What is a Trade License?
A trade license is a certificate issued to an applicant seeking to open a business permitting him/her/them to commence business in a given area/location within the particular municipal/corporation limit. This license permits the applicant to commence and operate the business, as mentioned in the application. If the applicant wishes to commence another business different from that mentioned in the trade license application, they will have to separate it. Additionally, the applicant does not become the property owner after securing the license. Trade license is exclusively meant as an approval or permission given to the applicant to begin the business mentioned in the application only.
Why is a Trade License Compulsory?
The main purpose of introducing trade licenses was to help the government regulate and strictly supervise all trades and businesses being performed within the specific municipal or corporation limits. The objective of the trade license is to establish a mandate concerning setting up and operating a business from within the allocated localities meant exclusively for the purpose of business operations and to ensure that all businesses are under the surveillance of the government authorities and no unethical businesses practices are operating within the country. The license also establishes certain operational protocols and safety measures for the general welfare of all commercial establishments and the workforce involved.
Who Issues a Trade License?
The municipal corporation’s department issues a trade license for licensing. The corporation has departments set up for different business categories, including health, engineering and industry. The Government of India authorizes the license and grants permission to conduct trade (as specified in the application) in the location (as specified in the application).
Are You Eligible for a Trade License?
There are certain criteria for being eligible to apply and receive a trade license. These are as follows:
- The applicant must be 18 years or older.
- The applicant must not have any crime history or criminal records
- The business being conducted is legal.
Trade License: Categories
Trade licenses are classified into three broad classifications based on the type of industry or the category of products and services provided by the business. Based on this differentiation, trade license may be classified into three broad categories, as follows:
- Industrial License
- Shop license
- Food establish license
Trade license granted to small, medium and large scale industries involved in manufacturing or other related industry operations is what is called Industrial license. All industries require an industrial license to commence and function, particularly manufacturing or industry facilities of electronics, aerospace, and defence equipment. Industrial licensing is part of the IDRA Act of 1951 and is authorized by the Secretary of Industrial Assistance (SIA).
Acquiring a shop license is mandatory for shops dealing with dangerous/inflammable/offensive trades such as facilities involved in firewood sale, firecracker manufacturing, candle manufacturing, barbershop, and dhobi shops. If the business employs full-time workers, casual workers or contract-based workers, the shop must be registered under the Shop and Establishments Act and acquire a shop license. This is meant to regulate the working conditions and ensure the protection of the workers’ rights.
Food Establishment License:
As the name itself suggests, business establishments engaged in the sale of any food item or providing related services must acquire a food establishment license. Establishments including restaurants, food stalls, canteens, butcher shops, vegetable and fruit stalls, bakeries, cafes and any business involving the sale of food items can commence and operate only after receiving the food establishment license. Even if you are a seller of homemade food, selling your food from the premises of your own home, you must acquire a food license. Ten licenses must be acquired prior to opening a restaurant in India. They are:
- FSSAI license – Obtained from Food Safety and Standard Authority of India
- Liquor license – If your restaurant serves liquor, health/trade license to ensure that the establishment conforms to health regulations and protocols as regulated by the Department of Health.
- Eating house license – Provided by the Licensing Police Commissioner to open a food stall or outlet in the city, shop and establish license to run your business even if it is a food truck, mobile restaurant or a la carte diner.
- Fire safety license – For protecting customers from hazards, including fire for which a NOC must be acquired from the Fire and Safety Department
- Lift clearance – If you wish to install a lift in your multi-storied restaurant building, received from the Electricity department.
- Music license – To play music issued by the PPL or Phonographic Performance Limited.
- Certificate of Environmental Clearance – To ensure adherence to environmental safety protocols so that the restaurant’s operations, including waste management, do not affect the environment adversely.
- Signage License – To use posters, graphics, paintings, and hoardings for marketing your restaurant in the locality, which is to be obtained from the Municipal Corporation.
Objectives of Licensing:
All trade licensing applications must fulfill four licensing objectives as follows:
- Prevention of crime and disorder
- Public Safety
- Prevention of public nuisance
- Protection children from hazards
How to Apply?
Applying for a trade license involves drafting your application and submitting the same to the concerned department in the municipality/corporation where you are commencing your business/trade. The application must be submitted with the following documents required for obtaining a trade license:
- PAN card (for firm/LLP/registered company)
- Incorporation Certificate (for firm/LLP/registered company)
- Aadhar card (for individual applicants)
- Receipt of recent property tax payment to the Municipality
- Lease documents/property owner consent
- No Object Certificate from closest neighbors of the business premises
- Layout plan of the business including working/washing areas (certified)
- Sanctioned plan
- Occupancy certificate.
