Factory License: Applicability, Registration, Eligibility, Checklist, Documents Required

Factory owners had to compulsorily register their premises with local authorities before the Factories Act, 1948 came into force. The local authorities gave a license to run their factories and carry out manufacturing activities. The Factories Act, 1948 (‘Act’) provides that certain factories that fulfil the conditions given in the Act must register and obtain a factory license under the Act to ensure the safety of the workers. The factory owners can renew the factory license upon its expiry by applying to the respective state labour department or department of factories.

Factory license applicability

As per the Act, the below factories must obtain the factory license:

• When the factory has ten or more workers involved in manufacturing activity with the aid of power 
• When the factory has 20 or more workers involved in manufacturing activity without the aid of power

Checklist for factory license

The following are required before applying for a factory license:

• Factory building/premises
• NOC (No Objection Certificate) from the fire, water and pollution board
• Factory layout plan 
• Notice to chief inspector

The factory owner must get the factory plan approved by the respective state labour department authorities before applying for a factory license. The factory owners must take permission from the respective state government regarding the factory location. After the state government approves the factory plan and location, factory owners can apply for the factory license.

They should also send a legal notice to the chief inspector 15 days before carrying out any activity or using the factory premises containing the following information:

• Name and address of the occupier
• Name and location of the factory
• Name of the manager of the factory
• Number of workers that will be hired
• Type of manufacturing process that will be carried out at the factory
• The total rated horsepower installed or to be installed in the factory
• Any other particulars as required

Factory license registration

Section 6 of the Act empowers the state governments to monitor and grant licenses and registrations under the Factories Act. The process to obtain a factory license is as follows:

Plan submission

The factory owners must submit the factory plan to the state’s labour department. This must be submitted before the expansion or construction of a factory. Once the factory plan is approved, the factory owners can apply for a factory license.

Filing application

A factory owner can file an application for the factory license online or offline with the state’s labour department or department of factories. It should be submitted along with all duly signed documents.

Payment of fees

The prescribed fees should be paid for obtaining the factory license after submission of the license application. 

Grant of factory license

After payment of fees and inspection of the application and documents by the respective authority, the department issues the factory license to the owners.

Factory license online application

The online application process to obtain a factory license differs from state to state. In some states, the online factory registration and license application can be filed on the labour department website. While in other states, the factory registration and license application can be filed on the department of factories website. Below is the general process of the factory license online application:

• Visit the state labour department or the department of factories website.
• Under services, click on ‘Factory Registration’.
• Create an account and Login, if required.
• Fill out the application form, upload documents and submit the application.
• Pay the prescribed fees.
• The respective department will inspect the application and grant the factory license.

Factory license certificate

The respective state department of labour will grant the factory license certificate. The factory license is valid for up to one to five years. The validity of the factory license certificate varies from state to state. However, factory owners must apply for renewal of the factory license certificate before its expiry to carry on the manufacturing processes or operations of the factory. 

Documents required for factory license

• Owner ID and address proof
• Address proof of factory premises or location, such as rental agreement or electricity bill
• Pollution department consent letter
• NOC from the fire and water department
• Business PAN card copy 
• Factory layout and building plan
• List of directors
• Board resolution or partnership deed
• Particulars of equipment and raw materials
• Particulars of hazardous and non-hazardous wastes
• Tax receipt, if any

Benefits of factory license

A factory license is a municipal approval for the factory’s business. It will help to apply for and obtain other licenses. Factory owners must mandatorily obtain this license, or else they may have to shut down the factory. It also protects owners from penal provisions laid down under the Factories Act. It ensures owners adopt appropriate safety measures to promote their workers’ welfare and health. Factory owners can also get benefits provided by the government under different schemes when they obtain the factory license.