By treating such delays in litigation as a “zero period”, the government is trying to prevent developers from having to reapply for permission, an exercise that has slowed or stalled several major projects across sectors.
The reform, announced through a notification on October 30, will rationalize the validity of environmental clearances granted under the Environmental Impact Assessment (EIA) notification of 2006. Officials said the move will help revive projects stalled in cases before the National Company Law Tribunal (NCLT) or courts, ease of doing business and reduce regulatory uncertainty for developers and lenders.
Environmental permits for projects are initially granted for 10 years and this period can be extended by one year.
“The matter has been examined by the ministry and it has been decided that the validity of the EC laid down in the EIA notification of 2006 as amended needs to be rationalized in view of the loss of time in view of the proceedings before the NCLT or courts,” the MEFCC notification said. “In this context, the Ministry clarifies that the following period, after which the project proponent could not implement the EC granted for the related project, will be considered a zero period for calculating the validity of the EC.”
An environment ministry official said on condition of anonymity that the development is sector-agnostic and the ministry expects the move to see the light of day for several projects mired in litigation.
Several infrastructure and industrial projects that have secured environmental clearance are facing unexpected delays as they have been embroiled in proceedings before the NCLT or other courts. Officials and industry experts said valuable time is being wasted in litigation, even for projects that meet all legal environmental standards.
Projects in sectors such as real estate, manufacturing, and real estate are among the worst affected, as insolvency and restructuring cases often halt construction and investment activity.
Of the total number of 8,492 recognized cases (as of June 30) since the Insolvency and Bankruptcy Code came into effect in 2016, 37% are for manufacturing companies, 22% for real estate companies, and 12% for construction companies. Of the 1,258 cases where resolution plans are underway, the manufacturing sector accounts for 45% and real estate and construction 17% and 12%, data from the Insolvency and Bankruptcy Board of India (IBBI) showed.
Experts said the government’s latest move would allow several stalled projects to be restructured. “The current concession will now benefit all relevant stakeholders, not only in terms of saving time and resources, but also in making the core projects financially viable for restructuring through appropriate legal mechanisms,” said Radhika M. Dudhat, Partner, Shardul Amarchand Mangaldas & Co. Previously, such projects faced uncertainty and commitment of additional costs and resources, which hurt their viability, Dudhat added.
While NCLT’s primary mandate is to resolve insolvency disputes, overlapping jurisdiction with environmental clearances has created procedural bottlenecks.
The ministry’s notification also said that if a project remains bogged down in litigation or NCLT proceedings for more than three years, the State Pollution Control Board (SPCB) or Pollution Control Committee (PCC) must include additional environmental safeguards while granting consent to operate (CTO), which legally permits the industry or project to start operations. These safeguards should reflect any changes in site conditions and ensure proper pollution control and prevention measures are in place, the company said.
“By extending the validity of the EC to stay litigation for up to three years and targeted conditions beyond that, it shields genuine developers from legal hurdles. It recognizes the practical difficulties faced by a project proponent when a legal challenge, though later dismissed, effectively freezes all activity,” said Rajnish Gupta, tax and economic policy partner, EY India.
With project timelines separate from court delays, the government has strengthened regulatory certainty, which is a key factor for ease of doing business, Gupta said. This would help industries save time and costs, and the reform is seen to benefit sectors where large projects often face litigation-related delays and boost investor confidence and project momentum, he added.
“India has a robust and rigorous process for granting environmental clearance by the government and subsequent independent review by the NGT (National Green Tribunal) and the courts if the clearance is challenged,” said Ajay Shankar, senior fellow at The Energy and Resources Institute (TERI), former secretary of the former department of industrial policy and promotion.
