Lok Sabha Question No. 4202 (UNSTARRED), answered on 2025-08-19
Subject: Licence for Tobacco and Cigarette Manufacturing
Ministry: COMMERCE AND INDUSTRY
Asked by: Shri Babu Singh Kushwaha

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

UNSTARRED QUESTION NO. 4202.

TO BE ANSWERED ON TUESDAY, THE 19 TH  AUGUST, 2025.

## LICENCE FOR TOBACCO AND CIGARETTE MANUFACTURING

## 4202.  SHRI BABU SINGH KUSHWAHA:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज्य एवं उद्योग मंत्री

- (a) whether  obtaining  industrial  licence  is  mandatory  for  tobacco  and  cigarette manufacturing units in the country;
- (b) if so, the details thereof along with the procedure and rules prescribed;
- (c) the number of industrial licenses and Letters of Intent (LoI) issued for this sector in the country so far along with the procedure and rules for issuing Letter of Intent;
- (d) last instance when industrial license was issued by the Ministry and the number of such applications pending at present along with the current status of such pending applications;
- (e) the time-limit and rules for converting Letter of Intent into Industrial Licence; and
- (f) whether there is any Letter of Intent which has not yet been converted into Industrial Licence and if so, the reasons therefor?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री णिणिन प्रसाद ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI JITIN PRASADA)

- (a) & (b): After the Industrial Policy Resolution 1991, and considering various amendments made to Notification No. 477(E) dated 25th July, 1991, industries manufacturing  Cigars  and  Cigarettes  of  tobacco  and  manufactured  tobacco substitutes  are  covered  under  compulsory  licensing.  Licences  are  issued  to companies for the manufacture of items that are compulsorily licensable under Section 11 and Section 11(A) of The Industries (Development & Regulation) Act,  1951  and  as  per  the  procedure  mentioned  in  The  Registration  and Licensing of Industrial Undertaking Rules, 1952.

Department  for  Promotion  of  Industry  and  Internal  Trade  (DPIIT)  is  the licensing authority for granting Industrial License (lL) under IDR Act, l95l to the units established in the area other than Special Economic Zones (SEZs) and Export Oriented Units (EoUs).

Licences  are  issued  by  DPIIT  in  consultation  with  the  various  stakeholders and  on  the  basis  of  recommendations  made  by  the  Licensing  Committee chaired by Secretary, DPIIT.

Department  of  Commerce  is  the  designated  licensing  authority  for  issuing Industrial  License  (lL)  under  IDR  Act,  l95l  to  units  established  in  Special Economic Zones (SEZs) and Export Oriented Units (EoUs). For Tobacco and Cigarette manufacturing units set up in SEZs , the Board of Approval (BoA) in Department of Commerce is empowered to grant the license under IDR Act, 1951 as per Section 9(2)(e) of the SEZ Act, 2005.  For  Export Oriented Units (EOUs), grant of license for setting up EOUs requiring IL is covered by the Foreign Trade Policy (FTP) read with Handbook of Procedure (HBP), 2023 (as amended  from  time  to  time).  Para  6.01(d)  of  HBP,  2023  provides  that a proposal  for  setting  up  an  EOU  requiring  IL  may  be  granted  approval by Development Commissioner after clearance of proposal by the aforesaid BoA and  DPIIT.  Para  6.32  (b)(i)  of  HBP,  2023  provides  that  "ltems  of manufacture  requiring  industrial  licence  under  Industrial  (Development  & Regulation)  Act, l95l shall be considered by the BoA".

- (c) to (f): A total of 20 industrial licences and 25 Letters of Intent (LOI) have been issued by DPIIT for this sector in the country till 1999. For the tobacco  and cigarette manufacturing units, for applications not requiring further clearances such as foreign  collaboration  and  capital  goods  imports,  Industrial  Licenses  were issued. In cases where further clearances were warranted, a letter of intent was issued. The initial validity period for a letter of intent was 12 months. In cases where only  one  further  clearance  viz.  foreign  collaboration  or  capital  goods clearance was found necessary, one further extension of 6 months to the initial validity  could  be  considered.  In  cases  where  both  foreign  collaboration  and capital  goods  clearance  were  involved,  two  extensions  of  6  months  each beyond the initial validity period of 12 months could be  considered. Once the conditions  incorporated  in  the  Letter  of  Intent  were  fulfilled,  it  would  be converted into an Industrial Licence.

Fresh licenses/Letter of Intents have not been issued for the manufacture of Cigars  and  Cigarettes  of  tobacco  and  manufactured  tobacco  substitutes  on health grounds since 1999 by DPIIT.

As  per  records  3  LOI  have  been  converted  into  industrial  licences.  The remaining Letters of Intent that could not be converted into licences during the prescribed time limits, are not valid at present. No such application is pending with DPIIT.

Only two Industrial Licenses have been granted so far for setting up of units for  this  sector  in  a  Special  Economic  Zone.  The  rules  and  procedures  are governed by the SEZ Act and Rules, as amended. The last time the Industrial License  as  mentioned  above  was  issued  by  the  Department  of  Commerce was  in  May,  2022.  No  such  applications  are  pending  in  the  Department  of Commerce as on date.

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