Industrial Licence under the IDR Act — Who Needs One
An industrial licence is a central approval under the Industries (Development and Regulation) Act, 1951, and today it is needed only for a short list of industries. Most manufacturers just file an Industrial Entrepreneur Memorandum. We check which route you fall under and prepare the filing on the DPIIT portal.
What it is
Until the 1990s almost every factory needed a central licence. The IDR Act still stands, but most industries are now delicensed. A compulsory licence is needed only for a small list of sectors, such as industrial explosives, hazardous chemicals, electronic aerospace and defence equipment, and tobacco products such as cigars and cigarettes.
For delicensed industries, a non-MSME unit files an Industrial Entrepreneur Memorandum (IEM) with the Department for Promotion of Industry and Internal Trade (DPIIT). Part A is filed before you start, and Part B after commercial production begins. Both are filed online on the DPIIT portal. An industrial licence is not the same as a factory licence from the state labour department, which we cover separately.
Who it applies to
Makers of listed items
If your product falls in the compulsory-licence list, you must apply for and receive the licence before you start manufacturing.
Non-MSME manufacturers in delicensed sectors
You do not need a licence. You do file an IEM. An acknowledgement is issued on receipt of Part A, with no separate approval wait.
MSMEs and new promoters
MSMEs register on the Udyam portal instead of filing an IEM. Say you are setting up a small packaging unit in Ballabgarh: we check turnover and investment before you file anything.
Why it matters
You cannot start production without it
For a listed industry, manufacturing without the licence is a breach of the Act. Later approvals depend on it.
The IEM keeps you on record
It creates the central record of your investment, employment and activity, and lets the government check that unlicensed manufacture of listed items is not taking place.
Other approvals line up behind it
Here is the catch: state consents, factory licence and fire approvals all ask for project papers, and they get easier once your central status is settled.
Documents required
Entity papers
- Certificate of incorporation or firm deed
- MOA and AOA, where a company
- Board resolution authorising the application
- PAN and DSC of the authorised signatory
Project details
- Description of the manufacturing process
- Items and capacity proposed
- Location details of the unit
- Foreign investment details, where any
Declarations
- Ownership proof of the site
- Disclosure of any litigation involving the company
- Statutory approvals already held
Licence or IEM: which one applies
| Compulsory licence | IEM filing | |
|---|---|---|
| Applies to | Listed industries such as explosives, hazardous chemicals, defence electronics, tobacco | Non-MSME units in delicensed industries |
| Approval needed | Yes, before manufacture | No; acknowledgement on Part A filing |
| Follow-up | Progress reports during the licence period | Part B after commercial production starts |
| Validity | Initially three years; extendable to seven in total | Not time-bound |
How it works
Confirm your category
We check your product against the compulsory-licence list and your enterprise size against MSME limits, then tell you whether you need a licence, an IEM or only Udyam.
Create the project file
We prepare entity documents, process description, capacity and site details so that the application reads clearly and consistently.
Register and file on the DPIIT portal
We register the authorised signatory on the portal, complete the licence or IEM form, upload documents and pay the fee where it applies.
Reply to queries
If the department raises questions on a licence application, we draft the response with supporting papers.
File progress reports and Part B
After approval we calendar the progress reports for a licence and the Part B filing for an IEM so nothing is missed.
Timelines
Licence validity
The initial validity is three years. With progress reports every six months it can be extended twice by two years each, for up to seven years in total, within which commercial production must begin.
IEM Part A
Filed before you set up the unit. The acknowledgement is issued on receipt, with no waiting period.
IEM Part B
Filed after commercial production starts, so the record shows actual operations.
What happens if you do not hold the right approval
Manufacture without a licence
For a listed item, producing without a licence breaches the IDR Act and can lead to prosecution under the Act. We do not quote a sentence here; the Act’s own penalty provisions apply.
Licence lapses
If commercial production does not start within the permitted period, the licence cannot be extended further.
Delays in other approvals
Without settled central status, state consents and bank finance can stall.
Frequently asked questions
Is an industrial licence compulsory for every factory?
No. Most industries are delicensed. A compulsory licence under the IDR Act, 1951 is needed only for a short list, including industrial explosives, hazardous chemicals, electronic aerospace and defence equipment, and tobacco products such as cigars and cigarettes. Other non-MSME units file an IEM. We check your product and tell you which applies.
What is an Industrial Entrepreneur Memorandum?
It is an online filing with DPIIT by non-MSME industrial units in delicensed sectors. Part A is filed first and acknowledged on receipt, and Part B is filed after commercial production begins. There is no approval wait, but the filing creates the official record of your project. We prepare and file both parts for you.
How long is an industrial licence valid?
The initial validity is three years. If you submit progress reports every six months, it can be extended twice for two years each, making seven years in total, within which commercial production has to begin. We track the progress report dates so extensions are not missed.
Do MSMEs need an industrial licence or IEM?
MSMEs do not file the IEM; they register on the Udyam portal. A listed compulsory-licence industry still needs the licence even if you are small. Because the rules depend on your product and size, we check both and tell you the exact route before you file anything.
Is an industrial licence the same as a factory licence?
No. The industrial licence is a central approval under the IDR Act for listed industries. A factory licence comes from the state labour department under factory and labour law, and applies to premises with workers. Most manufacturers need the factory licence even when no industrial licence is required. We handle both.
Where do I apply for an industrial licence?
Applications and IEM filings are made online on the DPIIT portal, which replaced the earlier e-biz system on 16 October 2018. You register, complete the form, upload documents and pay online. We handle the portal work and answer any query from the department.
Does my defence or explosives product need other permissions?
Often yes. Industrial explosives usually need a separate PESO licence, and defence items can involve further approvals under other laws. The industrial licence is only one layer. We map the full set for your product and list the order in which they should be taken.
Can I change my product after getting the licence?
A licence is granted for specified items and capacity, so changes need to be checked against its terms and may need an amendment. Do not change the line before confirming. Share your plan with us and we will tell you whether an amendment or fresh filing is required.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
The portal fee for a licence application depends on the type of filing, so we confirm it at quote stage rather than guess here.
Ready to begin?
Tell us your product, location and investment, and we will confirm whether you need a licence, an IEM or neither.