application in the prescribed form (Form FC-IL) (with Applicable fees) may be submitted to SIA at ebiz portal (www.ebiz.gov.in) specially developed by GOI and also available on www.dipp.gov.in.
Procedure for filing IEM

  • Industrial undertakings exempt from industrial license are only required to file an online Industrial Entrepreneur’s Memorandum (IEM) in Part ‘A’, in the prescribed format (Form IEM) with Secretariat for Industrial Assistance (SIA), Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, Government of India, New Delhi at ebiz portal ( www.ebiz.gov.in )and also available on www.dipp.gov.in
  • Submission of IEM form requires a fee of Rs.1000/- for up to 10 items proposed to be manufactured. For more than 10 items an additional fee of Rs.250/- for up to 10 additional items needs to be paid.
    • On filing the IEM, an acknowledgement containing the SIA registration No. for future reference is issued. This acknowledgement is sent by post and no further approval is required.

Upon commencement of commercial production, industrial undertakings need to file online information in Part-B of the IEM to SIA.
No fee is to be paid for filing Part-B.

Establishing an Industrial Project
Steps to be followed by an entrepreneur       

  • Gather information on the project and the products you propose to manufacture.
  • Prepare a Project Report giving details on the project and the products you propose to manufacture.
  • Decide the location of the Project to be set up.
  • Find out the procedures required to be completed before physical implementation of the project

Get a detailed project report prepared which interalia should include following components

  • Market survey of the products you propose to manufacture.
  • Characteristics of the Location.
  • Land and building requirements.
  • Requirements and availability of Plant and Machinery.
  • Requirement of other utilities namely power, water, steam etc.
  • Assessment of Working Capital requirements.
  • Technology tie-up.
  • Raw materials specifications.
  • Manpower requirements.
  • Schedule of Implementation.
  • Estimates of Project Cost.
  • Tie up of means of finance.
  • Break even Point.
  • Internal Rate of Return.
  • Cash flow.
  • Debt service Coverage Ratio to establish financial viability.
  • Economic Benefits.