Business Registrations & Compliance#091

Understanding Factory licence under Factories Act, 1948

Obtain a factory licence before operating a manufacturing unit with 10+ power-using or 20+ non-power workers.

At a glance

Jurisdiction

State-level — Chief Inspector of Factories (or Inspector of Factories) under the Factories Act, 1948; administered by State Labour Departments across India

Who applies

Any person or entity (company, firm, individual) who intends to occupy or use any premises as a factory where 10 or more workers are employed with the aid of power, or 20 or more workers are employed without the aid of power, in a manufacturing process

Typical time

30–90 days from submission of application; varies by state. Preliminary approval / site clearance may be issued within 15–30 days.

Fee

Fee based on the number of workers and type of process; typically ₹1,000 – ₹25,000+ depending on the state and factory category. Annual renewal fee is generally lower than the initial fee.

Who should use this process

✓Applicable to premises where 10 or more workers are employed with the aid of power (electricity, steam, etc.) OR 20 or more workers without power, engaged in a manufacturing process
✓The prospective occupier must submit a written notice (Form 1 or state equivalent) to the Chief Inspector at least 15 days before commencing operations
✓The factory building and premises must comply with the requirements of Chapters III and IV of the Factories Act (buildings, health, safety, welfare)
✓Adequate provisions for health (ventilation, lighting, sanitation), safety (fire exits, machinery guarding), and welfare (canteen, rest rooms for 150+ workers) must be in place

Who does NOT need to apply

✕Premises employing fewer than 10 workers (with power) or fewer than 20 workers (without power) are not covered under the Factories Act
✕Mines and oilfields are governed by the Mines Act, 1952 and Oilfields (Regulation and Development) Act, 1948 respectively
✕Government establishments covered by specific Central Acts may have separate provisions
✕Offices and purely commercial establishments are not 'factories' under this Act

Documents required

#	Document	Type needed	Purpose
1	Site plan / layout plan of the factory premises	Original	Shows the location of buildings, machinery, exits, fire fighting equipment, welfare facilities, and general layout of the factory
2	Building plan / structural drawings approved by the local authority	Original	Approved building plan confirming structural safety and compliance with local building bye-laws
3	List of machinery installed or proposed to be installed	Original	Details of all plant and machinery used in the manufacturing process, including prime movers and transmission equipment
4	Details of manufacturing process (description of the process and raw materials used)	Original	Describes the nature of manufacturing activity, raw materials, intermediates, and finished products
5	Details of workers employed (number, gender, shifts)	Original	Confirms the number and category of workers for computing applicable safety and welfare requirements
6	Certificate of Incorporation / Partnership Deed / other legal entity document	Self-attested Copy	Proof of the legal entity of the occupier
7	NOC from Pollution Control Board (PCB)(optional)Required for factories that discharge effluents or emissions; categories as per PCB guidelines	Original	Environmental clearance confirming the factory's effluent and emission compliance with PCB norms
8	NOC from Fire Department(optional)Required for factories above a specified size or dealing with hazardous / flammable materials	Original	Confirms that fire safety provisions (fire exits, extinguishers, hydrants) meet fire safety standards
9	Proof of ownership or tenancy of premises	Self-attested Copy	Confirms legal right of the occupier to use the premises as a factory

Original documents: Carry originals only for in-person visits — do not hand them over permanently unless explicitly required.

