Licences, laws, loopholes and lost lives expose glaring violations in Delhi’s spaces

And that’s when a middleman – the industry politely calls a “licensing liaison” – stepped in, armed with information of exactly which licenses were needed from which departments, the paperwork required, details of the fee to be paid, timelines, and most importantly, the bribes to be paid. “I have always been very diligent about compliance. Everything has to be by the book. But in Delhi, even when you are fully compliant, getting a licence to run a restaurant without a middleman is impossible. His job is to guide you through the process, submit all the paperwork and meet the officials. He’s connected to every department, and every department wants to be paid off above the mandated licence fee,” said the restaurateur, requesting anonymity.

After deciding on the space, the process began: obtaining a food safety certificate from Food Safety and Standards Authority of India (FSSAI); a health trade license from the Municipal Corporation of Delhi (MCD); clearance from the Delhi Police for eating establishments; environmental clearance and consent to operate from the Delhi Pollution Control Committee (DPCC); and a no objection certificate from the Delhi Fire Service (DFS).

It did not end there. Once construction was complete and the restaurant was close to opening, applications had to be made for liquor licences and approvals from the weights and measures department.

“It was so frustrating. It doesn’t end with acquiring the licences. Officials want free meals, drinks, and if you hurt their ego, they will slap you with a fine of ₹1 lakh for something as insignificant as not mentioning bar timings in front of the bar. We were looking to open a restaurant in the UAE and found the process so easy, but here the process is the punishment,” she said.

It isn’t just restaurants, retail stores, gymnasiums, cafeterias, and hotels – all need a handful of licences and clearances.

But that doesn’t mean all have them – as DFS personnel discovered on the morning of June 3 when they forced their way into a smoke-filled building in Hauz Rani.

When firefighters entered the Hauz Rani building, they found what appeared to be a full-fledged hotel. Officially, however, it was a B&B registered under a scheme launched before the 2010 Commonwealth Games and permitted to operate only six guest rooms. Investigators later found around 25 rooms functioning in the building.

“Within the first few minutes, it was obvious that what existed on ground and what existed on paper were two different things,” said a DFS official who asked not to be named.

And how! For instance, the ground floor housed a restaurant, even though records available with authorities suggested the premises were licensed as a small tea-and-snacks outlet (to make matters worse, this licence had expired). The local health inspector had inspected the restaurant only a day before the fire. The health inspector works for MCD and has to verify that the outlet with a tea-and-snacks licence is just serving tea and snacks – and isn’t a restaurant.

An MCD official said the inspector has since been dismissed and investigations are underway against officials responsible for oversight in the area. “There are more than 1,200 health trades in the south zone, with each inspector expected to cover multiple wards. Action will be taken against all those who failed to catch these violations,” the official said.

The MCD spokesperson did not respond to requests for comment.

Then, this is a familiar script in Delhi: premises approved for one purpose operating as something entirely different, often navigating a maze of overlapping permissions, expired licences and weak enforcement. A factory operates under the guise of a household industry. Restaurants function under the garb of small snack vendors; and street vending permits turn into full-fledged food vans.

Over the decades, Delhi has created a regulatory structure so fragmented and cumbersome that it does not merely encourage violations; it creates opportunities for them. One department issues a registration. Another, conducts inspections. A third handles enforcement. Yet another maintains records. Each possesses only a fragment of the picture.

As a result, accountability becomes diffused.

They regulate everything from road widths and parking requirements to floor area ratio (FAR), building height and occupancy.

How complex can this be? Very. As AK Jain, former DDA commissioner (planning), explained: “There are nine major and 37 sub-categories of land use. Any activity has to legally conform to the notified zonal plan with third level of regulation of specific property use in layout plan.”

But why does this meticulous blueprint have little to show on ground?

That’s because the city’s administrators decided early on that they could not afford to let rules and regulation get in the way of business. Jain blames populism and poor enforcement.

“In the 1960s the Delhi government, under a land reform act announced that village (abadi area) lal dora areas will not be constrained by the masterplan leaving a big loophole. The very name abadi refers to residential use but the land mafia over decades carried out massive development,” he added. Commercial and retail hubs such as Shahpur Jat boutiques, Saidulajab’s Champa Gali, Hauz Khas village and Chhatarpur’s Dhan Mill came up on such land.

The Delhi High Court attempted to intervene in 2003, directing authorities to ensure fire-safety compliance, completion certificates and stricter action against unauthorised buildings. It even ordered disconnection of electricity and water supplies to non-compliant structures. Yet implementation remained sporadic.

With a massive population and a buzzing economy, thousands of illegal units ranging from eating houses to factories and shops to entire commercial hubs have come up in such non-conforming areas. The reason is not hard to fathom: a restaurant seeking to operate in a commercial area would require around eight licences. In a non-conforming area, large hotels and restaurants are prohibited. But local authorities occasionally introduce conditional exemptions, such as cloud kitchens and mixed-land use policies.

An MCD official said that the civic body recently issued orders to deregulate food-related businesses including restaurants and eateries as part of efforts to crack down on inspector raj. “Over the last year, we changed policies for factory licensing, general trade licensing, storage, and health trade to integrate them with property tax, minimising the inspector’s role. “We will still have the right to ensure trade license norms are followed to ensure safety,” the official added.

