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Factory License

The Factories Act 1948 says that a factory must obtain its building plan approval from the labor and employment department before covering itself for factory registration. Under this Act, registration and renewal of factory licenses are also done to ensure the safety of workers.

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Overview of Factory License

To protect the workers and ensure that the owner provides a healthy environment, the government has introduced the Factory Act 1948. 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 Department of Factories and Boilers issues Factory License. The Factories and Boilers Department must keep a check on workers' health, safety, and welfare.

Also, a factory registering under the Factories Act, 1948 must obtain its building plan approval from the labour and employment department before covering themselves for a factory registration.

Guidelines to be adhered to by the Factories

The government has laid down the guidelines that are required to be followed by those Factories which-

  • Have a minimum of 10 workers and consumer power.
  • Have a minimum of 20 workers and do not consume power.

The factories are broadly divided into two sub-categories depending on the process-

  • Hazardous
  • Non-hazardous

Benefits of Obtaining a Factory License

The main motive for obtaining the factory license is to ensure that appropriate safety measures are adopted to promote the employees' safety, welfare, and health. The benefits of getting a Factory License are mentioned-below-

Provides Specific Provision For Employees

The Act specifies the provisions associated with female employees and young people, wages for employees, work hours, working conditions, etc.

Avails Legal Benefits

The factory owner can avail of the legal benefits provided by the government under different schemes.

Enhances Productivity

Proper enactment of compliances and guidelines of the Factories Act, 1948 enhances the employees' productivity.

Regulates Various Matter

It helps in regulating various matters such as-

  1. Working hours,
  2. Wages/payments,
  3. Leaves,
  4. Holidays,
  5. Enlistment of juveniles/women,
  6. Hiring and termination of work,
  7. Other terms of service or any conditions related to the individuals working in shops, commercial establishments, public amusement establishments, etc.

Ensuring Equal Benefits

Proper Compliances of the Factories Act helps in ensuring that every employee receives equal benefits.

Documents required for Obtaining the Factory License

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

Registration Procedure of Factory License in India

Section 6 of the Act empowers the State government to monitor the Licensing and registration rules of the factories Act.

  • Description of factory or business plan has to be submitted to the appropriate authority of the state government.
  • Replacement or expansion of any plant or machinery is not charged if the same is in working condition.

The government of India has set a simple process to obtain a Factory license. The process varies in the case of hazardous factory licenses and non-hazardous factory licenses. The process for obtaining a Factory License involves the following steps: -

  • Filing Application.
  • Submission of documents.
  • Payment of Requisite fees.
  • Obtaining a license

Before applying, the applicant needs to get factory plan approval from the respective authorities. Once this approval has been obtained, the applicant can start obtaining a factory license.

Step 1 Submission of Plan

The plan should be submitted as per the rules laid down by the state government. There is a requirement of prior consent for expansion or construction of any Industrial facility by the State Government or Chief Reviewer.

Step 2 Details by Owner

  1. Manufacturing Process Type
  2. Number of employees
  • Name of the factory and its owner
  1. Address of the factory
  2. Name of the manager
  3. Details of machinery deployed

Step 3 Filing of Application

The Application for approval is required to be submitted in Form -1 in the prescribed manner along with all duly signed documents.

Step 4 Payments of Fees

Payment fees for the license are to be submitted once approval of Application is obtained.

Step 5 Grant of License

After payment of fees and inspection is Department is satisfied that all documents and application form is as per desired rules and norms, then the license is issued by the Department.

Factory License Renewal

Factory License is valid for up to one year, and so it should be renewed before its expiry. The process for renewal of license is the same as the registration process. Documents required for renewal of Factory license are:

  • Form-4
  • Form-4B
  • Treasury of Online Challan

In case default has been made in the renewal of the Factory license, a minimum of 10% of the license fee has been prescribed as a penalty which shall increase by 10 % every month.

Process for Suspension of a Factory License Voluntarily

In case the licensee needs to surrender the factory license to the government, the below-mentioned process should be followed-

  • Apply for suspension with the reason for the same.
  • Attach the requisite documents.
  • Please provide the details of the workers along with their grievances.
  • Once the application is submitted, the authority will take the necessary steps for the suspension of a factory license.

CorpBiz Procedure for Factory License

  • Purchase a Plan for Expert Assistance
  • Add Queries Regarding Factory License
  • Provide Documents to Corpbiz Expert
  • Prepare Application for Factory License+ Complete all Admissibility Criteria for Preliminary Screening
  • Complete Procedural Actions
  • Factory License at your Door Step!

Frequently Asked Questions

Every manufacturing unit is eligible to obtain a factory License.

A manufacturing factory employing 10 or more workers with the aid of power or 20 or more workers without the aid of power can be issued the factory license.

No, a Factory license cannot be granted in the residential area.

The license remains valid for 1 Year.

Documents are required for the renewal of the factory license:

  • Form-4
  • Form-4B
  • Treasury or Online Challan

The basic responsibilities of an occupier are to make sure-

  • The welfare of workers,
  • Their health conditions,
  • Their work environment,
  • Wages,
  • Time of duty is well within the guidelines of the government.

In India, the Act applies to all states and all manufacturing processes and establishments. In some cases, the Act is also applicable to factories that belong to the Central/ State Government.

Steps are required for obtaining the Factory License:

  • Application
  • Documentation
  • Payment of requisite Fee
  • Obtaining a license.

The government has indicated that a licensee should have a factory license at least 15 days before he plans to work functional start-up of the factory.

The factories are broadly divided into 2 sub-categories-

  • Hazardous
  • Non-Hazardous.

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