Energy Sector

This page explains consent to establish and consent to operate (cte/cto), renewal and transfer in plain terms: the law, the forum, the documents and the usual steps. Legals365 is the legal platform of Advocate B.K. Singh and associates, based in Delhi NCR.

In short. Under section 25 of the Water Act and section 21 of the Air Act, most industries, hospitals, large buildings and other polluting operations need consent to establish (CTE) from the state pollution control board before construction and consent to operate (CTO) before starting. CTO must be renewed before expiry and transferred on a change of ownership. Refusal can be appealed to the appellate authority and then the NGT.

Consent from the pollution control board is the basic licence to pollute within limits. Without it, a factory, hospital, hotel, housing project with its own STP or diesel generator sets, or a commercial complex can be told to stop work, have its electricity and water cut, and be asked to pay environmental compensation. With it, the unit still has to meet the conditions written into the consent, and those conditions are what inspectors check.

This page explains when consent is needed, the difference between consent to establish and consent to operate, how applications, renewals and transfers work, what happens if consent is refused or delayed, and the consequences of running without it. The details vary by state board and by category of activity, and the position for a new factory is quite different from that of a buyer taking over a running unit or a society managing a building, so the sections below say how the answer changes.

Law

Water (Prevention and Control of Pollution) Act 1974 ss.25, 26, 27, 28 and 33A; Air (Prevention and Control of Pollution) Act 1981 ss.21, 31 and 31A; Control of Water Pollution and Control of Air Pollution (Grant, Refusal or Cancellation of Consent) Guidelines 2025; CPCB categorisation of industries (red, orange, green, white)

Authority

State pollution control board or UT pollution control committee, such as DPCC (Delhi), UPPCB (Uttar Pradesh), HSPCB (Haryana), RSPCB, KSPCB, TNPCB and MPCB

Validity

Under the 2025 guidelines: CTE generally 5 years, extendable by 2; CTO by category, longest for green and shortest for red; check the current state notification

Appeal

Appellate authority under s.28 Water Act and s.31 Air Act within 30 days; then the NGT under s.16 within 30 days, extendable by 60

Documents

Land title or lease, site plan, project report, capital investment certificate, process flow and water balance, pollution control design, other NOCs, previous consents and compliance reports

What CTE and CTO mean

Consent to establish (CTE) is the board's permission to set up a unit at a particular site with a particular process and capacity, and it must be obtained before construction or installation begins. Consent to operate (CTO) is the permission to start production or operations once the unit is built and its pollution control systems are in place, and it must be obtained before commissioning. Some states use different labels, such as consent for establishment and consent for operation, or issue a combined consent and authorisation, but the structure is the same.

The legal basis is section 25 of the Water Act, which requires consent before establishing any industry, operation or process, or treatment and disposal system, likely to discharge sewage or trade effluent, and section 21 of the Air Act, which requires consent to establish or operate an industrial plant in an air pollution control area. Since most states have declared their entire territory an air pollution control area, both Acts usually apply together. Section 26 of the Water Act brought existing discharges within the consent system.

Consent is specific. It covers the products, capacity, raw materials, discharge points, stacks, fuel and pollution control equipment described in the application. A change in any of these can take the unit outside its consent, even if the board has not yet noticed.

Which application you need

The provisions that govern consent

Who needs consent and the colour categories

Whether you need consent depends on the activity, not on the type of building. The CPCB classifies activities into red, orange, green and white categories using a pollution index. Red covers the most polluting activities such as large chemical, pharmaceutical, dyeing, tannery and thermal power units; orange covers moderately polluting ones; green covers low-polluting activities; and white covers practically non-polluting activities. The category decides the consent fee, the inspection frequency, the validity period and, in many states, where the unit can be located.

White category activities do not need consent; in November 2024 the MoEFCC exempted them from CTE and CTO, and it also provided that industries obtaining environmental clearance with the board's views considered during appraisal need not obtain a separate CTE. Check the current list, because the white category list has been revised. Everyone else needs consent, including many businesses that do not think of themselves as industries: hospitals and nursing homes, hotels with boilers or large kitchens, large residential and commercial building projects with their own sewage treatment plants and diesel generator sets, IT parks, malls, cold storages, stone crushers, hot mix plants and workshops.

If the board has classified your activity in a higher category than the CPCB list suggests, raise it at the application stage. A wrong category means higher fees, shorter validity and stricter siting rules for as long as the unit operates.

Check the site before you apply for CTE

Most CTE refusals are about location, not about pollution control design. The board will ask whether the site is in a conforming area under the master plan or zoning regulations, whether the category of activity is allowed there, and whether there are setback or siting requirements for that category near rivers, residential areas, protected areas or other sensitive places. In Delhi, for example, polluting industries are generally permitted only in approved industrial areas, and units in residential or non-conforming areas face refusal and closure.

