Brief of Factory License in India
Factory License is mandatory for the factories as per the law after some strict legislation. Industrial Labour has been exploited ever since the industrial revolution has been existing. Their condition has been so miserable that it was considered indispensable to protect them. The first ever Factory Act has come in 1881. Since then the act has been amended several times. In order to remove its weakness and improve it and keep harmony this new act of 1948 has been passed. That act is known as the Factories Act, of 1948. There was a genuine need for this act; hence it has been passed in1948. This act is the revised version of the previous act. This covers all the aspects like health, welfare, safety, licensing, etc related to the labor class. Factory License also came under this new act.
In accordance with the provisions of the Factory Act, of 1948, it is mandatory for all factory owners to register their premises with the local governing authority before the start of business. The Chief Inspector of the Labour Commissioner Organization shall grant a Factory License after registration of the factory. Before going for the Factory License one must take building plan approval from the Labour and Employment Department. We can say that building plan approval is one of the many prerequisites of the Factory License.
Factory License is mandatory so that government can keep eye on the factories and protect the interest of laborers who are working in the different kinds of factories. Through this Factory License government can have records about the factories like how many factories are working in a particular place and how many workers are working in the respective premises. In short Factories Act, of 1948 came the protection of the basic fundamental rights of the workers who are working in the factories.
What is Factory?
As per section 2(m) of the Factories Act, 1948 factory is any premises where ten or more workers are working or they were working on the ant preceding twelve months, or it also includes any part of which a manufacturing process is being carried on with the aid of the power. It also includes any premises where twenty or more workers are working or they were working in the ant preceding twelve months, or it also includes any part of which a manufacturing process is being carried on with the aid of the power. There are certain things that are not considered as factory as per the Factories Act, of 1948, these things are given below-
- Mobile units belong to the Armed Forces of the Union
- A shed that is run by the railways
- Eating House
What is Factory License?
Permission taken by the government for manufacturing in a particular place or city is called Factory License. This is basically a kind of Permission given by the authorities about how to work, what to do and what not to do, and how to treat the workers and also helps the government on keeping the eye on the various activities of the factory owners. Factory Licenses can also help the government provide security to the workers working in the factories.
Guidelines that Factories must adhere
As per the Factory Act, of 1948, any factory needs to obtain a Factory License must adhered to the guidelines given below-
- 10 or more workers must be involved in manufacturing activity with the aid of power on any day of the preceding 12 months. It means there must be a minimum of 10 workers and also the consumer power.
- 20 or more workers are involved in manufacturing activity without the aid of power on any day of the preceding 12 months. It means when we are talking about without power minimum number of workers must be 20.
Types of Factories
The Factories are broadly divided into two subcategories depending on the process-
- Non- Hazardous
Hazardous factories mean such kinds of factories whose manufacturing process is hazardous process. As per section 2(cb) of the Factories Act, 1948 hazardous process means any process or activity in relation to an industry specified in the first schedule where unless special care has been taken, raw materials used therein or the intermediate or finished products, by-products, wastes and effluents thereof would cause harm to the person engaged or working in that factory. Also if such kinds of waste or effluents cause harm to the environment and create pollution.
Non-Hazardous Factories are the ones whose manufacturing process does not include hazardous processes. It simply means that the waste or effluents of the factory do not create any harm to the workers working there or to the environment.
Benefits of Obtaining a Factory License in India
Obtaining a Factory License is beneficial to all the employees working at such establishments as it ensures the safety and well-being of these workers. Some of the advantages or benefits of the Factory License include the following-
- Provides Specific Provision For Employees
- Avails Legal Benefits
- Enhances Productivity
- Regulates Various Matter
- Ensuring Equal Benefits
The Factories Act provides specific provisions associated with female employees and young people like wages for female employees, work hours of female employees and children, working conditions, wages, etc. This is basically done to protect the children and women. It is not discrimination against men as constitutional rights are subject to reasonable restrictions.