The validity of a trade license is one year. It usually takes around seven to ten days for processing a trade license application. Furthermore, all trade licenses received must be renewed in the period starting from January 1st to March 31st. The application for validity extension of the license must be submitted at least thirty days prior to expiry. If the renewal application is delayed, penalty charges apply accordingly. Following are the documents required for renewal of trade license:
- Original copy of trade license
- Challans from the previous year
- Receipts of regularizing property tax payments
Benefits of Acquiring A Trade License:
Credibility: A business with a trade license has more goodwill and attracts more clients and investors than an unregistered business entity.
Financial aid: A trade license can allow you to request financial help from the government to broaden or develop your business. It is easier for businesses with trade licenses to apply for loans, from private financing institutions and from the government.
Larger ROI: As there is more credibility and goodwill for businesses with valid trade licenses, more investment will flow into the business, and you will be able to make an entry to foreign markets and enjoy the benefit of larger ROI, with more clients interested in liaising with your legal and ethical business practices.
Ethical practices: Securing a trade license ensures that the business is under constant surveillance of the authorities and therefore, no unethical business practices can be carried out, hence ensuring the safety of your business prospects as you are not indulging in illegal activities and causing problems for your business and your clients/investors.
Additional facilities: Securing a trade license allows you to add additional facilities to attract more customers to your business premises like lift, playing music and organizing entertainment and client relational activities.
Trade License State Wise Website List:
1. Andhra Pradesh – https://cdma.ap.gov.in/en/trade-license
2. Arunachal Pradesh – https://itanagar.nic.in/service/trade-license/
3. Assam – https://gdd.assam.gov.in/how-to/apply-for-trade-license
4. Bihar – https://nagarseva.bihar.gov.in/udhd/Home.html
5. Chhattisgarh – https://industries.cg.gov.in/
6. Goa – https://goaulbservice.gov.in/services.aspx
7. Haryana – https://services.india.gov.in/service/detail/apply-for-trade-license-in-haryana
8. Himachal Pradesh – https://himachal.nic.in/index1.php?lang=1&dpt_id=14&level=0&linkid=401&lid=730
9. Jharkhand – https://advantage.jharkhand.gov.in/SingleWindow/registrations/departmentService/MTI=/
10. Karnataka – https://bbmp.gov.in/tradelicenseneworrenewal.html or http://www.mrc.gov.in/TradeLicense/loadCreateApplicationForCitizen
11. Kerala – http://lsgkerala.gov.in/en/e-governance
12. Madhya Pradesh – https://www.mpenagarpalika.gov.in/ open website checks the business section and downloads the forms and apply online.
13. Maharashtra – https://portal.mcgm.gov.in/irj/portal/anonymous?NavigationTarget=navurl://2db224e8f548597fd23294db11c52d39&guest_user=english
14. Manipur – https://www.eservicesmanipur.gov.in/
15. Meghalaya – http://smb.gov.in/
16. Mizoram – https://amcmizoram.com/documents/shop-license/
17. Nagaland – https://dmc.nagaland.gov.in/services/trade-licence/
18. Odisha – https://www.ulbodisha.gov.in/or/emun/trade-licence-dashboard
19. Punjab – http://lgpunjab.gov.in/cms/online-municipal-services.php
20. Rajasthan – https://rajasthan.gov.in/Services/Pages/CertificatesandLicenses.aspx or https://rajasthan.gov.in/Business/OnlineBusinessServices/Pages/default.aspx
21. Sikkim – https://www.india.gov.in/application-form-form-i-grant-trade-license-gangtok-municipal-corporation-sikkim-0
22. Tamil Nadu – https://www.tn.gov.in/
23. Telangana – https://www.ghmc.gov.in/Trade.aspx
24. Tripura – https://tripura.gov.in/online_services
25. Uttarakhand – http://enagarsewa.uk.gov.in/Home.aspx
26. Uttar Pradesh – https://e-nagarsewaup.gov.in/ulbapps/
27. West Bengal – https://www.kmcgov.in/KMCPortal/jsp/KMCTradeLicenseHome.jsp or https://wblc.gov.in/e-services
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