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Introduction to Key Envionmental Clearances

Post-incorporation, companies operating in certain sectors or specific industries may be required to obtain an industrial and/ or an environmental license to start operations. These clearances are largely applicable to the manufacturing sector. In some cases, they may be applicable to a large service sector entity as well - for example, if an educational institution is established over a large plot of land, or if a bank or a large service sector company such as TCS decides to erect its own building (for office purposes) from land purchased from the government, it may have to obtain certain consents from the State Pollution Control Board.


However, where entities in the same sector are located together in clusters, such as in an industrial estate or an SEZ, individual businesses are not required to obtain environmental clearance – clearance is obtained at once by the developer for all industries which can be located there, and each entity is only required to comply with the terms of such clearance.


Similarly, with respect to a development project (e.g. of a mall), environmental clearances are often obtained by the developer at the time of construction. A developer who plans to construct a mall in a city may be required to obtain various clearances, such as consent under Water Act for discharge of sewage from washroom facilities from the mall, applicable air pollution related clearances for pollution generated from equipment, etc.


In such cases, individual businesses which lease stores, offices or workspace may not be required to obtain an independent environmental clearance. However, while taking a lease, they should require the developer (in this case the mall owner) of the facility to make appropriate representations in relation to his having obtained requisite clearances. There should also be appropriate indemnity for the entrepreneur, to ensure that he is suitably compensated for any liability arising due to breach of the representations.


Similarly, clearance of forest area by a private entity for development of a road on a public-private partnership (PPP) basis or construction of railway tracks will require various consents under environment-related legislations. In this case, the entity in charge of the construction work may have to directly obtain environmental clearance.


This chapter is divided into two parts. The first part discusses situations which require environmental clearance from the Ministry of Environment and Forests/ State Environment Impact Assessment Authority.


The second part discusses provides an overview of essential environmental consents required for a business which handles certain kinds of input/ output products or conducts particular activities.


The Environment Protection Act, 1986, Air (Prevention & Control of Pollution) Act, 1981 and Water (Prevention & Control of Pollution) Act, 1974 are the general legislations governing protection of the environment. The Central and State Governments are empowered to make rules under these legislations. Till date, rules have been made relating to various aspects of the environment - air, water and noise pollution, hazardous substances, e-wastes, battery-related wastes, etc. Generally speaking, the Central Pollution Control Board and State Pollution Control Boards of the concerned states have the authority to administer the provisions of these statutes, issue environment-related standards and monitor compliance with them.


In addition to the above legislations, the Wildlife Protection Act and Forest Conservation Act, 1980 are other critical legislations which govern specific aspects of the environment (i.e. conservation of plants and animals, and deforestation, respectively).


These legislations are likely to be attracted for most medium to large scale activities.


In addition to the above, compliance with additional environment-related legislations or regulations may be necessary, depending on the nature of the activity.


1. Environmental Clearance


In India, environmental clearance has been required for commencing projects in seven broad sectors (listed below) as per an Environment Impact Assessment issued on 14 September 2006 (EIA Notification).


1. Mining, extraction of natural resources and power generation (for a specified production capacity) 

Primary Processing (coal washeries and minerals beneficiation)

Materials Production

Materials Processing


5. Manufacturing/Fabrication

Service Sectors (oil and gas transportation, handling of hazardous chemicals only)

 Physical Infrastructure including Environmental Services (such as townships, building and construction projects, waste management facilities and effluent treatment plants, etc.)


The sectors above are further sub-divided into sub-components under the EIA Notification. As is evident, environmental clearance will be relevant only for heavy industries which require huge amounts of capital, such as industries manufacturing various kinds of chemicals, cement, dyes, pesticides, nuclear power, thermal power plants, electroplating, etc.


Environmental clearance is also required to be obtained if an existing industry adds capacity beyond the limits specified for the sector under the schedule, or which changes its product-mix beyond the range specified in the schedule, will have to conduct such impact assessment.


An industry in any of the sectors above (the EIA Notification narrows down the sectors into specific segments) requires environmental clearance, which must be obtained after the identification of prospective site for the project/ activities but before commencing any construction activity, or before preparation of land at the site.

Sectors which are not listed in the schedule do not require
Environmental clearance

Environmental clearance may be obtained from the Ministry of Environment and Forests (MOEF) or from the State Environment Impact Assessment Authority (SEIAA), depending on the scale of the project. In certain cases, an Environmental Impact Assessment Report (EIA Report) is required to be prepared.

Validity of environmental clearance

The prior environmental clearance is normally valid for 5 years. For river valley projects, it is valid for 10 years and for mining projects, it can be up to the entire duration of the project, subject to a cap of 30 years.


The validity period can be renewed by the concerned regulatory authority for up to five years at a time by filing a renewal application within the validity period.


A prior environmental clearance granted for a specific project or activity to an applicant is transferable during its validity to another legal person entitled to undertake the project or activity either:


i) on application by the transferor, or


ii) by the transferee with a written “no objection” by the transferor, to, and by the regulatory authority concerned, on the same terms and conditions under which the prior environmental clearance was granted, and for the same validity period.