Step-by-step guide

1
Obtain site clearance / prior approval (pre-construction stage)
Offline
Before constructing or converting a premises into a factory, the occupier should apply to the Inspector of Factories for site clearance. Submit the site plan, proposed manufacturing process, and pollution control plan. Some states make this mandatory before the local body approves the building plan.
15–30 daysInspector of Factories / Chief Inspector of Factories
2
Obtain NOC from State Pollution Control Board
Both
Apply to the State Pollution Control Board (PCB) for Consent to Establish (CTE). Submit details of the manufacturing process, proposed effluent and emissions, and pollution control measures. PCB categorises factories as Red, Orange, Green, or White based on pollution potential. Obtain the CTE before commencing construction.
30–60 days
3
Obtain Fire Department NOC
Offline
Apply to the local Fire Department for a NOC confirming that the factory's fire safety measures (fire exits, fire extinguishers, sprinkler systems for applicable cases) meet the National Building Code and state fire safety standards.
15–30 days
4
Submit notice of occupation — Form 1
Both
At least 15 days before the factory commences or resumes operations, the occupier must submit a written notice (Form 1 or state equivalent) to the Chief Inspector of Factories. The notice must include: name and address of occupier, nature of manufacturing process, number of workers, installed power (KW/HP), and description of the factory. Some states accept this online via the state labour portal.
At least 15 days before commencementChief Inspector of Factories
5
Inspection of the factory premises
Offline
After receiving Form 1, an Inspector of Factories visits the premises to verify compliance with Chapters III (Health), IV (Safety), and V (Welfare) of the Factories Act. The Inspector checks ventilation, lighting, cleanliness, fire escapes, machine guarding, first aid facilities, and welfare provisions.
15–30 days after Form 1Inspector of Factories
6
Comply with inspection requirements
Offline
If the Inspector identifies deficiencies, the occupier must rectify them within the prescribed time and submit a compliance report. Common deficiencies include inadequate fire exits, missing machine guards, poor sanitation, and insufficient first aid provision.
15–30 days for compliance
7
Obtain Factory Licence and registration certificate
Both
Upon satisfactory inspection and compliance, the Chief Inspector of Factories issues the Factory Licence (registration certificate) under the Factories Act. Display the licence at the factory. The licence is renewed annually by paying the renewal fee before 31 December / 31 January as per the state.
30–90 days from Form 1Chief Inspector of Factories

Government officers involved

Chief Inspector of Factories

State Labour Department / Factories Inspectorate

Steps 1, 4, and 7

Receives Form 1, issues factory licence, renews licence, and has powers to stop any manufacturing process that poses imminent danger

Inspector of Factories

State Labour Department / Factories Inspectorate

Steps 1 and 5

Conducts physical inspection of factory premises, checks compliance with Factories Act provisions, and submits inspection report to Chief Inspector

Government portals

Shram Suvidha Portal (Central)

https://shramsuvidha.gov.in

Factory registration and compliance for Central Sphere establishments; also provides links to state-specific portals

Maharashtra Factories Portal

https://mahabocw.in

Factory licence application and renewal for Maharashtra

Karnataka Karmika — Labour Department

https://karmika.karnataka.gov.in

Factory licence application and renewal for Karnataka

Tamil Nadu Labour and Employment Department

https://www.labour.tn.gov.in

Factory registration and licence for Tamil Nadu

Things to watch out for

Commencement of operations without giving Form 1 is an offence

Starting manufacturing operations without submitting Form 1 (at least 15 days in advance) to the Chief Inspector of Factories is an offence under Section 7 of the Factories Act, attracting prosecution and fines. Do not begin operations — even on a trial basis — without submitting the notice.

Factory licence must be renewed annually

The factory licence must be renewed each calendar year by paying the renewal fee before the prescribed date (usually 31 December of the preceding year). Operating with an expired factory licence is an offence. Late renewal attracts additional fees.

Change of occupier, process, or substantial alteration requires fresh notice

Any change of occupier, material change in the manufacturing process, addition of new machinery that increases power by more than 50%, or structural alteration to the factory building requires prior written notice to the Chief Inspector. Operating without intimating such changes is a violation.

Hazardous process factories have additional obligations

Factories involving hazardous processes (as listed in the First Schedule of the Factories Act — chemical plants, insecticide factories, petroleum refineries, etc.) have additional obligations under Chapter IVA: health surveys, medical examinations, emergency on-site plans, and disclosure to workers. Non-compliance with Chapter IVA requirements carries heavier penalties.

Canteen is mandatory for factories with 250+ workers

A factory employing 250 or more workers must provide and maintain a canteen. A restroom is mandatory for 150+ workers. A creche is mandatory for factories employing 30 or more women workers. These welfare obligations must be set up before the inspector's visit or the licence may be withheld.