Factory License

Introduction

What is the Factory Act 1948?

The Factory Act 1948 is a legislation introduced by the Indian government to protect the rights and well-being of workers in the manufacturing sector. It mandates that all factory owners register their premises with the local authorities before commencing operations. The Department of Factories and Boilers is responsible for issuing Factory Licenses and ensuring the safety and welfare of workers.

Pursuant to the 1948 Factory Act, it is compulsory for each factory owner to register their premises with local authorities before starting a business. Factory License acts as an approval document provided by authorities to carry out manufacturing activities.

The Factories Act 1948 states that a factory must obtain approval from the labor and employment department for its building plan before it covers itself for registration of a factory. Under this act, Factory license registration and renewal is also done to ensure the safety of workers.

According to section 2(m) "factory" means any premises including the precincts thereof-

(i) whereon ten or more 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 with the aid of power, or is ordinarily so carried on, or

(ii) whereon twenty or more 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, - but does not include a mine subject to the operation of the Mines Act, 1952 (XXXV of 1952) or a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place;

Guidelines for Factory Owners

Under the Factory Act 1948, factories meeting specific criteria must comply with the guidelines. These guidelines are as follows:

1. Factories with a minimum of 10 workers and consumer power.
2. Factories with a minimum of 20 workers without power consumption.

Factories are further categorized into two subcategories:

1. Hazardous Factories: These factories involve hazardous processes that can cause harm to workers or the environment if proper care is not taken.
2. Non-Hazardous Factories: These factories do not involve hazardous processes and pose minimal risk to workers and the environment.

Who Needs a Factory License?

As per the Factory Act, certain factories must obtain a Factory License. This includes:

1. Factories with 10 or more workers involved in manufacturing activities with the aid of power.
2. Factories with 20 or more workers involved in manufacturing activities without the aid of power.

Before starting construction, reconstruction of a factory, or in the event of factory expansion, the entrepreneur/applicant must apply for approval of the factory plan and obtain permission for construction.

Eligibility Criteria for Factory License

To be eligible for a Factory License, the factory must fulfill the following criteria:

1. The factory must meet the minimum worker requirements as stated in the Factory Act.
2. The factory premises must adhere to the guidelines and safety measures specified by the Act.
3. The factory owner must obtain the necessary building plan approval from the respective state labor department.

Prerequisites for Obtaining a Factory License

Understanding the Prerequisites

Before applying for a Factory License, certain prerequisites must be fulfilled. These include:

1. Factory Building/Premises: The factory premises must be suitable for carrying out manufacturing activities safely.

2. NOC from Fire, Water, and Pollution Boards: No Objection Certificates must be obtained from the fire, water, and pollution control boards to ensure compliance with safety and environmental regulations.

3. Factory Layout Plan: A detailed layout plan of the factory premises, including machinery placement and workflow, must be submitted.

4. Notice to Chief Inspector: The factory owner must send a legal notice to the chief inspector at least 15 days before commencing any activities or occupancy in the factory.

The Process of Obtaining a Factory License

Step 1: Factory Plan Submission

The factory owner must submit the factory plan to the state labor department for approval. This plan should adhere to the guidelines laid down by the department and ensure the safety and welfare of workers. Prior consent from the state government is required for any expansion or construction of industrial facilities including following details:

• Manufacturing process type
• Provide the name and address of the factory and its owner
• Contact address
• manufacturing machine detail
• Number of employees
• Name of the manager

Step 2: Filing the Application

The factory owner needs to file an application for the Factory License with the state labor department or the department of factories. The application must be submitted in the prescribed format along with all the required documents.

Step 3: Payment of Fees

Once the application is submitted, the prescribed fees for obtaining the Factory License must be paid. The fee structure varies depending on the state and the category of the factory (hazardous or non-hazardous).

Step 4: Verification & Inspection

In the event that the application and proposals are in accordance with the legislative requirements of the Factories Act, 1948 and Factories Rules, 1950, the factory plan shall be approved by the Factories Director after review of the recommendations of the Deputy Factories Director concerned

Step 5: Grant of License

Upon payment of fees and inspection of the application, if the department is satisfied that all the documents and application form comply with the desired rules and norms, the Factory License is issued. The license is valid for a specified period, usually one year, and must be renewed before its expiration.

Documents Required For Factory License

To obtain a Factory License, the following documents need to be submitted along with the application:

1. Owner ID and Address Proof: Valid identification and address proof of the factory owner.
2. Address Proof of Factory Premises: Documents such as a rental agreement or electricity bill to establish the address of the factory premises.
3. Pollution Department Consent Letter: Consent from the pollution control department, indicating compliance with environmental regulations.
4. NOC from Fire and Water Department: No Objection Certificates from the fire and water departments, ensuring compliance with safety measures.
5. Business PAN Card Copy: Copy of the PAN card of the business entity.
6. Factory Layout and Building Plan: Detailed plans showcasing the layout and construction of the factory premises.
7. List of Directors: Names and details of all the directors of the company.
8. Board Resolution or Partnership Deed: Relevant legal documents indicating the authority of the factory owner.
9. Particulars of Equipment and Raw Materials: Detailed information about the machinery and raw materials used in the manufacturing process.
10. Particulars of Hazardous and Non-Hazardous Wastes: Information regarding the management and disposal of hazardous and non-hazardous wastes generated by the factory.
11. Tax Receipts: Receipts of taxes paid, if applicable.

Challenges Associated with Obtaining Factory License

While obtaining a Factory License offers numerous benefits, there are certain challenges that factory owners may face during the process. These challenges include:

1. Complex Documentation: The process of obtaining a Factory License requires the submission of various documents and fulfilling specific criteria, which can be time-consuming and complex.
2. Regulatory Compliance: Factories need to adhere to strict regulatory compliance, including safety measures, environmental regulations, and labor laws, which can be challenging to implement and maintain.
3. Renewal and Compliance Tracking: Factory owners need to ensure timely renewal of the Factory License and stay updated with any changes in regulations to avoid penalties and legal complications.

Penalties Associated with Factory License

If any person violates the rule made under factories act 1948 then he will be penalties as per the act. Following penalties can be imposed

➲ Imprisonment for a term which may extend to one year, or,

➲ Fine which may extend to one lakhs, or

➲ Both