Pre-1991:- Before the introduction of the IEM system, India followed a License Raj framework, which was established after the country gained independence in 1947, where businesses were required to obtain government licenses to set up industries, expand existing businesses, or produce certain goods. This led to bureaucratic delays, inefficiencies, and limited competition. The Industrial Policy Resolution of 1956 focused on state control over major industries, leading to restrictions on private entrepreneurship.
Early 1980’s – 1990’s:- It became clear that India’s economic model needed to change to foster faster growth and industrialization. The country faced a growing economic crisis, including a balance of payments issue, and needed to open up its economy to increase industrial production, attract foreign investment, and improve competitiveness.
Objective:- The IEM system allowed industrialists to inform the government about their plans to start a new industry or expand an existing one, without requiring prior approval or licensing from the government, except in certain cases. This shift was an important step in encouraging private sector participation and investment in the industrial sector.
What is IEM Certification?
Industrial undertakings exempted from the industrial licensing requirements under the Industries (Development and Regulation) Act, 1951 (IDR Act) are required to submit information about their industry setup through the Industrial Entrepreneur Memorandum (IEM). The IEM Acknowledgement serves as confirmation that the Department has received the submitted details. This acknowledgment, issued online, indicates that the industrial activity does not fall under the licensing provisions. However, it should not be mistaken for an approval or clearance to begin the industrial activity specified in the IEM unless all applicable regulations, statutes, notifications, or any specific orders and stay directions issued by courts or competent authorities are fully complied with. The IEM is filed online by submitting the required details in Part A & Part B of the IEM through the G2B portal.
Who needs to apply for the IEM?
Certain industrial undertakings that are exempt from the industrial licensing requirements under the Industries (Development and Regulation) Act, 1951 need to file an IEM. These include:
- All industrial undertakings exempted from the requirements of industrial licensing under I (D&R) Act, 1951 and having an investment in plant and machinery of Rs 50 Crore and above;
- OR turnover of Rs. 250 crore and above, including Existing Units, New undertaking (NU) and New Article (NA), may file an IEM, i.e. “Form IEM” in the prescribed format ‘Part A’.
- Large-scale industries investing over Rs. 10 crores in manufacturing and Rs. 5 crores in services.
- Industries manufacturing products not exclusively reserved for the Small-Scale Industry (SSI) sector.
How to apply for IEM?
In 2021, in an effort to improve transparency and facilitate ease of doing business, the Department for Promotion of Industry and Internal Trade (DPIIT) launched an upgraded version of its G2B Portal. This portal simplifies the process for entrepreneurs to file their Industrial Entrepreneur Memorandum (IEM) applications, allowing them to submit Part A (for establishing a business) and Part B (upon commencement of commercial production) online. This move is part of the government’s broader initiative to streamline the industrial registration process and promote an investor-friendly business environment.
The enhanced G2B portal allows for the online submission of IEM applications—both Part A and Part B—and amendments. From now on, applications for IEM Part A, Part B, and amendments will no longer be accepted in physical form. Instead, all applications will be processed digitally, ensuring a paperless system.
Once processed, the IEM Acknowledgment Certificates, complete with a QR code, will be issued electronically, allowing for easy verification of their authenticity online. Entrepreneurs will also be notified instantly via email and SMS upon the approval of their applications.
Understanding IEM Part A and Part B
- IEM Part A – For Establishment of Business: Any industrial undertaking that is exempt from industrial licensing, including existing units undertaking substantial expansion, must submit Part A of the IEM. This application is submitted to the Department for Promotion of Industry and Internal Trade for acknowledgment.
- IEM Part B – For Commencement of Commercial Production: After an industrial undertaking has filed IEM Part A, it must submit Part B to report the commencement of commercial production. This step must be filed online on the DPITT G2B Portal, and a copy of the IEM Part A Acknowledgment needs to be uploaded during this process. After submission, an acknowledgment will be issued, with the physical copy sent by post.
What is IEM Acknowledgment?
The IEM Acknowledgment is the official confirmation from the Department for Promotion of Industry and Internal Trade (DPIIT) that the industry’s information has been received. This acknowledgment, issued electronically, confirms that the IEM has been processed, but it does not imply approval for the industrial activity unless all regulatory requirements have been met.
Purpose of IEM Filing
The IEM is filed for the following purposes:
- To set up a new industrial undertaking.
- To manufacture a new article.
- To transition from an existing SSI unit to a large-scale industry.
- To expand the operations of an existing industrial undertaking.
Documents Required for IEM Application
Entrepreneurs must upload the following documents for their IEM application:
- For IEM Part A:
- Memorandum of Association
- Articles of Association
- Certificate of Incorporation
- For IEM Part B:
- Acknowledgment of IEM Part A
Fee for IEM application
To file the part-A of IEM, the entrepreneur needs to pay an amount of Rs.1000 as fee and No fee is required for filing part B of IEM.
IEM User Manual
Application Process https://services.dpiit.gov.in/lms/document/DPIIT_IEM_User_Manual.pdf
Reference taken
Disclaimer
The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.
