Government extends validity of industrial licences to 7 years

Government extends validity of industrial licences to 7 years

"As a measure of 'ease of doing business', henceforth, two extensions of
two years each in the initial validity of three years of (an) industrial
licence shall be allowed up to seven years," the department of industrial
policy and promotion (DIPP) said in a notification.

In July, DIPP <http://economictimes.indiatimes.com/topic/DIPP> had extended
the validity of an industrial licence to three years from two, as part of
measures to cut red tape. The BJP government is working to promote India as
a manufacturing hub, with Prime Minister
<http://economictimes.indiatimes.com/topic/Prime-Minister> Narendra Modi
launching the 'Make In India' drive last month. Manufacturing contracted by
0.7% in 2013-14, but recovered to 3.5% in the first quarter of the fiscal.

DIPP on Monday also relaxed the stipulation on annual capacity for defence
items for industrial licences to encourage more companies to enter the
sector and allow manufacturers to scale up. Licensees will however have to
submit half-yearly production returns to DIPP and the department of defense
<http://economictimes.indiatimes.com/topic/department-of-defense> production
(DoDP).

Licensees will be allowed to sell defense items to government entities
under the control of ministry of home affairs, state governments, public
sector units and other valid defence-licensed companies without prior DoDP
approval. "However, for sale of the item to any other entity, the licensee
shall take prior permission from DoDP," the notification said.

All applications related to DIPP will be processed within 90 days. In the
case of defence manufacturing, the ministry of home affairs will give
security clearance within three months, which will ensure faster clearances.


These announcements are part of government's plan to promote indigenisation
of India's defence production and cut its large import bill on this count.

The foreign direct investment
<http://economictimes.indiatimes.com/topic/foreign-direct-investment> limit
in the defence sector was raised to 49% from 26% in August by the Modi
government. It also allowed more than one Indian company to hold a 51%
share in a defence production company.