MSMEs with Udyam registration or official allotment documents can now operate without a separate factory licence, provided they comply with safety norms and pay a nominal annual fee.
BY PC Bureau
New Delhi, July 29, 2025 — In a major administrative reform aimed at enhancing industrial efficiency and improving the Ease of Doing Business in the capital, the Municipal Corporation of Delhi (MCD) has issued an order allowing deemed approval of factory licences for industrial units operating in notified industrial areas. The decision marks a significant shift from the older regulatory system that required a separate factory licence under the DMC Act, 1957.
The order, signed by Leela Dhar Meghwal, Additional Commissioner of the MCD’s Factory Licensing Department, was issued on July 28 and takes immediate effect.
What the New Policy Says
According to the order, factory owners operating in industrial areas developed or recognised by the Delhi government or the Delhi State Industrial and Infrastructure Development Corporation (DSIIDC) will no longer need to apply for a separate factory licence from the MCD. Instead:
MSME units with a valid Udyam Registration Certificate will be considered as having a factory licence under Section 416/417 of the DMC Act, 1957.
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Other industrial units will be covered under the deemed licensing rule if they possess a valid allotment letter or lease deed from GNCTD or DSIIDC.
The policy applies to both: Conforming industrial areas; Notified unplanned industrial clusters
Fee and Licensing Receipt
While a separate licence will not be issued, industrial units are required to pay a nominal annual licence fee equivalent to 5% of their Property Tax. This payment must be made via the official MCD property tax portal.
Once the payment is completed: The e-receipt will act as proof of factory licensing. The receipt will include a system-generated endorsement stating that the licence is deemed to have been granted.
Accountability and Compliance
The MCD has clarified that despite the relaxation in the licensing process, factory owners will remain fully responsible for complying with:
Fire safety norms (Delhi Fire Services)
Environmental norms (Delhi Pollution Control Committee)
Building and structural safety
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The order clearly states that in the event of any accident or loss due to negligence, the owner will face civil and criminal liability. MCD will not be held responsible since no physical verification or inspection is required under the new regime.
The decision to further enable businesses- especially the small and medium enterprises is indeed commendable.
Hon’ble LG Shri VK Saxena lauds this move by the MCD under the overall guidance of Hon’ble CM, Smt Rekha Gupta. https://t.co/hhtFxJrRqU
— Raj Niwas Delhi 🇮🇳 (@RajNiwasDelhi) July 29, 2025
Why This Matters
This move is being seen as part of Delhi’s broader push to reduce red tape and promote industrial activity. Factory owners and entrepreneurs have long complained of delays, overlapping clearances, and high compliance costs due to outdated procedures. By recognizing existing approvals and documentation from other government bodies, the MCD seeks to eliminate redundancy and foster a more business-friendly ecosystem.
Officials noted that the earlier system of issuing factory licences did not add any tangible benefit to safety or governance but merely created procedural burdens. The new system allows for effective regulation through more relevant agencies like the DPCC and DFS while reducing administrative load on business owners.
Statement from MCD
“The decision will encourage industrial growth while upholding regulatory accountability,” said a senior MCD official. “Our goal is to streamline governance while ensuring that factories remain safe, compliant, and environmentally responsible.”
📌 Summary of Key Provisions:
| Provision | Description |
| Who is covered | All units in GNCTD/DSIIDC notified industrial areas |
| Licence status | Deemed approval granted |
| Fee required | 5% of Property Tax paid online |
| Applicable proof | Udyam Certificate or DSIIDC/GNCTD allotment documents |
| Scope | Conforming and notified unplanned clusters |
| Responsibility | Owner liable for any violation or accident |
| Effective from | July 28, 2025 |
The order has already been circulated among officials and stakeholders in industrial bodies across Delhi. Factories currently in operation or under construction can avail this deemed licensing mechanism immediately by submitting relevant documents and fees digitally.
