In the interest of worker welfare and workplace safety, the government has instituted the Factory Act of 1948. This legislation mandates that all factory proprietors must formally register their establishments with local authorities before commencing operations. The factory licence is the official authorisation from these authorities to engage in manufacturing activities. The Department of Factories and Boilers administers the issuance of these licences and assumes responsibility for overseeing worker health, safety and well-being.
Additionally, for a factory aspiring to be registered under the Factories Act of 1948, it is essential to secure approval for their building plan from the Department of Labour and Employment before advancing with the factory registration procedure.
Guidelines for Factories
In accordance with government regulations, factories must adhere to specific guidelines based on their workforce and power consumption. These guidelines apply to two distinct categories of factories, which are further divided based on the nature of their processes.
- Factories with a Minimum of 10 Workers and Consumer Power:
Factories that employ a minimum of 10 workers and have consumer power must adhere to the following guidelines.
- Factories with a Minimum of 20 Workers and No Power Consumption:
For factories with a minimum of 20 workers that do not consume power, the government has outlined specific guidelines that must be followed.
Categorisation of Factories
Factories are categorized into two based on the nature of their processes. These are as follows:
- Hazardous Factories:
Factories involved in hazardous processes are subject to unique guidelines to ensure safety and compliance.
- Non-hazardous Factories:
Non-hazardous factories follow guidelines appropriate for their processes to maintain a safe and efficient working environment.
Benefits of Obtaining a Factory Licence
Obtaining a factories licence is important for promoting the safety, welfare, and health of employees. It ensures compliance with regulations and guidelines set forth in the Factories Act, 1948 and offers a range of benefits as outlined below:
- Specific Provisions for Employees:
The Act prescribes specific provisions concerning various aspects of employment, including those related to female employees, young workers, wages, work hours, and working conditions.
- Legal Benefits:
Factory owners can access legal benefits made available by the government through various schemes and initiatives.
- Enhanced Productivity:
Strict adherence to the compliance and guidelines outlined in the Factories Act, 1948, leads to an increase in employee productivity.
- Regulation of Various Matters:
The factories licence facilitates the regulation of various important matters, including:
- Working hours
- Wages and payments
- Enrollment of juveniles and women in the workforce
- Hiring and termination of employment
- Other terms of service and conditions related to individuals employed in shops, commercial establishments, public amusement establishments and more.
- Ensuring Equal Benefits:
Compliance with the Factories Act ensures that all employees, without discrimination, receive equal benefits and protections, thereby promoting fairness and equality in the workplace.
Checklist for Factory Licence Application
Before applying for a factories licence, there are several essential requirements that must be fulfilled. This checklist gives the necessary items needed for obtaining a factories licence:
- Factory Building/Premises:
Ensure you have a suitable factory building or premises in compliance with the applicable building codes and safety standards.
- NOC (No Objection Certificate):
Obtain a No Objection Certificate from the following authorities:
- Fire Department
- Water Board
- Pollution Control Board
- Factory Layout Plan:
Prepare a comprehensive factory layout plan, detailing the arrangement of machinery, workspaces, and safety features.
- Notice to Chief Inspector:
Before you start any operations or make use of your factory, it is essential to send an official notice to the Chief Inspector of Factories, and that too at least 15 days in advance. In this notice, you should provide the following details:
- Name and address of the occupier (owner)
- Name and location of the factory
- Name of the factory manager
- Number of workers to be employed
- Type of manufacturing process to be carried out in the factory
- Total rated horsepower installed or to be installed in the factory
- Any other particulars as required by the regulatory authority
- Approval of Factory Plan by State Labour Department:
Obtain approval of the factory plan and location from the respective State Labour Department authorities. This step is important before applying for the factories licence.
- Permission for Factory Location:
Seek permission from the state government regarding the chosen factory location. Ensure that the location complies with zoning and land-use regulations.
Once the state government approves the factory plan and location, you can proceed with the factories licence application. Adhering to this checklist will help ensure a smoother and more compliant application process for your factories licence.
Documents Required for Obtaining a Factory Licence
To successfully obtain a factory licence, you need to provide the following documents and information:
- Form-1 (Particulars of Room in The Factory):
A completed Form-1 detailing the particulars of rooms within the factory premises.
- Copy of the Factory Building Plan:
A copy of the factory building plan, showing compliance with building codes and safety standards.
- ID and Address Proof of the Applicant:
Identification and address proof of the applicant, which may include Aadhar card, passport, or driver's license.
- Detailed List of All Directors:
A comprehensive list of all directors involved in the factory's management and operation.
- Memorandum of Association, Articles of Association and Board Resolution:
Copies of MOA, AOA, and the board resolution indicating the establishment and operation of the factory.
- Partnership Deed (if applicable):
A partnership deed, if the factory is operated as a partnership.
- Bank Account Details:
Details of the factory's bank account for financial transactions related to the operation.
- Expected Date of Commencement of Work:
The anticipated date of the commencement of factory operations.
- Payment Receipts:
Receipts as evidence of the fees paid for the factories licence application and processing.
- Land Deeds:
Documents proving ownership or authorization for the use of the factory premises, such as land deeds.
- Consent from All Relevant Authorities:
Consent or approvals obtained from various regulatory authorities, such as environmental clearances and safety approvals.
- Particulars of Equipment:
Particulars of the machinery as well as equipment in the factory.
- Particulars on Raw Materials, By-Products and Finished Products:
A comprehensive list of raw materials, by-products, and finished products, along with the associated production processes illustrated in a flow chart.
- Tax Receipt:
Proof of payment of taxes or fees related to the factory operations.
Providing these documents and information is essential for a smooth and compliant factories licence application process. It ensures that your factory adheres to all necessary legal and safety requirements.
