Factory license compliance means adhering to the Factories Act, 1948, which is one of India’s most important labour legislations, designed to ensure the safety, health, and welfare of workers employed in manufacturing units. Key steps include initial registration and obtaining necessary No Objection Certificates (NOCs) from pollution/fire departments. Factory owners should get the plans of their factories approved by the respective state labour departments before applying for a factory license.
The Factory Act, 1948, protects owners from penalties laid down under the Act. Owners who do not adhere to compliance, such as adopting appropriate safety measures to promote their workers’ welfare and health, may have to close down their establishments.
Who Needs a Factory License?
Any establishment that falls within the definition of a “factory” under the Act must obtain a license.
- Manufacturing Units – Any business involved in manufacturing goods, like textiles, food processing, chemicals, engineering products, or pharmaceuticals.
- Units Using Power – Small units employing 10 or more workers and using electricity or other forms of power in their manufacturing process come under the Act.
- Non-Power Manufacturing Units – Manufacturing units not using power but employing 20 or more workers.
- Seasonal Manufacture – Factories/manufacturing units having seasonal business. Example: sugar mills or food processing units may require a license.
Factory Under the Factories Act, 1948 – Definition
The following establishments are considered a factory as per Section 2(m) of the Factories Act
- 10 or more workers are employed with the aid of power.
- 20 or more workers are employed without the aid of power.
- Manufacturing process is being carried out or is ordinarily carried out.
Following broadly defines ‘manufacturing unit’:
Making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, or otherwise treating any article or substance for sale, use, transport, or disposal.
Who Is Exempted?
Some establishments are excluded from the Factories Act:
- Mines are governed by the Mines Act.
- This refers to all types of mining work and excavations.
- Mobile units like construction sites
- Portable and prefabricated structures like, offices, break rooms, and sanitation facilities that can be easily transported, assembled, and relocated at construction sites.
- Railway running sheds
- A railway running shed (or loco shed) is a crucial facility for maintaining, servicing, and housing locomotives.
- Hotels, restaurants, and eating places (covered under Shops & Establishments laws)
- Hotels, restaurants, and eating places classified as “establishments” or “commercial establishments” under the Shops & Establishments (S&E) Act are exempted.
However, rules and regulations may differ from state to state. Exemptions may also vary as laws differ in respective states. Local rules must be checked carefully.
Restrictions Under the Factory Act, 1948
Special provisions for women and young workers, including restrictions on night work and hazardous processes. By mandating factory registration, licensing, and regular inspections, the Factories Act, 1948 seeks to balance industrial growth with worker protection and promote safe, humane, and legally compliant workplaces in India.
Why Is Factory Licensing Important?
Obtaining a factory license is not just a legal formality. Non-compliance can lead to heavy penalties, prosecution, or even closure of the unit. More importantly, compliance ensures safer working conditions, regulated working hours, proper ventilation, sanitation, and welfare measures for employees—leading to higher productivity and reduced workplace risks.
Conclusion
If you run a factory or manufacturing unit that requires compliance under the Factory Act, 1948, and are looking for someone to help and guide you with the legalities of Compliance, then reach out to us – Drishti Consultancy. Call us on 9971183483 or mail us – drishticonsultancyservices@outlook.com and we shall help you to resolve your problem. We offer our services across Delhi, Noida, Faridabad, Gurugram, and Palwal.