Other location rules apply on top. A site near the coast may need CRZ clearance, a site near a sanctuary may fall in an eco-sensitive zone, and a site in an over-exploited groundwater block may face restrictions on abstraction. Projects above certain thresholds need environmental clearance before CTE; our page on environmental clearance and EC violations covers that. Groundwater NOCs are explained on our page on CGWA groundwater NOC and borewells.

For a buyer or tenant of an industrial plot, these checks belong in the property due diligence. A clean title is of little use if the plot is in an area where your category of industry can never get consent. When Advocate B.K. Singh reviews an industrial lease or sale, he asks for the land use certificate and the board's siting criteria for the client's category before he looks at the commercial terms.

How CTE and CTO applications move

Most boards now take applications only online, through their own portal or the state's single-window system.

1. Register and choose the right category

   Register the unit on the board's portal and select the activity and category carefully. A wrong selection leads to returns, delay or a consent that does not cover what you actually do.

2. File the CTE application

   Upload the land documents, site plan, project report, process description, water balance, details of effluent, emissions and waste, the proposed pollution control systems and the capital investment certificate. Pay the consent fee, which is mainly based on capital investment and category.

3. Inspection and queries

   The board may inspect the site and raise queries. Reply in writing within the time given and keep a record, because the time taken to answer queries is usually excluded from the board's processing timeline.

4. Receive CTE and build as approved

   Construct and install exactly what the CTE describes, including treatment plants, stacks and monitoring systems. Keep photographs and invoices of the pollution control equipment.

5. Apply for CTO before commissioning

   File the CTO application with proof that conditions of CTE are met, then allow the board to inspect. Start trial or full production only after CTO is granted, unless the board has specifically allowed a trial run.

The 2025 guidelines prescribe category-wise timelines for decisions and an escalation to a state-level committee where the board does not act, but each state applies them through its own procedure. Keep a dated record of every submission.

Living with consent conditions

Getting consent is the start, not the end. Every CTO carries specific conditions, such as discharge and emission standards, the location of monitoring points, the frequency of third-party analysis, maintenance of log books, a limit on water consumption, a ban on bypassing treatment, and requirements such as online continuous emission or effluent monitoring for listed categories. General conditions require the unit to inform the board of breakdowns and changes, and to allow inspection.

Annual obligations also follow from consent. Units must file an environmental statement in Form V under rule 14 of the Environment (Protection) Rules 1986, by 30 September each year for the previous financial year, and many must file hazardous waste and other returns under the relevant rules. These filings are read at renewal time, and gaps in them are a common ground for refusing renewal.

Breach of a consent condition is treated almost as seriously as having no consent at all. It is the usual basis for show cause notices, closure directions and environmental compensation. Our pages on pollution board notices and board inspections and raids explain how to deal with what follows an inspection.

Renewing consent to operate

Apply for renewal of CTO well before it expires. The 2025 consent guidelines give a rebate on the renewal fee for applications filed at least 120 days before expiry and impose surcharges for later filing, rising steeply for applications filed after expiry. A unit that keeps running after expiry without a renewal decision is exposed, because the board can treat it as operating without consent.

Validity under the 2025 guidelines depends on category: shorter for red, longer for orange and longest for green, with CTE generally valid for five years and extendable by two. States are adopting these guidelines through their own notifications, and some boards had already been granting longer validity, so read your state board's current order rather than relying on what the previous consent said.

Renewal is not automatic. The board looks at compliance with existing conditions, recent analysis reports, the environmental statement, hazardous waste returns, any pending notices and complaints, and compliance with environmental clearance conditions where applicable. If there is a pending show cause notice or closure direction, deal with it before or alongside the renewal application, because the board will not renew a unit it is in the middle of acting against.

Transfer of consent on sale, lease or change of name

Consent is granted to the occupier of a unit at a site, so a change of owner, lessee, partnership or company name has to be reported to the board and the consent transferred or amended. Most boards handle this through an application with proof of the transfer (sale deed, lease deed, business transfer agreement or certificate of change of name), a no-objection or confirmation from the previous holder, and an undertaking by the new occupier to comply with all conditions.

The new owner takes over the unit's environmental history. If there are unpaid consent fees, pending notices, a closure direction or an environmental compensation demand, the board will expect them to be resolved, and some boards will not transfer consent until they are. That is why environmental due diligence belongs in every acquisition of a running unit; our page on mergers, acquisitions and business deals covers the deal side.

For a share purchase, where the company itself does not change, no transfer is usually needed, but a change of directors or authorised signatory should be updated on the portal. For a slump sale or asset purchase, the buyer is a new occupier and must apply. In a lease, the agreement should say clearly who holds consent, who pays fees and who bears the cost of compliance, because disputes between landlord and tenant over an expired consent are common.