No reference to the Expert Appraisal Committee or State Level Expert Appraisal Committee concerned is necessary in such cases.

Relaxations for units in pre-defined industries in EPZs, SEZs, and Biotech Parks

Under the EIA Notification, if an Industrial Estate, EPZ, SEZ, BTP or a Leather Complex with similar industries located within the same complex obtains prior environmental clearance, the individual industries within the complex are not required to take prior environmental clearance. They are only required to comply with the terms and conditions of environmental clearance obtained for the entire complex.


This relaxation is available if the complex has a clearly identifiable management with the legal responsibility of ensuring adherence to the Terms and Conditions of prior environmental clearance, who may be held responsible for violation of the same.


The following industries have been included within this exemption:


1. Chlor-alkali industry,

2. Leather/skin/hide processing industry,

 Petrochemical based processing (processes other than cracking & reformation and not covered under the complexes)

4. Sy
nthetic organic chemicals industry (dyes & dye intermediates; bulk drugs and intermediates excluding drug formulations; synthetic rubbers; basic organic chemicals, other synthetic organic chemicals and chemical intermediates); or


5. Industrial estates with pre-defined activities (even if they are not homogeneous)


The full text of the notification is available at the link.

2. Compliance requirements under environmental laws and key industry-specific consents

This part discusses substantial obligations related to environmental laws imposed on a business carrying out particular activities. Details of forms to be filed and compliance requirements are mentioned in Annexure B (also uploaded separately as a downloadable PDF) at the end of this discussion.


i. Consent to Establish and Operate


Consent to establish and consent to operate are essential consents required from the State Pollution Control Board (SPCB) for setting up an industrial or manufacturing establishment – or any other establishment that may release any air or water pollutant.Under Section 21 of the Air Act, the SPCB’s consent is taken to establish or operate an ‘industrial plant’, i.e. any plant used for an industrial or trade purposes, which emits an air pollutant. The SPCB is required to issue a decision within 4 months of the application. Under Section 25 of the Water Act, consent has to be taken to set up any industry, plant or process which is likely to discharge sewage or to make any new discharge of sewage.


The industries are required to observe any standards issued by the SPCB with respect to air/ water pollution. Usually, the certificate of consent contains a reference to the standards which must be complied with by the business.


ii. Consents for manufacturers/ intermediaries dealing with electrical & electronic items


Manufacturers and users of electrical and electronic equipment (such as computers, notebooks, telephones, ACs, washing machines, and other equipment listed in Schedule I of the rules are required to comply with Electronic Wastes (Management and Handling) Rules, 2012 while handling waste materials. Certain requirements under these rules are applicable to users of such equipment as well (see Annexure B for details).

iii. Entities which manufacture or handle hazardous substances


Entities engaged in manufacture or handling of hazardous substances or hazardous wastes may have to comply with the following statutes:


1. Hazardous Wastes Rules


Every entity engaged in the generation, processing, storage or use of hazardous substances must obtain an authorization from the State Pollution Control Board. Hazardous wastes are defined as those substances which are likely to cause danger to health or environment due to their physical, chemical, toxic or other characteristics or which are listed under the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008.


2. Public Liability Insurance


Every entity which is handling ‘hazardous substances’ (as defined under the Environment Protection Act) must take an insurance against liability in respect of damage caused to the members of the general public due to accidents, and contribute a premium towards a fund called the Environment Relief Fund, which is established by the Central Government.


It is also responsible for compensating a claimant (or his representative) who has been injured, or suffered damage or died from an accident at its facility, irrespective of whether the damage was caused due to the entity or its officers’ fault.


iv. Permission under Forest Conservation Act

Any project which involves use of a forest area for a non-forest purpose requires prior approval of the Central Government as per the Forest Conservation Act, 1980. Therefore, undertaking a large-scale infrastructure development project, such as development of a road, or a factory, will also require Central Government permission if it involves clearance of any forest area.


v. Regulation for serving meat products/ trade in animal articles- Wildlife Protection Act


A restaurant, a business contemplating trade in animal related articles or trophies must comply with the Wildlife Protection Act, 1972, which regulates trade in wild animals. As per the act, any entity who intends to cook or serve meat in a restaurant, manufacture or deal in meat, animal articles or animal trophies requires a license from the Chief Wildlife Warden (or another officer authorized in this regard. Incidentally, in practice, restaurants rarely obtain a license to serve meat.


State governments are empowered to make rules laying down procedures for implementing the provisions of the act. For example, under the Orissa Wildlife Protection Rules, 1974, the application must be made as per Form 14. The license is valid for a period of 1 year and must be renewed within 30 days before its expiry. Similarly, an entrepreneur should look up the rules of the state in which he is contemplating establishing such a business.  

Useful Links





Application process

Application for environmental clearance must be made in
Form 1 of the EIA Notification, and Supplementary Form 1A (if applicable), along with:

  • Copy of pre-feasibility project report, in case of non-construction related activities.
  • In case of construction projects or activities (item 8 of the Schedule), copy of the conceptual plan instead of the pre-feasibility report.


