LICENSE FOR FACTORY SETTING-UP

A business entity irrespective of its residential status is required to have a renowned place for its operations and other information that benefits them to stand firmly in the Indian market. Once the entity is ready with a full-fledged plan, they can apply for a factory set-up license.

After the passing of the Factory Act, 1948, it became compulsory for each factory owner to register their area or place of operations with local authorities before starting such a factory. Thus, the license serves as an approval document as required by authorities to undertake any manufacturing activities.

LICENSE APPLICABILITY FOR MANUFACTURING BUSINESS

As per the factory act 1948, the following class of factory requires to take a license under the act-

• Factory having 10 or more workers involved in manufacturing activity with the aid of power on any day of the preceding 12 months.
• Factory having 20 or more workers involved in manufacturing activity without aid of power on any day of the preceding 12 months.

Before taking a factory license, the owner is required to get the plan of factory set-up approved by the regulatory authority.

BENEFITS FOR FACTORY SETTING-UP

1. Such a license act as a municipal approval for performing business.
2. It will also help the factory owner to apply for other licenses under different laws.
3. The license ensures the continuous and hassle-free running of the factory.
4. It also protects the factory owner from various penalties under the Factories Act, 1948.

PREREQUISITE OF LICENSE FOR FACTORY SETTING-UP

1. The applicant is required to draft the factory plan and get it approved by the Director of Factories. The applicant can visit the website of Municipal Department of their respective state and can apply online.
2. After filing the required information and submitting the application, the same will be forwarded to the Deputy Director of Factories and after his complete verification, he will forward the application to the Director of Factories for final approval.
3. After complete verification, the Director will sign the plan along with the letter of approval for the same.

PROCEDURE LICENSE FOR FACTORY SETTING-UP

Section 6 of the Factories Act, 1948, lays down the procedure for applying for Factory Registration. The step-by-step procedure is as follows –

1. APPLICATION TO DIRECTOR OFFICE

Application be made to the Office of Director of Factories and shall contain the following information -

• The type/nature of the manufacturing process to be carried out.
• Details related to the full name and address of the place of operation and its owner.
• Contact details of the owner i.e., their contact number and email id.
• Details related to the machinery and plant to be used for manufacturing.
• A total number of employees along with their status in the factory.
• Manager detail who would be supervising the activities.

​2. ​SUBMISSION OF APPLICATION WITH SUPPORTING DOCUMENTS

Once the application is formed, supporting documents be attached to it and the same be submitted to the Office of Director of Factories.

3. FEE PAYMENT

After successful submission of the application, the applicant is required to pay the required fees, to forward the application to the department.

4. VERIFICATION

The department will verify the application and the supporting documents and in case no discrepancy is found, the same be forwarded to the Director of Factories for final approval.

5. ISSUANCE OF LICENSE

After getting approval from the Director, the department will issue the factory license in the name of the concerned entity.

DOCUMENTATION REQUIREMENT FOR LICENSE FOR FACTORY SETTING-UP

There are certain documents required for getting the license. These are -

• An application form duly formed by the department.\
• The receipt validating the payment of fees.
• Copy of the lease/rent agreement of the place of operation in case the land is taken on lease, otherwise, the sale deed duly notarized.
• The final copy of the factory layout duly approved by the concerned department.
• Declaration by a Chartered Accountant regarding the investment and finance plan.
• Photograph, ID proof, and address proof of the applicant making the application for a license.
• Copy of consent letter received from pollution department.
• Documents validating the registration of the entity.
• Copy of PAN card issued in the name of the entity.
• Plan of the factory set-up, duly approved by the Director of Factories
• Health and safety policy in case the entity is in manufacturing of hazardous goods.
• Copy of approval received from local municipal for power consumption.
• Details regarding the raw material used on a monthly or yearly basis.
• Details regarding the products manufactured on a monthly or yearly basis.

VALIDITY AND RENEWAL OF LICENSE UNDER FACTORY ACT

• The license issued under Factories Act, 1948 is valid up to 31^st December of the year in which such license is granted.
• Such a license is required to be renewed before the expiry of the above-mentioned period, to avoid penalty. The license can be renewed for a period of 1 year and 5 years, depending on the nature of the factory.

PENALTY UNDER THE UNDER THE FACTORY ACT

In case any person is found to be violating any of the provisions of the Factories Act, 1948, the same shall be punishable with -

1. Imprisonment for at least 3 months, which can be extended up to 1 year.
2. The monetary penalty which is extended up to Rs. 1 lakh.
3. Both imprisonment and monetary penalty.

India expert professional assistance can help and guide you with the overall system process, documentation for pre and post interview, job offer, appointment letter contract with key management employees, contract for MD/CEO, severance contract, various HR Policies, and so on.