Industrial Entrepreneur Memorandum

INDUSTRIAL ENTREPRENEUR MEMORANDUM (IEM)

INTRODUCTION

Industrial Entrepreneur Memorandum or IEM is the information filed by such industrial undertakings to the government of India which are exempted from the requirement of obtaining an industrial license under the Industrial (Development and Regulation) Act, 1951.

Industrial License is required for setting up of Industrial Unit by the undertaking under the Industrial (Development and Regulation) Act, 1951 if such enterprise is desirous of undertaking any of the following activities;

1. Activities reserved for the Public Sector;

2. Activities included in Annexure-II of the Industrial (Development and Regulation) Act, 1951;

3. Activities are reserved for the SSI.

These activities are reserved for Public Sector;

• Distillation and brewing of alcoholic drinks.
• Cigars and Cigarettes of Tobacco and manufactured tobacco substitutes.
• Electronic Aerospace and all types of defense equipment.
• Industrial explosive including detonating fuses, safety fuses, gun powder, matches etc.
• Hazardous Chemical
• Drugs and Pharmaceuticals

APPLICABILITY OF INDUSTRIAL ENTREPRENEUR MEMORANDUM

All the undertakings which are exempted from obtaining the industrial license and fulfil the following conditions are required to file Industrial Entrepreneur Memorandum;

• Investment in Plant and Machinery of INR 50 Cr., and above, and
• Turnover of INR 250 Cr., and above.

WHY INDUSTRIAL ENTREPRENEUR MEMORANDUM IS REQUIRED

IEM is required by the government for statistical purposes only, similar to Foreign Assets and Liabilities statement filed by the enterprise to the RBI. Through IEM, the government conduct a limited post facto check to see whether the proposed manufacturing activities require an industrial license or not.

HOW TO FILE INDUSTRIAL ENTREPRENEUR MEMORANDUM

To increase the ease of doing business and transparency, the government has made the entire process of IEM online. Single IEM form, divided into two parts, is filed by the one company irrespective of the number of locations from which it operates or the number of sectors from which it operates.

We can use the government’s G2B website for filing IEM. As discussed above, IEM has two parts, Part-A and Part-B.

The investment intentions and other details are required in Part-A, and intimation regarding the commencement of business is communicated through Part B.

DOCUMENTS TO BE ATTACHED WITH IEM

Following documents needs to be attached;

• Certificate of Incorporation
• Memorandum of Association
• Article of Association.

EFFECT OF FILING OF IEM

Once the undertaking submits Part-A to the department, the department, after the initial verification, accepts the form and issues the Acknowledgement. However, the Acknowledgement should not be construed as a clearance or approval to carry on any industrial activity contemplated in the IEM unless the provisions issued by the central or state government about such activity have fully complied. Similar to Part-A, Acknowledgement is also provided after the filing of Part B.