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Assam govt forwards MSME ordinance amid land exploitation concerns

The Assam government has faced flak over its decision to ease out the process of setting up industries in the state for the sake of accelerating industrialisation. In a recent tweet, State Commerce and Industries Minister Chandra Mohan Patowary stated anyone will be able to set up industry in Assam just by submitting one self-declaration, said, “No permission, clearance or license will be required for three years. Land will also be deemed converted for industrial purpose.”

After the announcement, civil society organisations, lawyers and the opposition have criticised the move. The Assam government has been accused of ignoring serious environmental issues like protection of Dehing Patkai and Dibru Saikhowa National Park, which shook the state recently and consequently mobilised a movement. Instead, they are now allowing more people to set up industries without taking due diligence for the environment.


To clear the matter, Chandra Mohan Patowary posted again on Thursday. He stated that that move will only allow Micro, Small & Medium Enterprises (MSMEs) and not for large industries. The entire issue faced a lack of clarity as the govt didn’t release the ordinance copy. However, on Friday, it finally released the ordinance.

The ordinance finally released

The Cabinet chaired by Sri Sarbananda Sonowal, Hon’ble Chief Minister, approved the ‘Assam Micro, Small and Medium Enterprises (Facilitation of Establishment and Operation) Ordinance, 2020’ on 30th June 2020.

The press release read, the Ordinance approved by the Cabinet will be a huge game-changer and aid to Ease of Doing Business in Assam. This Ordinance will not affect the land rights of indigenous people of Assam as protected by the Assam Agricultural Land (Regulation of Reclassifications and Transfer for Non-Agricultural Purpose) Act 2015.  This Ordinance does not affect the restrictions on sale or transfer of agricultural land for non-agricultural purpose as protected under the aforesaid Act. This Ordinance does not allow any person to buy or sell any agricultural land for non-agricultural purpose. The bar of agricultural land used or transferred for non-agricultural purpose as provided under the aforesaid Act shall remain as it is and this Ordinance will not affect it at all. In other words, agricultural land will remain with the agriculturalists only.

Due to COVID19 pandemic, State economy has adversely been affected and the business environment is also very depressing. In such situations, the Ordinance will create a conducive environment, drive the domestic growth, attract investment and accelerate industrial development in the State. After notification of the Ordinance, the entrepreneurs will not be required most of the statutory permissions for the first three years to set up their industries.

The main features of the Ordinance approved by the Cabinet are given below:

  1. Assam Government will notify an Investment Facilitation Agency headed by the Commissioner, Industries & Commerce to facilitate establishment of enterprises in the State.
  • Any person who intends to start an enterprise may furnish to the Nodal Agency a declaration of intent to start an enterprise with an undertaking that they will follow all the relevant provisions of all the Acts, Rules and Guidelines and ensure labour welfare measures, adequate fire safety and environmental measures as required by law.
  • On receipt of the declaration completed in all respects the Nodal Agency shall issue an Acknowledgement Certificate.

Also read: Is the Government of Assam turning anti-native?

  • After getting the Acknowledgement Certificate no permission, clearance, consent, approval, registration, license, no-objection etc. under any State Law except Fire Services and Power in connection with the establishment of an enterprise in the State will be required for three years. After expiry of three years the enterprises shall be required to get all such clearances and permissions within next six months of the period. The enterprise will also be free to apply for permission, clearances etc. any time even before the completion of three years of period.
  • The Ordinance does not deal with sale or purchase of any type of land. It does not allow any person to buy or sell any agricultural land for non-agricultural purpose. Therefore, any apprehension that an entrepreneur under the provisions of this Ordinance, will buy agricultural land for non-agricultural purpose is totally unfounded. It simply provides that if the only genuine owner of the agricultural land intends to set up an MSME unit, his agricultural land which is eligible and capable of reclassification as per the provisions of Assam Agricultural Land (Regulation of Reclassifications and Transfer for Non-Agricultural Purpose) Act 2015 will be deemed to be non-agricultural land only for three years. During that period or within the next six months of expiry of three years, the person will have to get his land converted into non-agricultural land, following all prescribed procedures and after payment of requisite premium as prescribed in the Assam Agricultural Land (Regulation of Reclassifications and Transfer for Non-Agricultural Purpose) Act 2015. Deputy Commissioner will allow the conversion of agricultural land for non-agricultural purpose strictly as per the provisions of aforesaid Act.
  • While framing rules to implement the Ordinance, further strong safety net shall be put in place to ensure that no entrepreneur is in a position to misuse or circumvent any of the provision of the Ordinance.
  • After receipt of the declaration from the entrepreneur it will be properly checked, verified and scrutinized that the entrepreneur is genuine and details of land provided by them are authentic as per the land record only after such detail verification, an Acknowledgement Certificate shall be issued by the Nodal Agency. 
  • As per provisions of the Ordinance the Acknowledgement Certificate shall not entitle a person to use a land in deviation to the land use specified in the Master Plan wherever such plan is in force. It shall also not entitle a person to use the land falling in restricted category viz- Public Grazing Reserve (PGR), Village Grazing Reserve (VGR), Wetlands, Eco-Sensitive Zones, Heritage, Historical, Archeological Sites and land settled, allotted or reserved for Religious Institutions like Satras, Namghars, Temples, Wakfs, land under Tribal Belts and Blocks etc.
  • During the period of three years, no authority shall undertake any inspection for the purpose of issue of any approval. However, the competent authority shall be empowered to undertake an inspection during the said period of three years, in the case where the enterprise has applied for necessary permission under the respective laws within a period of three years from the date of issuance of acknowledgement certificate. 
  1. The exemption from approval for three years shall be provided in respect of State Acts and Rules only.
  1.  No exemption shall be given to any enterprise from any provision of any law for the time being in force or any regulatory measures and standards laid down there under. The enterprises will only be exempted from getting the permission and clearances for initial three years to set up the industries.

 12. An enterprise cannot setup an industry related to hazardous products without obtaining prior permission as it is mandatory under the Central Act.

13.  The provision of the Ordinance approved by the Cabinet shall be applicable to Micro, Small and Medium Enterprises only. This will not be applicable to large industries where the investment in the industry is more than Rs. 50.00 Crores.

Also read: Is Assam govt using MSME leeway to foster reckless industrialisation?

14. Only few States like Gujarat, Rajasthan and Karnataka have brought out such ordinance and acts to facilitate and the setting up of Micro, Small and Medium Enterprises.

This initiative will empower the local entrepreneurs in tune with the vision of Hon’ble Prime Minister to be Vocal for Local to make Atmanirbhar Assam and Atmanirbhar Bharat.   

Going forward

The ordinance mentioned, “no industries will be allowed in Eco-Sensitive Zones”. But the Baghjan and Dehing Patkai episode clearly show that such rules are easily violated in Assam with loopholes such as due public views are not taken. With the EIA new draft 2020, which further limits the scope of taking views from the public, this can facilitate an easy way for the industrial lobby to get clearances with a state-level institutional backing. How the state government plans to curb these loopholes, only time will tell, as things stand now, there’s a whole lot of lack of clarity.

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