Expansion, new products and process changes

Any expansion in capacity, addition of a new product, change in the manufacturing process, change of fuel or addition of a new discharge point or stack needs prior approval. Expansion usually needs a fresh CTE for the additional capacity, followed by CTO, and if the expansion crosses an EIA threshold it also needs environmental clearance before the CTE.

Units often expand gradually: one more machine, one more shift, a small change in product mix. Each step looks too minor to report, but the board compares actual production with the consented capacity, often using electricity consumption and sales figures. Production above consented capacity is treated as operating without consent for the excess and can lead to compensation calculated for the whole period.

A change of fuel needs particular care in Delhi NCR, where directions of the Commission for Air Quality Management restrict industries to approved fuels. Switching to an unapproved fuel, even temporarily, has led to immediate closure directions. Check the current CAQM list before any fuel change and apply for amendment of consent first.

Documents for consent applications

When consent is refused, delayed or cancelled

A refusal must give reasons, and the unit must be given an opportunity of hearing before consent is refused or revoked on grounds of non-compliance. Read the reasons carefully. Many refusals are curable: a missing document, a design that does not meet a standard, a siting issue that can be addressed with a different layout. In those cases a fresh or revised application is quicker than an appeal.

If the refusal is wrong in law or fact, appeal to the appellate authority constituted by the state government under section 28 of the Water Act or section 31 of the Air Act within 30 days. The appellate authority's order can be appealed to the NGT under section 16 of the NGT Act within 30 days, extendable by 60 days. Our page on NGT cases explains that stage.

Delay is the more common complaint. The Water Act has long provided that a complete application not decided within four months is deemed granted, and the 2025 guidelines set shorter timelines with escalation to a state-level committee. Relying on deemed consent is risky, because boards often argue the application was not complete. In consent matters that come to Advocate B.K. Singh, the practical step is a written reminder citing the timeline and the date of the last complete submission, followed by escalation, before anyone treats consent as deemed.

Running without consent: what follows

Operating without valid consent exposes the unit to closure directions under section 33A of the Water Act or section 31A of the Air Act, including disconnection of electricity and water. Boards and the NGT also levy environmental compensation for the period of operation without consent, and the Supreme Court confirmed in 2025 that boards have this power where damage is caused or likely. Our page on closure notices and closure orders explains how to respond.

Penalties have changed. The Jan Vishwas (Amendment of Provisions) Act 2023 and the Water Act amendment of 2024 replaced imprisonment with monetary penalties, decided by an adjudicating officer, for many contraventions, though the position depends on the provision and on whether the state has adopted the Water Act amendment. Prosecution remains possible in some cases, so check the current text.

Banks and buyers also care. A lender may treat lack of consent as a breach of loan covenants, and a buyer may walk away or cut the price. Insurance claims after a fire or accident can become harder if the unit was operating without consent. Fixing consent is almost always cheaper than dealing with these consequences.

How consent works for different kinds of occupiers

A manufacturing unit is the standard case, and its main risks are expansion beyond consented capacity and lapses in renewal. An MSME in an industrial estate often depends on a common effluent treatment plant, and its consent will be tied to its membership of and discharge into the CETP; a CETP failure can put every member's consent at risk. A large unit will usually have online monitoring linked to the board and CPCB servers, which means violations are recorded automatically.

A builder developing a large residential or commercial project needs CTE before construction and CTO before occupation where the board's rules require it, usually because of the STP, DG sets and project size. After handover, the RWA or maintenance agency becomes the occupier and must hold or renew the CTO, which is a frequent source of dispute when the builder never obtained it. Hospitals need consent under both Acts as well as authorisation under the Bio-Medical Waste Management Rules; see our page on bio-medical waste compliance.

IT parks, malls, hotels and warehouses are usually orange or green category and are often surprised to learn they need consent at all. The city matters too: Delhi units deal with the DPCC and CAQM directions, Noida and Ghaziabad units with UPPCB through the state's single-window system, Gurugram and Faridabad units with HSPCB, and units in other states with their own boards, each with its own portal, fee schedule and practice on renewals and transfers.

Mistakes that cost units their consent

• Building before CTE. Construction without CTE is a violation in itself and can lead to refusal, compensation and closure even if the design is sound.
• Filing renewal late. Late filing attracts surcharges, and operating after expiry without renewal invites closure.
• Not reporting a change of owner. The new owner is operating without consent in its own name until transfer is approved.
• Quiet expansion. Production above consented capacity is caught through power and sales data, and compensation is often calculated for the whole period.
• Ignoring queries. An unanswered query stops the clock on the board's timeline and can lead to the application being returned.
• Missing Form V and returns. Gaps in annual filings are read at renewal and are a common reason for refusal.

