What is an Industrial Employer Memorandum (IEM)?

The Department of Promotion of Industry and Internal Trade of India (DPIIT) recently updated the business registration process in the country. Currently, most industrial companies have to submit an Industrial Entrepreneur Memorandum (IEM) to be recognized by DPIIT. This new registration process is designed to increase transparency and ease of registration for entrepreneurs in India.

But what exactly is an Industrial Employer Memorandum? Who is required to apply, and what is the application process? This helpful guide will answer all these important questions.

What is an Industrial Employer Memorandum?

Industrial Employer Memorandum (IEM) is an important document for large scale industrial ventures in India.

According to DPIIT, IEM registration is intended for “Industrial Undertakings that are exempt from Industrial Licensing requirements under the Industrial Development and Regulation Act.”

Understanding the Industrial Employer Memorandum (IEM)

The Industrial Entrepreneurs Memorandum serves as formal recognition by the Department of Promotion of Industry and Internal Trade (DPIIT) for businesses that are exempt from industrial licensing under the Industrial Development and Regulation Act. IEM submission ensures that industrial entrepreneurs comply with regulatory requirements while simplifying the process of setting up and expanding their businesses.

The IEM process is divided into two parts: Part A, which is submitted at the founding stage, and Part B, which is submitted at the start of commercial production. These are sometimes also referred to as Number 1 IEMs and Number 2 IEMs.

This double step This approach ensures transparency and accountability, making IEM a platform for industrial entrepreneurs looking to scale their operations.

Breaking down IEM Parts A and B

IEM Part A is for business setup. Exempt industrial businesses must submit IEM Part A to receive IEM Recognition (Ack. Receipt). Once Ack. Receipt has been secured, industry players must then follow up by submitting IEM Part B.

IEM Part B is for “commencement of commercial production.” In other words, when a company prepares to launch as a commercial business, it must file Part B. IEM Part B filings must have an attached copy of the “Ack.Receipt” from Part A of the filing.

Once Part A and Part B are filed and approved, the industrial venture is approved to do business. Applying for IEM Part A incurs a small fee (1000 rupees). Part B is free to file as long as Part A has been properly filed and approved in advance.

Who is required to apply for an IEM?

Not all industrial businesses are required to submit an Industrial Entrepreneur Memorandum. This memorandum is intended for large-scale industrial businesses, with some exceptions. Most importantly, manufacturers of industrial explosives and hazardous chemicals must still obtain industrial permits under the Industrial Development and Regulation Act.

IEM submission is also required for the manufacture of products that are not only intended for the Small Scale Industrial sector. So, for the most part non-SSI Industrial players must submit an Industrial Entrepreneur Memorandum.

Notes on the SSI Industrial Sector

The SSI industrial sector generally refers to industries that produce products at a small or micro level. This includes items such as toys, handmade items, and many food items.

However, if your business has been producing SSI units but has now turned into a large-scale industry, you must also apply for an IEM to be approved for expansion.

How Do I Know If I Should File an Industrial Employer Memorandum?

If you are an Indian entrepreneur looking to launch a business that produces products at scale, you may need to apply for an IEM. This filing is only required for industrial businesses in India. If you register your business in another country, you must follow local registration requirements in that region.

For most Indian entrepreneurs outside SSI manufacturing, IEM Parts A and B are required filings. This filing is required when starting a new large-scale industrial venture or when expanding an existing business.

Need Help Following Your Entrepreneurial Dream?

Filing all the necessary documents is a good start for any entrepreneur. But this is not the end of the journey. Once your industrial venture is registered, you have more preparations to do. This includes steps such as hiring your team, producing the product, and finding ways to reach your target market.

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