No. 4(1)/92-SSI Bd.
GOVERNMENT OF INDIA

MINISTRY OF INDUSTRY
DEPARTMENT OF SMALL SCALE INDUSTRIES & AGRO RURAL INDUSTRIES
OFFICE OF THE DEVELOPMENT COMMISSIONER (SSI)
7th Floor, Nirman Bhavan,
New Delhi the 10thMarch, 1992

To,

  1. The Commissioner / Director of Industries
    All States and Union Territories


  2. The Directors
    All small Industries Service Institutes

Subject: - Licensing policy in regard to setting up of capacities in respect of industries included in 1st Sch. To IDR Act 1951

  1. The licensing provisions of IDR Act, 1951 are applicable to industrial undertaking only if the number of workers employed is more than 50/100 with/without the aid of power.

  1. This means that any of the small scale industrial undertaking working with employees less than 50/100 with/without the aid of power is exempted from the provisions of Section 10, 11, 11-A and 13 of the IDR Act, '51 even if the item in question is otherwise under compulsory licensing as per the industrial policy.

  2. However, there has been some confusion about the policy in this regard and various representations has been received arising out of circular letters issued by the Department of Industrial development vide their

    1. No. 10/56/88-LP dated 2.09.1988
    2. No. 10/84/87-LP dated 29.11.1988
    3. No. 10/38/88-LP dated 1.12.1988
    In which it was stated that the State Governments /Uts, were not to register any industrial unit under the State laws unless the unit in question has obtained permission/approval/industrial licence from the Central Government regardless of whether the number of workers was less than 50/100 with/without the aid of power, as the case may be.

  3. This matter was examined in detail and now it has been decided to withdraw these instruction because the IDR Act, 1951 is very clear and its provisions are not applicable to small scale industrial undertakings employing less than 50/100 with/without the aid of power. A copy of Deptt. of I.D. letter No. 10/38/88-LP dated 12.2.1992 in this regard alongwith its enclosures (1) No. 10/56/86-LP dated 2.9.1988 (2) No. 10/84/87-LP dated 29.11.1988 and (3) No. 10/38/88-LP dated 1.12.88 addressed to Secretary, Industries Deptt. Of all States and U.T.s, is enclosed for your information and record.

  4. It is now, therefore, clarified that small scale units can take up the manufacture of any item even if covered in Schedule-II to exemption notification No. S.O. 477 (E) dated 25.7.1991 provided it employs less than 50/100 workers with/without thw aid of power. It is further clarified that any item which is compulsorily licensable but is reserved for exclusive manufacture in the small scale sector or is included in Schedule-III to exemption notification No. S.O. 477(E) dated 27.5.1991 will not require any licence even if the number of employees is more than 50/100 with/without the aid of power. It is also clarified that the small scale / ancillary industrial undertakings which were denied registration after 30.6.1988 on the grounds that the item was compulsorily licensable can now be registered if the number of persons employed was less than 50/100 with/without the aid of power. The units which were asked to obtain licence on the ground that the item was covered under compulsory licensing, their cases should be reviewed in the light of these instructions.

Yours faithfully,

Sd/-
(Subodh Kumar)
Director (SSI Bd.)