The Industries (Development and Regulation) Act, 1951

What it does

The Act lets the Central Government control the development and regulation of industries in the public interest. Its main instrument is industrial licensing: an undertaking in a scheduled industry could not be set up, expanded or made to produce a new article without a licence. It also provides for the registration of existing undertakings, for investigation into an industry, for directions to a scheduled industry on its functioning, and, in serious cases, for the Government to take over the management of an undertaking.

Who it binds

The owner of an industrial undertaking in an industry listed in the First Schedule. The schedule lists the industries to which the Act applies, and the Government has the power to exempt classes of undertaking from licensing. The Act therefore binds only a manufacturer in the scheduled industries who is not exempt.

What has changed, and when

The policy under the Act changed with the industrial policy of 1991, which removed licensing for most industries. After that, licensing under the Act applies to a short list, and the Government maintains that list through notifications of the Department for Promotion of Industry and Internal Trade. The categories commonly named include the manufacture of industrial explosives, certain hazardous chemicals, cigars and cigarettes, the distillation and brewing of alcohol, and electronic aerospace and defence equipment. The current list is fixed by the Department's notification and is changed from time to time.

The Act itself has been amended on a number of occasions. Its importance is now less in the day-to-day licensing of most business and more in the specific sectors that remain licensed and in the Government's powers on investigation and control.

What turns on it in practice

The site names the Act on its pages on manufacturing and on aerospace and defence. For a manufacturer in those sectors, the question is whether the product is on the list of items that still need an industrial licence. A company that plans to make defence equipment, or components that the Government treats as defence items, has to settle whether a licence is required before it commits capital, because an undertaking that operates without a required licence commits an offence under the Act.

Three questions recur. Whether the item is within the licensed list, and under which description. Whether the proposed capacity or location needs approval, since a licence carries conditions on both. And whether a change in the product mix after the licence is granted is a substantial expansion or a new article that needs a fresh licence.

The licence under this Act is separate from the other approvals a defence or hazardous manufacturer needs, including the environmental clearance under the Environment (Protection) Act, 1986 and the licences under the explosives and arms laws. A project plan should treat each as its own step with its own timetable.