Govt eases filing of Industrial Entrepreneurs Memorandum; move likely to benefit midsize enterprises

Ease of Doing Business for MSMEs: The Commerce Ministry on Tuesday announced upgradation of the paperless process for filing Industrial Entrepreneur Memorandum (IEM) to enhance ease of doing business among new and existing businesses in the manufacturing and services sectors. Enterprises will now be able to disclose investment details related to the setting up of new industrial units and commencement of commercial production through a single online form instead of reporting the two separately. “This single form will facilitate filling of investment intentions (IEM-Part A) and reporting of commencement of production (IEM-Part B) in a seamless manner,” the ministry said in a statement.

Industrial undertakings, which are exempted from the requirements of industrial licensing under the Industries (Development & Regulation) Act, 1951, were required to file information as IEM with respect to the setting up of industries. This was filed as per ‘Part A’ of IEM. Once enterprises begin commercial production, they were required to report the same as per prescribed form ‘Part B’ of the IEM. The latest move is expected to benefit medium enterprises. “The single form will have both parts to facilitate investment intent such as land, investment to be made, machines to be used, and beginning of commercial production. This will help medium units and it has been one of our demands as well,” Pankaj Kumar, President, Indian Industries Association told Financial Express Online.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), all exempted industrial from the requirements of industrial licensing and having an investment of Rs 10 Crore or above in the manufacturing sector and Rs 5 crore or above in services sector are required to file IEM. According to the MSME definition modified last year, entities with the investment in plant and machinery or equipment between Rs 11 crore and Rs 50 crore are defined as medium enterprises.

Any amendments to the IEMs can also be done in order to avoid duplication in filling information, the ministry said. “Earlier, the things we projected in Part A and what we furnished in Part B used to different. For instance, increase in machinery used from the time of disclosing investment to commencement of production. Now, if we have to do so, the government has given the clause of amendment to make the changes. This will help in transparency and reduce duplicity,” added Kumar.

Importantly, the government had in July last year launched Udyam Registration portal for paperless registration and classification of enterprises wherein entities won’t have to upload any documents or proof except the Aadhaar number for registration. As of March 22, 2021, the portal had registered 25,07,112 MSMEs, up nearly 130 per cent from over 11 lakh registered MSMEs as of November 7, 2020, according to the data from the MSME Ministry.