The factory owner can avail of the legal benefits provided by the government under different schemes like the schemes which are there to promote start-up India or Make in India projects of the government, for which government gives tax exceptions as well. Without having a Factory Licence one cannot take benefit of such schemes of the government.
Proper enactment of compliances and guidelines of the Factories Act, of 1948 which are given for achieving a very important goal related to the health of the workers, enhances the employees' productivity which is ultimately beneficial for the factory. It helps the factory in profit maximization and in other aspects as well.
It helps in regulating various matters which are given in the Factories Act, of 1948 for the betterment of the manufacturing process and workers' health. Some of them are given below-
a. Working hours of the workers working in the factory.
b. Wages and payments of the workers by the owner of the factory.
c. Leaves, like how many leaves can be taken in a month, how many of them will be paid and how many will not be paid, etc.
d. Holidays with respect to the month and year etc.
e. Enlistment of juveniles and women in the factory
f. Hiring and termination of workers who are working in the factory under the owner of the factory.
g. Other terms of service or any conditions related to the individuals working in shops, commercial establishments, public amusement establishments, etc.
Ensuring that every worker is getting equal benefits is very necessary for the betterment of the employees. This concept of “Equal Pay for Equal Work” is also provided in our constitution indirectly. Hence it is the duty of the legislature to make sure that it has been followed properly.
Mandatory Safety, Welfare and Health Measures
The following safety, welfare, and Health measures will be observed when a Factory License is obtained-
From section 21 to 40 of the Factories Act, 1948 safety measures has been given which are given below-
- Fencing of the machinery in any factory which has a moving part of the prime mover and flywheel that is connected with the prime mover is mandatory.
- Only a trained adult male worker wearing tight-fitting clothes, who have a certificate of his appointment can work on or near the machinery which is in motion.
- Employment of a young person in dangerous factories is not allowed.
- In every factory, a suitable striking gear or other efficient mechanical appliance shall be provided, which can be used to move driving belts too fast and lose the pulleys.
- If the machine is a self-acting machine then outwards as well as inwards transverse within 45 cm.
- The casing of new machinery is necessary, in case you fail to do so then you may be punished with imprisonment of 3 months or a fine up to Rs. 500 or both.
- Women and children are not allowed to work near the Cotton Opener.
- Hoists and lifts must be made up of sound material and have the strength to carry out the things. They must be sufficiently protected.
- Lifting machines, chains, ropes, and lifting tackles must be made up of sound material and have a good construction. All these must be free from defects and must have adequate strength.
- Near every revolving machine, a notice must be placed which will indicate the maximum safe working speed.
- Affective measures must be taken in order to ensure that the safe working pressure of such part is not exceeded.
- Each and every floor, stairs, and means of access in a factory must be well maintained.
- Each and every slump, pit, and opening in the floor, etc must be properly fenced or covered.
- No person shall carry excessive weight in a factory. The limit of the excessive weight can be fixed by the respective state government.
- Protection against eyes, dangerous fumes, gases, explosive or inflammable dust, and fire must be provided in the factory.
- Power to the inspector has been given regarding the specification of defective parts and tests of stability.
- There must be proper safety of buildings and machines.
- A safety officer has been appointed to look after all the above-mentioned things.
From section 42 to 48 welfare measures has been given under the Factories Act, 1948 which are given below-
- Proper washing facilities have been provided to the workers.
- Facilities with respect to storing and drying cloths have been given.
- In each and every factory proper arrangements for sitting should be provided for the workers working in the factory.
- First Aid facilities must be there in the factory for the laborers.
- Canteens are a must, on the premises of the factory.
- Shelters, restrooms, and lunchrooms must be provided for the workers in the factory.
- Crèches are mandatory in a factory where more than 30 women workers are employed.
