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To set up a small-scale factory in Delhi, an entrepreneur will still have to secure crucial pollution and municipality permits, though the Aam Aadmi Party (AAP) government has done away with such a requirement.
A Delhi Transport Department notification shows that enterprises do not have to submit these documents while obtaining quality certificates, in the form of entrepreneur’s memorandum (EM) Part II acknowledgement, but a copy of the memorandum will still be forwarded to the compliance authorities.
“It is hereby directed that enterprises who wish to file EM Part II can do so without submitting Delhi Pollution Control Committee (DPCC) order of consent to operate (CTO) and valid municipal corporation license. However, a copy of EM-I and EM-II issued shall be endorsed to DPCC and MCD for information,” the notification dated February 16, 2015 reads.
Under the MSMED Act, 2006, a central government legislation, while setting up an enterprise, the owner has to obtain an EM Part I acknowledgement from the Central government. Once the factory starts production or render services, it has to file EM Part II in order to enjoy several perks such as bank benefits, interest subsidy, export-import benefits, and waiver on electricity duty among many other things. This filing of memorandum is mandatory for the manufacturing sector in medium enterprises (where the investment in equipment is between Rs 2 crore and Rs 5 crore) and optional for all micro and small enterprises along with services sector in medium enterprises.
By the rules, while filing EM Part II, an enterprise has to necessarily submit a CTO certificate from the DPCC and a trade licence from the Municipal Corporation of Delhi (MCD) and only then it gets an acknowledgment letter under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
In any case, while setting up a small sector unit, an owner has to mandatorily get ‘consent to establish’ (CTE) certificate from the DPCC as per the state government rules. “EM Part I will not be accepted if it is not supported with consent to establish for setting up of enterprise,” a public notice issued by the Delhi government in August 2006 stated. A CTE certificate entitles a factory to get electricity connection from the government so as to commence its operation whereas a CTO ensures the environmental conditions of the CTE certificate are complied with.
The acknowledgment form clearly states the enterprise will have to obtain the requisite clearances despite issuance of the acknowledgment by the government. “The issue of this acknowledgment does not bestow any legal right. The enterprise is required to seek requisite clearance or license or permit required under statutory obligation stipulated under the laws of central government or state government or union territory administration,” the acknowledgment form states.
A former Delhi chief secretary said the submission of these documents might no longer be “a pre-condition” and one still has to comply with the pollution board and the municipal corporation. “It was earlier a pre-condition that you might not be able to run a business without these permits. The order means that you might continue to run your business and comply with the regulations in due course but there will be no delay in issuance of acknowledgment,” said the former bureaucrat.
A query sent to an AAP government spokesperson didn’t elicit a response.
Environmentalists have slammed the move as “half-baked” and agreed the industries still have to obtain the required licenses.
“It’s a half-baked measure. The industrialists still have to obtain the consent to operate from the Delhi Pollution Control Board (DPCC) but the only thing is that they do not have to produce it to the concerned ministry now,” said Sunita Narain, director-general of Centre of Science and Environment (CSE), after releasing the road map on air pollution for the Delhi government on Friday.
Narain also said although consent from the pollution boards doesn’t necessarily mean the pollution norms have been complied with, but urged the Delhi government has to frame “clear policies” and institute solid monitory mechanisms instead of taking such steps in haste.
“It’s a knee-jerk reaction and not a well thought out one. We understand the Delhi government is in a hurry but it has to think through while framing such rules. The government has to come up with clear policy good for both industries and the environment. It has to set up tough monitoring system to check on compliances,” Narain added.
The AAP-led-Delhi government, in a press statement on Tuesday said it "has decided to do away with the requirement of consent from DPCC and MCD trade license for issue of acknowledgement under the provisions of the Micro, Small and Medium Enterprise Development (MSMED) Act 2006", terming it as a "major stumbling block in easing of doing business."
