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Shubham Chauhan
| Updated: 14 Apr, 2020 | Category: Factory License, Government Registration

Registration and Licensing of Factories under Factories Act, 1948

Factories Act 1948

Over the years, manufacturing has emerged as one of the high growth sectors in India. Introduction of schemes like “Make in India” has given an adequate boost to the sector to a level that India is expected to become the fifth largest manufacturing country in the world by the end of the year 2020. The manufacturing sector in India has evolved from its earlier stages of industrialization to its current phase of global competitiveness, making it a great location for newer, smaller businesses to manufacture. To set up a factory in India, you need to apply for licenses from the centre and state government. Factory Registration in our country is regulated by the provisions of the Factories Act 1948. Factories Act regulates the working condition in factories and deals with various problems concerning the health, safety, efficiency, and well being of the persons at workplaces. This blog will provide you with an insight into the procedure involved in Factory Registration in India.

Applicability of Factories Act, 1948

The Factories Act 1948 is applicable throughout the country, including Jammu & Kashmir, and covers all manufacturing processes and establishments falling within the definition of “factory” as defined u/s 2(m) of the Act. The Act is also applicable to factories belonging to the Centre/State Government (section 116).

Definition of factory as per Factories Act, 1948

Under the Factories Act, “factory” means any premises:

  • Where ten or more than ten workers are working or were working on any day of the preceding twelve months, and in any part of which a manufacturing power is being carried on with the aid of power, or is ordinarily so carried on, or
  • Where twenty or more than twenty workers are working or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on.

Objectives of Factories Act, 1948

  • The Factories Act was incorporated in the year 1948 with objectives of regulating the working conditions in factories, regulating health, safety, welfare, and annual leave of factory workers to ensure adequate safety measures of workers employed in factories.
  • Moreover, the Act also makes provisions regarding the employment of women and young persons, annual leave with wages, etc.

The procedure of registering a factory in India

It is obligatory for every factory in India to abide by the rules and guidelines stated in the Factories Act, 1948. The first step towards establishing a factory in India is the registration of the factory, and once the registration is done, the licenses can be availed from the government. Following is the procedure to be followed for factory registration in India:

  • An applicant has to apply with duly filled in Form No-2, a set of prescribed documents and fees prescribed in the proper head of Account in the shape of Treasury Chalan in the office of Director of Factories & Boilers, of his state.
  • Upon receiving the application, the same is scrutinized by the concerned officer.
  • Post scrutiny, if the documents are found correct, it is processed for approval by the competent Authority.
  • In case shortcomings are observed then, the applicant is asked to submit the corrected application in a time-bound manner.
  • Once authorities receive the corrected from the applicant, the application is processed in file to get approval from the Competent Authority.
  • After approval is given, a registration certificate and a license duly signed by the Competent Authority are sent by post to the applicant with a covering letter.

Documents Required for Factory Registration

Following is the list of documents needed for Factory Registration:

  • Form No-2 or Combined application form for establishment of industries in form 1AA.
  • Construction completion report from management as per the approved plan.
  • Requisite Fee in shape of treasury Chalan in proper Head of Account as per fee structure notified in from time to time.
  • Resolution of Director/partners nominating one to act as occupier under section 2(n) of Factories Act.
  • Original copy of Stability Certificate issued by a recognized competent person.
  • Safety & Health Policy for 2(CB) and MAH category factories and other factories are employing 50 or more workers.

Procedure for renewal of factory license

  • 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 Director of Factories & Boilers, of his state.
  • Upon receiving the application, the same is scrutinized by the concerned officer.
  • After inspecting the application, if the documents are found correct the application, it is processed for approval by the competent Authority.
  • If there are any corrections to be made, the applicant is asked to submit the corrected application in a time-bound manner.
  • Once authorities receive the corrected documents from the applicant, the application is processed in a file for approval of the Competent Authority.
  • After approval, the renewed copy of license duly signed by the Competent Authority is sent by post to the applicant with a covering letter.

Documents required for renewal of factory license

  • Form No-2 or Combined application form for establishment of industries in form 1AA.
  • Requisite Fee in shape of treasury Chalan in proper Head of Account as per fee structure notified from time to time.
  • Copy of Original Factory License.

Compliance Checklist under the Factories Act

Licensing of Factory

The owner of the factory has to take prior permission from the State Government or the Chief Inspector in writing for the site on which factory is to be situated.

Further to get a license, the occupier must send the notice under section 7 of the Act to the Chief Inspector, at least 15 days before he begins to use the premise as a factory containing the following details:

  • Name and address of the Occupier.
  • Name and address of the factory.
  • Type of the manufacturing process to be carried out in the factory.
  • Name of the manager of the factory.
  • Number of workers likely to be employed.
  • Other prescribed particulars.

Working Hours of Adults

According to the Factories Act, 1948[1], the employees working in the factories would gain the benefit of the following regulations:

  • No worker should be given permission to work in a factory for more than 48 hours a week.
  • No worker should be made to work continuously for 10 days without any holiday.
  • In case the worker is deprived of any of weekly holidays, he should be allowed to take that holiday in that month or within the two months immediately following that month.
  • No adult worker should be working in a day for more than 9 hours.
  • The working hours of an adult worker in a factory must be arranged in a way that he doesn’t work for more than 5 hours without taking a break of at least half an hour.
  • If a worker works on night shift, the hours he has worked for after the midnight should be counted in the previous day.

Safety Provisions under Factories Act, 1948

  • Fencing of machinery.
  • Work on near machinery in motion.
  • Employment prohibition of women and children on dangerous machines.
  • Protection of eyes.

Welfare measures under Factories Act

  • Washing facilities
  • Facilities for storing and drying clothing.
  • Facilities for sitting.
  • First aid appliances.
  • Canteens if the factory has more than 250 workers employed.
  • Shelters, restrooms, and lunchrooms if the company has more than 150 workers.
  • Crèches in case there are 30 or more women workers.

Penalties under Factories Act, 1948

Offence Penalties
Violation of the provisions of the Act Imprisonment for 2 years or fine up to Rs 1,00,000 or both
Continuation of violation Rs 1000 per day
Violation of Chapter IV pertaining to safety or dangerous operations Not less than Rs 25,000 in case of death Not less than Rs 5000 in case of serious injuries
Following violation of some provisions Imprisonment up to 3 years or fine not less than Rs 10,000 which may extend to Rs 2,00,000
Obstructing inspectors Imprisonment up to 6 months or fine up to Rs 10,000 or both
Wrongfully disclosing result related to results of analysis Imprisonment up to 6 months or fine up to Rs 10,000  or both
Violation of the provisions of Sec. 41B, 41C and 41H related to compulsory disclosure of information by occupier, specific responsibility of occupier or right of workers to work imminent danger Imprisonment up to 7 years with fine up to Rs 2, 00,000 and on continuation fine at Rs 5,000 per day. Imprisonment of 10 years when violation continues for one year.

Take Away

In India, Factory Registration is regulated by the provisions of the Factories Act 1948. The Act is managed by the Ministry of Labour and Employment. Factories Act also regulates the working condition in factories and deals with various problems concerning the health, safety, efficiency, and well being of the persons at workplaces. If you wish to set up a factory in India, you will have to abide by the rules and guidelines stated in the Factories Act, 1948.

Shubham Chauhan

A passionate legal content writer, a nature enthusiast, an avid reader, and a part-time thinker. By means of conducting in-depth research on industry related topics, Shubham often builds flawless and intelligible legal content for populace from all walks of life.

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