If you see section 11 to 20 of the Factories Act, 1948 you will find the provisions related to health measures, detail of these provisions is given below-
- Proper cleanliness facilities must be provided to the workers in the factory.
- Proper disposal of wastes and effluents.
- Adequate ventilation for the circulation of fresh air and reasonable temperature must be provided to the workers for their health and security.
- Effective measures have been taken so that workers will not inhale the harmful dust and fumes.
- An increase and decrease in the humidity can cause ill-effect on the health of the workers hence proper safety measures with respect to artificial humidity have been taken.
- There must not be overcrowding in any room of the factory.
- Proper lighting, artificial as well as natural has been provided to the workers working in the factory.
- Basic facilities like proper drinking water, latrines, and urinals have been provided to the workers in the factory.
- There must be a sufficient number of spittoons in the factory to maintain proper hygienic conditions in the factory.
The procedure of Registering a Factory in India
Since it is mandatory to obtain a Factory License before starting a factory in India, you need to register your factory first and given below are the steps for the same-
1. Submission of Business Plan
The plan related to your factory like how it is going to work, where it is going to establish and the limits and boundaries of the factory etc should be submitted as per the rules laid down by the state government regarding the establishment of the factory. Consent of the State Government or Chief Reviewer must be taken for the establishment of the factory as it is mandatory to take as per the rules and regulations. It must also contain the precautions taken by the factory related to health, welfare, and safety measures for the employees of the factory.
2. Details Provided by the Owner
Following are the details which must be provided by the owner-
- Manufacturing Process Type must be provided by the owner
- Number of employees, who will work in the factory
- Address of the factory where it will be established
- Name of the manager of the factory
- Details of machinery deployed in the factory
3. Filing of Application for Approval
The Application for approval is required to be submitted with the help of the form called Form -1 in the prescribed manner along with all duly signed documents as per the rules and regulations.
4. Payments of Fees Regarding License
Payment of fees for the license is mandatory once approval of Application is obtained by the applicant of the license. Approval can be taken as per the rules and regulation of the license.
5. Verification and Inspection
In the event that the application and proposals are in accordance with the rules and regulations provided under the Factories Act, 1948 and Factories Rules, 1950. The factory plan shall be approved or verified by the Factories Director after review of the recommendations of the Deputy Factories Director.
6. Grant of License
After payment of fees and valid verification by the inspection department that all the documents and application forms are as per desired rules and norms, then the license is issued by the concern Department.
Procedure to get Factory License in India
Section 6 of the Factories Act, 1948 which was made for the safety of the workers of the factory and it gives the authority to the government to govern make the rules relating to the licensing and registration of factories under the Act on the matters which are given below-
1. Rules and Regulations for Submission
The State Government may make the rules and regulations for the submission of plans or the representation of manufacturing plants. The association requires the prior consent of the State Government or the Chief Review Officer to develop or increase any industrial facility for the workers or employees of the factory. In any case, the expansion or substitution of existing hardware does not increase unless the protected working space is reduced and, in addition, it is not hazardous to well-being and soundness perspective.
2. Inspection Process
The step-by-step process which is involved in the inspection or verification is provided below-
- Establishment Identification is required
- Joint Team Inspection will be done
- Report on inspection must be submitted by the concern authorities
- Notice of non-compliance should be serve
3. License Approval is Needed
In the event that an application is made for the purpose of approval with respect to the development or expansion of the processing plant, it shall be drawn up by registered post or through the Government portal of the State government or the Chief Inspector. In case if no reply is received within one month from the date of use, it shall be assumed that it is confirmed by the authorities. If not approved within thirty days of the date of the application by the applicant, the framework will naturally be presumed as rejected.