Other approvals that sit alongside consent

Consent under the Water and Air Acts is one of several environmental approvals. A unit generating hazardous waste needs authorisation under the Hazardous and Other Wastes Rules 2016; see our page on hazardous waste authorisation and TSDF. Producers and brand owners may need EPR registration for plastic packaging, e-waste, batteries or tyres. Projects above thresholds need environmental clearance, and units drawing groundwater need a NOC.

Non-environmental licences follow their own laws: factory licence, fire NOC, trade licence, building completion and occupancy certificate, and electricity sanction. Our page on business licences, fire NOC and permits covers several of these. A board may ask for some of them at the consent stage, and an electricity distribution company may ask for consent before releasing a connection.

Keep one compliance calendar for all approvals, with expiry dates, return due dates and the person responsible. Most consent problems are not legal puzzles; they are missed dates.

Cost, time and what to do this week

The consent fee is set by each board, mainly by capital investment and category, and the 2025 guidelines aim to make fee structures more uniform and limit increases. Professional costs depend on whether the work is a routine application, a renewal with queries, a transfer in a transaction, or a refusal that has to be appealed. Routine green and orange applications can be decided within weeks if complete; red category applications and renewals with pending issues take longer.

This week: check the expiry date of your CTO and diarise renewal at least four months ahead; compare actual production, fuel and discharge points with what the consent allows; confirm that Form V and other returns have been filed; and, if you are buying or leasing a unit, ask for the full consent file and any notices before you sign. If an application is stuck, send a written reminder with the date of your last complete submission.

If you want the papers checked before you act, the team of Advocate B.K. Singh at Legals365 can review them and tell you the next step; you can talk to a lawyer here.

Frequently asked questions

What is the difference between CTE and CTO?

Consent to establish (CTE) is needed before you build or install a unit at a site. Consent to operate (CTO) is needed before you start production or operations, after the board is satisfied that the pollution control systems are in place. Both are issued by the state pollution control board under the Water and Air Acts.

Which industries do not need consent to operate?

White category activities, which are practically non-polluting, are exempt from CTE and CTO under the MoEFCC's November 2024 notifications. Industries that obtain environmental clearance with the board's views considered during appraisal do not need a separate CTE. Check the current white category list, as it has been revised.

How long is consent to operate valid?

Under the 2025 consent guidelines, validity depends on category, with red category units getting the shortest period and green the longest; CTE is generally valid for five years, extendable by two. States are adopting the guidelines through their own notifications. Always check your state board's current order.

When should I apply for CTO renewal?

At least 120 days before expiry, which under the 2025 guidelines also earns a rebate on the renewal fee. Late applications attract surcharges, rising sharply after expiry. Running after expiry without renewal risks closure.

Can consent to operate be transferred to a new owner?

Yes. The new occupier applies to the board with proof of transfer, a no-objection from the previous holder and an undertaking to comply. Pending dues, notices and compensation demands usually have to be resolved, so check them before buying.

Does a share sale need transfer of consent?

Usually not, because the company holding the consent stays the same. Changes of directors or the authorised signatory should be updated with the board. An asset purchase or slump sale does need a transfer, as the buyer is a new occupier.

What happens if I run a factory without consent?

The board can issue closure directions and cut electricity and water under section 33A of the Water Act or section 31A of the Air Act. Environmental compensation can be levied for the period of operation, and monetary penalties apply under the amended Acts. Lenders and buyers may also treat it as a serious default.

What can I do if the board refuses consent?

First check whether the reasons can be cured by a revised application, which is often quicker. Otherwise appeal to the appellate authority under section 28 of the Water Act or section 31 of the Air Act within 30 days. The appellate order can then be challenged before the NGT.

Is consent deemed granted if the board does not decide in time?

The Water Act has long provided for deemed consent after four months on a complete application, and the 2025 guidelines set shorter timelines with escalation. Boards often dispute that the application was complete, so do not rely on deemed consent without advice. Send written reminders and escalate first.

Do residential projects need consent from the pollution board?

Large residential and commercial projects usually need CTE and CTO because of their sewage treatment plants, DG sets and size, depending on the state board's rules. After handover, the RWA or maintenance agency becomes responsible for keeping the CTO valid. Ask the builder for the consent file at handover.

Do I need fresh consent to increase production?

Yes. Expansion in capacity or a new product needs a fresh CTE for the expansion and then CTO, and possibly environmental clearance if thresholds are crossed. Production above consented capacity is treated as operating without consent for the excess.

How is the consent fee calculated?

It is set by each state board, mainly by the unit's capital investment and its pollution category. The 2025 guidelines aim to bring fee structures closer together and cap increases. Your board's current fee schedule will give the exact figure.