For establishing a factory in India, following Factory License Procedure is very important. As per the Factory Act 1948, every factory owner must register their premises with the local authorities before commencing their business. A factory License acts as a document of approval given by authorities to carry out manufacturing activities. The main objective behind Factory License Procedure is to ensure that appropriate safety measures are adopted to promote the employees’ safety, welfare, and health. The license acts as an approval document provided by authorities to carry out manufacturing activities.

The Parliament of India introduced the Factories Act, 1948 on 23rd September 1948, which came into effect on 1st April 1949. The Act’s provisions empowered the State Governments to make their legislation regarding Factory License Procedures. State Governments were to set up mechanisms by which a Government Authority was to set up an office comprising of Factory Inspectors and a Chief Factory Inspector. They would control the setting of new factories and compliance requirements of existing factories as per Sec 6 of the Factories Act (Approval, Licensing, and Registration of Factories). In this article, we will discuss Factory License Procedure.

Advantages of Factory License.

The following are the advantages of the Factory License Procedure – 

1. The Act prescribes the provisions associated with female employees and young people, wages for employees, work hours, working conditions, etc. 
2. The factory owner can take advantage of the legal benefits provided by the government under different schemes.
3. Proper enactment of compliances and guidelines of the Factories Act, of 1948 enhances the employees’ productivity.
4. The license ensures that every employee under the establishment gets equal rights and treatment. 
5. Complying with the guidelines set by the Factories Act 1948 further enhances the productivity of all workers. 

Documents required for Factory License Procedure 

The following are the documents needed for Factory License Procedure:

1. Form-1 (Particular Room in The Factory)
2. Copy of the factory building plan,
3. Id and Address proof of the applicant
4. A detailed list of all directors
5. MOA, AOA, and Board resolution
6. Partnership deed, if any
7. Bank account details
8. Expected Date of commencement of work,
9. Payment receipts
10. Land deeds
11. Consent from all authorities
12. Particulars of equipment
13. Particulars of hazardous and non-hazardous wastes
14. Particulars on raw materials, by product, and finishing product along with the process procedure in a flow chart.
15. Tax receipt.

Factory License Procedure in India 

As per section 6 of the Factories Act the Government of the State to control the licensing and registration rules of factories under the Act on the following matters:

1. The state government can prescribe rules for submitting plans or representing manufacturing facilities. The association includes the State government or Chief Reviewer’s prior consent to the construction or expansion of any industrial facility.
2. Notice by the occupier for Manufacturing process type, Provide the name and address of the factory and its owner, Contact address, Manufacturing machine detail, Number of employees, and Name of the manager. 
3. Application for approval needs to be submitted in the prescribed form (form-1), accompanied by the required documents. 
4. After applying for the application submit the application fees for the license. 
5. After that verification and inspection. 
6. After inspection, if the department thinks that all the documents and provisions of the factory act comply then the department will issue the factory license.

The following is the procedure for Factory License renewal- 

1. An applicant has to apply with duly filled-in Form No-2 and fee prescribed in the proper head of Account in the shape of Treasury Chalan in the office of the Director of Factories & Boilers, of his state.
2. On accepting the application, the same is scrutinized by the concerned officer.
3. After inspecting the application, if the documents are found right the application, it is processed for approval by the competent Authority
4. Once authorities get the corrected documents from the applicant, the application is processed in a file for approval by the Competent Authority.
5. After approval, the renewed copy of the license duly signed by the Competent Authority is sent by post to the applicant with a cover letter.

According to the factory act 1948, any factory needs to obtain a Factory License if:

1. 10 or more worker is involved in manufacturing activity with the aid of power on any day of the preceding 12 months or
2. 20 or more worker is involved in manufacturing activity without the aid of power on any day of the preceding 12 months

The factory owner will be required to obtain permission in advance from the State government as to where the factory will be located. To be able to occupy the premises, the owner will also need to send a legal notice to the chief inspector under the Section 7 Act a minimum of 15 days before any activity or occupancy can be achieved there. The following details would be required at this time;

1. Name of the occupier
2. Address of the occupier
3. Name of the manager that will run the show
4. Number of employees that will be hired
5. Type of manufacturing process which shall be carried out at the said factory
6. Any other details which require close monitoring

Since it is mandatory to acquire a Factory License, you need to register first and the following mentioned steps are required to follow – 

1. Applicants require to completely fill up the designated form No. 2, along with the required documents and applicable fees, and submit it to the Director of Factories and Boilers
2. Once the application is received, it is scrutinized by the concerned party
3. The documents are also scrutinized and if all is in place, the process is sent for approval to the concerned authority
4. If the documents demonstrate any discrepancy, you will be under an obligation to rectify the errors and re-submit in the stipulated time-frame
5. Once the approval is given, a license along with a registration certificate is provided and a cover letter shall be needed for the same

Conclusion 

Obtaining a Factory License is an essential step for running a factory in India. Pursuant to the 1948 Factory Act^[1], it is mandatory for each and every factory owner to register their premises with local authorities before starting a business. A factory License works as an approval document provided by authorities to carry out manufacturing activities. Obtaining a Factory License is essential for all and is primarily designed to ensure that the owners and staff are well taken care of in the event of any problems during operations. Factory work is generally exhausting and dangerous, and employees are frequently overworked and underpaid. The License ensures that no one is exploited and that everybody involved with the establishment is subject to government scrutiny. Ignorance of a Factory License can result in heavy fines and penalties, which can collapse once a factory. Seek professional advice for Factory License Procedure. You can also reach Bizadvisors.io for more information.

Read our article:A Complete Overview of Documents Required for Factory License