New Delhi: Seeking to improve ease of doing business in India, the government on Wednesday decided to extend the validity period of industrial licence to three years with a provision for further extension of two years.

However, the commerce and industry ministry's press note said that the licence will lapse automatically after five years in absence of commencement of commercial production.

"In supersession of all earlier Press Notes, the period of validity of Industrial Licence is being extended from two years to three years as a measure for ease of doing business," the note said.

"Renewal of licence would be allowed for a period of two years. Any Industrial Licence, wherein commercial production has not started within a period of five years of issue of licence, will be treated as automatically lapsed," it added.

Further it said that in case the company fails to start commercial production of items within three years of issue of licence, the application for extension of licence should be submitted to the concerned administrative ministry, 60 days prior to the expiry of three years period.

It has stipulated that in case the application is not received in time, justification for late application would have to be submitted along with the application, it added.

"Applicant's request should be forwarded to Ministry of Home Affairs (in case of industrial licence in defence and explosive sector) and concerned State Government and after seeking comments of these agencies, case should be considered for Extension of validity," it said.

It also listed the conditions for an applicant to meet at the time of applying for extension.

"Land should have been acquired, either under ownership or on lease for minimum period of 30 years; The construction on the projects should have commenced; Orders for plant and machinery for the project should have been placed," the note said.

Recently, the government took steps to improve India's ranking in ease of doing business. Recently, it has de-licensed several defence products for private sector. It has also upgraded the National Industrial Classification Code with a view to make business climate more investor friendly.

According to a World Bank report, India ranks at 134th position out 189 economies.

In its election manifesto, BJP has said that it would ensure "that a conducive, enabling environment is created making 'doing business' in India easy. We will focus on cutting the red tape, simplifying the procedures and removing the bottlenecks".

(PTI)