Documents Required for the Factory License
There is need of different types of documents on the different stages; the list of some of such documents is given below-
Documents Required for the Approval of Site Plan
- Form 1 (Particular of Room in The Factory)
- Questionnaire for Form-1
- Certificate for Stability
- NOC Fire
- UPPCB NOC
- Diagram of process flow
- NOC Local Body/Local Authority
- NOC The Explosive Department
- NOC Of Others
- Copy of Building Drawing
- NOC Electrical Safety
- Proof of ownership of factory premises
- Site notification
- Article of the Memorandum
- Directors' List
- Resolution on the declaration of occupier
- Report on safety
- Emergency Plan on-site
- Policy on Health and Safety
Documents Required to Register
- Photography of the establishment
- Proof of identity
- DIN card or PAN card
- Treasury Challenge/Bank Name
Required Documents for Renewal Purpose
- Form – 4
- Form-4B Form
- Treasury or Challenge Online
Factory License Renewal
Factory License which is provided by the government authorities is not a onetime license, it has to be renewed time-to-time. After the expiry period one needs to renew the Factory License. Follow the steps given below to renew your Factory License-
- A fully filled form called Form No. 2 must be submitted at renewal time to the concern authorities
- The designated authority shall scrutinize this application submitted by the applicant
- Post-inspection will be done after which the process for approval shall be begin
- Corrections will be suggested, if needed and they shall be done at this stage only
- After the above step, the application will be sent with all corrections needed or suggested for the approval
- After the valid verification the renewed license copy attested by the government authority shall be sent to the owner
If one who already have Factory License and he or she wants to surrender it, they can do so by following the steps given below-
- Apply for suspension with the reason for the suspension of the Factory License
- Attach the requisite documents for the same
- Please provide the details of the workers along with their grievances for the above purpose
- Once the application is submitted with all the requisites to the concern authorities, the authority will take the necessary steps for the suspension of a Factory License.
The Factories Act has certain rules in the form of provisions for the security of the workers works in the factory, breaking of which leads to penalties. Section 92 of the Factory Act, 1948 states or says that in case there is any kind of contravention against the provisions of Factories Act, then the occupier and the manager of the factory will be equally responsible for the breaking of the law under the Factory Act. They will be punishable with imprisonment which may extend to 2 years and fine up to Rs. 2 lakhs. In case, they continue the breach, they will be punishable with Rs.10 thousand each day of the continuing breach of the duty imposed by the law.
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India’s Factory Registration and license is run by the provisions of the factories Act 1948, a legislation made for the workers works in the factory. This is operated by the Ministry of Labour and Employment of India. Obtaining a license is mandatory for all the factories and is essentially made so to ensure that the owners as well as the employees are well taken care of and their rights have been secured. There should not be any issues during operations of the factory which has been established as per the law. Factory work can be hazardous which can cause harm to the employees, hence to provide them safe and secure environment Factory License is required. Workers are often overworked and underpaid in the factories, thus protection of their right is necessary. This Factory License makes sure that no one is being exploited as well as people associated with the establishment are scrutinized by the government of India. Thus it can be concluded that Factory License regulates the working conditions in factories, to regulate health, safety, welfare measures and annual leaves and enactment of the special provisions in respect of young persons, women’s and children who work in the factories which are established by the law.
Frequently Asked Questions
The factories should have proper drainage system, adequate lighting, ventilation, temperature, etc. Adequate arrangements for drinking water and sufficient latrine and urinals should be provided at convenient places. These should be easily accessible to workers works in the factory and must be kept cleaned.
For the purpose of getting a Factory License in India he is required to make an application to the Directorate of Industrial Safety and Health, Labour Department.
The basic responsibilities of an occupier are to make sure the following things-
- The welfare of the workers of the factory
- Their health conditions within the premises of the factory be protected
- Their work environment should be healthy and safe
- Wages should be paid as per their work
- Time of duty is well within the guidelines of the government of India
Following are the licenses required for factories in India-
- Company or LLP Registration
- GST Registration
- Udyog Aadhar Registration
- FSSAI License or Registration
- Import Export Code
- Shop and Establishment Act License
- Gumastha license
- Other Licenses and Registrations.