Authority for clearance


For industries in Category A, the Ministry of Environment and Forests of the Central Government is the authorized body, decides on the basis of findings of an Expert Appraisal Committee (EAC).


Category B projects must obtain clearance from the State Environment Impact Assessment Authority (SEIAA), which decides on the basis of recommendations of a State or Union territory level Expert Appraisal Committee (SEAC). If there is no SEIAA or SEAC in the particular state, a Category ‘B’ project will be treated as a Category ‘A’ project.


Note: In each sector, an industry/ project may be divided into two categories (Category A or B) depending on its capacity of production. Category B is further sub-divided into Categories B1 and B2, again depending on production capacity.
A category B1 project is required to prepare an Environmental Impact Assessment Report (EIA Report) while B2 projects do not have to do so.


Compliance requirements


The project management must submit half-yearly compliance reports in respect of the stipulated prior environmental clearance terms and conditions in hard and soft copies to the regulatory authority concerned, on 1st June and 1st December of each calendar year. These compliance reports are public documents, whose copies can be provided to any person who applies to the concerned regulatory authority. The latest such compliance report is also required to be displayed on the web site of the concerned regulatory authority.         


Stages in environmental clearance


The process of environmental clearance comprises upto a maximum of 4 stages, and is briefly described in the table below.

Table - Stages in environmental clearance



Category A

Category B

Category B1

Category B2


Involves scrutiny of the application. The SEAC will determine whether EIA is required or not.

Not Required

Required. These projects also require an environmental impact assessment report (EIA Report) and public hearing.

Required. These projects do not require any EIA Report or public hearing.


Scoping involves finalization of the terms of reference (TOR) for environmental impact assessment report for the project for which the prior environmental clearance is sought. The TOR are finalized by the EAC or SEAC upon finalization of the site. It is required for Category A and B1 projects, and must be completed within 60 days.



Not required

Public Consultation





Appraisal refers to detailed scrutiny by the EAC or the SEAC and must be completed within 60 days of receipt of the final EIA Report and other documents (including Form 1 and Form 1A, as applicable)





  1. Construction/Township/Commercial Complexes/Housing do not require scoping.
  2. Public consultation is not required for the following categories of projects:
(a) modernization of irrigation projects

(b) all projects or activities located within industrial estates or parks approved by the concerned authorities, and which are not disallowed in such approvals.

(c) expansion of Roads and Highways (item 7 (f) of the Schedule) which do not involve any further acquisition ofland.

(d) all Building /Construction projects/Area Development projects and Townships .

(e) all Category ‘B2’ projects and activities.

(f) all projects or activities concerning national defence and security or involving other strategic considerations as determined by the Central Government.



Annexure B




Statute/ rules



Consent to establish

Air Act, Water Act or both (as may be applicable)

Make an application in to respective State Pollution Control Board (SPCB) along with required documents and scrutiny fees.


This is followed by physical inspection of the site and assessment of the environmental management system, to check whether it meets the requirement prescribed by State pollution Control Board.


Imprisonment between 1.5 to 6 years and fine.

Consent to operate

Air Act, Water Act or both (as may be applicable)

Once the industry is established, it is required to obtain consent to operate the unit from the SPCB. The consent is given for 1 year, and must be renewed regularly. Consent to Establish should be renewed if the unit is not commissioned by then.

Imprisonment between 1.5 to 6 years and fine.

Manufacturers/ intermediaries dealing with electrical & electronic items



Electronic Wastes (Management and Handling Rules), 2012

Manufacturers must obtain a license from the State Pollution Control Board and are also required to comply with a number of additional obligations.

Consumers must send any electronic wastes to an authorized collection centre, a registered dismantler or recycler or returned to a pick-up service of the manufacturer.


Educational institutions, banks, and companies which are running factories are called bulk consumers. They must keep a record of e-wastes generated by them as per Form 2 of the rules.

Note: Micro and small enterprises (as defined under the MSMED Act) (discussed separately in module 4) are excluded from the application of the rules.


Imprisonment up to 5 years and/ or fine of up to INR 100,000.

Entities manufacturing or handling hazardous wastes

Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008

Entities engaged in generation, processing, storage or use of hazardous substances (including those specified in Schedules I – III of the rules) must obtain an authorization from the SPCB for the purpose by making an application in Form 1.


The SPCB must decide the application within 120 days.


An authorization is valid for 5 years.


Storage of hazardous wastes is permitted for up to 90 days.


Record of wastes generated must be maintained as per Form 3.


An annual report as per Form 4 must be submitted by June 30 of every financial year.


Public liability insurance (see below) may also be required.


Imprisonment up to 5 years and/ or fine of up to INR 100,000.

Public liability insurance for hazardous substances

Public Liability Insurance Act, 1991

Insurance must be taken for a minimum sum equal to the paid-up capital of the company (from one or multiple insurers), a maximum limit that is prescribed by the State Government. State Government cannot prescribe a limit higher than INR 50 crores.


Imprisonment between 1.5 to 6 years and/ or fine.


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