India has witnessed a sea-change in its economic growth over the years. The Government has devised numerous policies to facilitate the development of the entrepreneurial segment of the country. Introduction of schemes such as "Make in India" "Startup India", "Standup India" and "Skill India", has been made to increase the Gross Domestic Product of the nation. The development of the commercial sector in the country has been one of the primary agendas working towards the prosperity of India.

In order to commence a new business, an authorization from the local Government in the form of a Trade license is required. The license must be procured before beginning manufacturing, exchange or storage of any activity/commodity.


Trade license is a permission issued by municipal corporation and is essential due to the following reasons:

  • monitors the operation of a specific business from a particular locality;
  • ensures that any citizen is not adversely affected by health hazard or nuisance by the improper conduct of trade;
  • ascertains adherence to the applicable rules, standards and safety guidelines;
  • regulates business locations by way of putting constraints on people from running certain types of commercial activities;
  • controls the number of specific responsibilities of the entrepreneur in connection with his business.

License Qualification

The following entities are required to be obtaina trade license before initiating their business transactions:

  1. Food establishment license: All activities related to consumable items and eating joints like hotels, restaurants, canteen, food stall, bakeries, sale of vegetables, meat, provisions store, etc.
  2. Industries license: Trades which use locomotives like manufacturing industries, factories, power looms, flour mills, cybercafé, etc.
  3. Shop license: Offensive and dangerous trades like barber shop, dhobi shop, timber wood, sale of fire wood, candle manufacturer, cracker manufacturer, etc.


The advantages of obtaining trade licenses to the owners thereof are listed below:

  • Restriction on the liabilities;
  • Certification of the fact that no unethical or illegal practices are being carried on;
  • Reinforcement of the business credibility.

In order to assure that proper and legal projects are procured and undertaken by the new business operators, the Government mandates for obtaining a valid trade license before the business comes into existence.

For further information please contact at S.S Rana & Co. email: or call at (+91- 11 4012 3000). Our website can be accessed at

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.