Registration Procedure for Factory Licence in India
The registration procedure for obtaining a factories licence in India is governed by Section 6 of the Factories Act, which grants the State government the authority to oversee the licensing and registration rules. The process varies for hazardous and non-hazardous factories licences and involves the following steps:
- Submission of Factory Plan:
Prepare a detailed description of the factory or business plan, as per the guidelines established by the state government. Prior consent may be required for any expansion or construction of an industrial facility, which must be obtained from the State Government or Chief Reviewer.
- Owner's Details:
Provide essential details, including:
- Type of manufacturing process.
- Number of employees.
- Name of the factory and its owner.
- Factory address.
- Name of the factory manager.
- Details of machinery and equipment deployed in the factory.
- Filing of Application and Payment of Fees:
Submit the application for approval, typically in Form-1, in accordance with the prescribed procedures. Ensure that all necessary documents are duly signed and attached to the application. After this, pay the requisite fees for the factories licence once the application has been approved.
- Grant of Licence:
Before you can get your factories licence in India, you must first gain approval for your factory plan from the relevant authorities. This step is vital in ensuring that your application for a factories licence is on the right track. Once you've done that, your next step is the payment of fees and a thorough inspection by the department responsible for such matters. If everything checks out and your documents and application meet the specified rules and regulations, then the department will grant you the necessary factory licence. It's worth emphasizing that adhering to these rules and regulations is very important for a smooth and legally sound factories licence process in India.
Online Factory Licence Application Procedure
The online application process for obtaining a factories licence in India is as given below:
- Visit the State Labour Department or Department of Factories Website:
Start by visiting the official website of the relevant state's labour department or the department of factories. The exact website may vary depending on the state.
- Select 'Factory Registration' under Services:
On the website, go to the 'Services' section and locate 'Factory Registration' or a similar option.
- Setting Up an Account and Signing In (if necessary):
As per the state requirements of specific states, you also might be asked to make an account on the website. To complete this, go through the registration steps and thereafter access your account by logging into your created account.
- Fill out the Application Form:
Access the online factories licence application form and provide the requested information. This may include details about the factory, its ownership, machinery, and employees.
- Upload Documents and Submit the Application:
Attach the necessary documents, which usually include those mentioned before and submit the completed application form.
- Pay the Prescribed Fees:
Pay the required fees for processing the factories licence application. The payment process is typically integrated into the online application portal.
- Application Inspection and Approval:
The respective department will review your application and conduct inspections as necessary. Once they are satisfied with the compliance of your application, they will grant the factories licence.
Factory Licence Certificate:
The factories licence certificate is issued by the relevant state's labour department or department of factories. The duration of a factory licence can differ, ranging from one to five years, contingent on the regulations of the state. For factory owners to sustain their manufacturing activities within legal bounds, they must apply for the renewal of their factory licence certificate before it reaches its expiration date.
Factory Licence Renewal Procedure
A factory licence in India is usually valid for a specified period, which can range from one to five years, as per state. It is important to renew the licence before its expiry to continue your factory operations legally. The renewal process is similar to the initial registration process and typically involves the following steps:
- Submission of Renewal Application (Form-4):
Complete Form-4, which is the renewal application for the factories licence. Provide all the needed information which is also accurate.
- Submission of Form-4B:
Along with Form-4, you may be required to submit Form-4B if applicable. This form may vary based on specific state regulations.
- Payment of Renewal Fees (Treasury or Online Challan):
Pay the prescribed renewal fees for the factories licence. The payment can typically be made through a treasury challan or online using a digital payment system.
- Inspection and Approval:
The relevant department might perform a factory inspection to confirm that it complies with safety and environmental standards. Upon being content with the inspection findings and the renewal request, they will grant their approval.
Consequences of Late Renewal
When there's a lapse or omission in renewing the factory licence, penalties can be levied. Generally, a minimum penalty of 10% of the licence fee is established and this amount escalates by 10% for each ensuing month until the renewal is finalised. Therefore, it is of vital importance to promptly renew your factory licence to avoid incurring these penalties and to uphold the continuity of your legal operations without disruption.
Process for Voluntary Suspension of a Factories Licence
If a factory licencee wishes to voluntarily surrender or suspend their factory licence, the following process should be followed:
- Request a Licence Suspension with a Stated Cause:
To initiate the suspension of a factory licence, the licencee must make a formal application. Within this application, it's vital to furnish a clear and valid reason for the suspension. Clarity and transparency regarding the circumstances leading to this decision are essential.
- Include Necessary Documentation:
Accompany the application with any pertinent documents that substantiate or elucidate the grounds for the suspension. The precise documents required can vary depending on the situation, but they may involve financial statements, notifications to employees, or any other relevant paperwork.
- Furnish Worker Particulars and Concerns:
As a component of the application, provide particulars about the factory's workforce. This should include information regarding their employment, such as their names, roles, and any complaints or issues that necessitate attention.
- Submission of Application:
Submit the application for suspension to the relevant authority or department responsible for factory licencing. Ensure that the application is complete and accurate.
- Authority's Action:
Once the application is submitted, the authority will review it and take the necessary steps for the suspension of the factories licence. This may involve verifying the reasons for suspension and addressing any worker-related issues or concerns.
Why Choose StartupFino for Factory Licence?
StartupFino specializes in offering comprehensive services on factory licence, assisting you from initial advice to ensuring full compliance with essential requirements.
In obtaining a Factories licence, the exact steps and requirements for the licence applications may vary based on the state's regulations and the specific online portal used for submissions. To ensure a smooth and legally compliant suspension process, it is advisable to consult with the appropriate government authority or professional like at StartupFino for guidance on the exact steps and requirements for your specific situation.