“Delhi’s food and beverage industry is currently undergoing a transition, with an increasing number of licenses being deregulated. Over the past few decades, obtaining the various approvals required to open and operate a restaurant has been a cumbersome and time-consuming process. As a result, restaurant chains and international brands have often preferred Noida and Gurugram over Delhi … Restaurant owners in Delhi are very optimistic that deregulations brought about in the recent past will bring positive results in the growth in the F&B sector with respect to ease of doing business,” Sandeep Anand, Delhi chapter head of National Restaurant Association of India.

There are 97 categories of establishments that come under this: restaurants, banquet halls, coffee houses, even paan shops, gymnasiums, and swimming pools.

Delhi’s population is estimated at roughly 25 million. MCD data shows only around 13,000 establishments currently hold health trade licences. That doesn’t mean that the Capital’s residents are underserved; it only suggests that they are being served by establishments without the licence.

A MCD official who spoke on condition of anonymity claimed that the corporation has, over the past two to three years, worked to “reduce the compliance burden”. Initially, the number of documents required for a health trade licence was reduced from 14 to around five. More recently, 67 categories of food-related businesses were deregulated and linked directly to FSSAI certification. “This means these establishments no longer require a separate health trade licence. All they need is an FSSAI certificate,” the official said. MCD has launched a new portal for the purpose.

Apart from health trade licences, MCD also issues “general trade” and “storage” licences covering hundreds of categories of businesses such as grocery shops, paan shops, art galleries, and special trades like showrooms, retail outlets, warehouses.

Factory trade licences are governed under Section 416 of the Delhi Municipal Corporation Act (1957) but only around 29,000 units run on factory licence.

The Street Vendors Act 2014 mandated a survey of street vendors and allotment of vending spaces but around 70,000 certificates have been issued against the estimated vendor count of over 200,000.

Urban planners say the numbers reflect a persistent demand-supply gap.

In the absence of sufficient legal commercial and industrial space, businesses inevitably migrate into residential neighbourhoods and unauthorised areas. Delhi has 28 approved industrial areas. Alongside exist 26 non-conforming industrial clusters that authorities have repeatedly sought to redevelop.

In December 2019, a fire at an illegal factory in Anaj Mandi killed 43 people. Most of the victims were labourers sleeping inside the building. A year earlier, a fire at a firecracker unit in Bawana claimed 17 lives. Smaller incidents continue to occur regularly. On June 10 this year, firefighters responding to a blaze in Begumpur discovered that it originated from a designer-paper-pouch manufacturing unit operating from a residential building.

Raghuvansh Arora, who heads the Apex Chamber of Commerce and Industries (ACCI) an umbrella body of industrial area associations in Delhi, said flawed licensing is responsible for ruining Delhi’s industrial base while pushing people towards non-conforming areas. “The DSIIDC regime was expected to develop industrial areas previously managed by MCD. MCD abandoned us and the DSIIDC has not been able to deliver. It has been 15 years of disaster… We pay exorbitant rates for power and water but what do we get in return?” said Arora.

On June 23 last year, chief minister Rekha Gupta announced a regulatory overhaul, revoking Delhi Police’s powers to issue a no-objection certificate for seven trade categories: amusement parks, hotels/guest houses/lodges, restaurants, swimming pools, discotheques, game parlours, auditoriums.

Earlier, police could inspect such establishments and, in serious cases, initiate action that could lead to sealing.

To be sure, there is no guarantee that police licensing alone would have prevented such violations. Even under the current B&B framework, operators are required to submit guest records to local police every 15 days. Officials said no such records had been provided in the Hauz Rani case.

Still, former police officers argue that the old system was imperfect but provided an additional layer of scrutiny. Retired IPS officer Rajan Bhagat, who last served as deputy commissioner of police in Delhi, said fragmented regulation often leads to weak accountability.

“Why create multiple agencies? If something is everyone’s responsibility, it becomes nobody’s responsibility. The government should designate one agency responsible for periodic inspections and enforcement,” he said.

While Delhi Police does not hold any power to act, they can still flag illegal constructions to MCD which they claim to regularly do. “It’s important to realise that due to lack of powers to act or any mandatory rules, the staff has no motivation to increase their work,” a serving IPS officer in the Delhi Police said, asking not to be named.

Police officers point out that guest houses and hotels are routinely inspected before major national events such as Republic Day and Independence Day. A violation as large as operating 25 rooms instead of six would have been difficult to miss. Why they were not flagged is anybody’s guess.

The June 2025 changes are part of a larger trend that encompasses factory and general trade licenses being merged with property tax, and 67 types of health trades being integrated with FSSAI registration. All are part of a growing emphasis placed by provincial governments on the ease of doing business.

Which is important, but as urban planning expert and former MCD works committee chairman Jagdish Mamgain put it, reforms should strengthen safety standards rather than weaken them. “The objective of ease of doing business should be to simplify procedures without compromising public safety,” he said.

The Hauz Rani fire illustrates what happens when the gap between paperwork and reality becomes too large.

B&B registrations are administered through the tourism department. Hotels require compliance with public health norms and other municipal regulations. Police verification, which doesn’t exist now, forms another layer of oversight. Multiple agencies possess pieces of the puzzle, but none sees the complete picture.