What is a Factory License?
A Factory License is a mandatory approval issued by the Chief Inspector of Factories of the respective state under the Factories Act, 1948. It grants permission to operate a manufacturing unit and ensures that the factory complies with the statutory requirements regarding the health, safety, and welfare of workers.
Operating a factory without a valid license is a punishable offense and can lead to heavy penalties or closure of the unit.
Who Needs a Factory License?
Registration is mandatory for any premises where a manufacturing process is carried on:
- With Power: Employing 10 or more workers.
- Without Power: Employing 20 or more workers.
- Hazardous Processes: Any unit engaged in hazardous processes as defined under the Act, regardless of the number of workers.
Documents Required for Factory License
| Category | Documents |
|---|---|
| Factory Plans | Approved Building Plan, Site Plan, Layout of Machinery. |
| Entity Proof | MOA/AOA, Partnership Deed, Certificate of Incorporation. |
| Occupier Details | ID & Address Proof of the Occupier (Director/Partner) and Manager. |
| Premises Proof | Ownership Deed or Rent/Lease Agreement with NOC. |
| Others | List of Machinery (with HP), Flow Chart of Process, Consent to Establish (CTE) from Pollution Control Board. |
Registration Process
- Plan Approval: Submit detailed factory plans to the Chief Inspector of Factories for approval before construction or setup.
- Notice of Occupation: File Form-1 (Notice of Occupation) at least 15 days before occupying the premises.
- Application Filing: Submit the application for the license (Form-2) online via the state's Labour Department portal.
- Fee Payment: Pay the requisite government fee based on the number of workers and installed power (HP).
- Inspection: A Factory Inspector will visit the site to verify compliance with safety and health norms.
- License Grant: Upon satisfactory inspection, the license is issued.
Fees and Penalties
Fees: The government fee varies significantly from state to state and is calculated based on a matrix of the maximum number of workers employed and the total installed horsepower (HP) of machinery.
Penalties: Operating without a license can attract imprisonment of up to 2 years or a fine of up to ₹1,00,000, or both. Continuing offenses attract further daily fines.
Validity and Renewal
Validity: A factory license is typically valid for 1 year to 5 years, depending on the state rules and the fee paid.
Renewal: The license must be renewed before its expiry (usually by 31st December of the year). Late renewal attracts additional fees (often 10% to 25% of the license fee).
