How to Obtain Factory Registration Under the Factories Act 1948 in India

Kaustav Chowdhury
Jul 15
5 min read

Operating a factory in India without proper registration and a licence is a criminal offence punishable with a fine of up to Rs 1 lakh, imprisonment of up to two years, or both under Section 92 of the Factories Act, 1948. The registration and licensing process is governed by Section 6 and Section 7 of the Act, and every occupier of premises that qualifies as a "factory" must comply before commencing manufacturing operations. This guide explains who must register, the step-by-step process, the documents required, and the penalties for non-compliance.

What Qualifies as a Factory

Section 2(m) of the Factories Act, 1948 defines a "factory" as any premises (including the precincts thereof) where 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 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.

The definition is threshold-based: if your premises crosses either of these worker-count limits, the Factories Act applies regardless of the scale of operations. Even seasonal units and job-work premises can fall within the definition if they meet the worker threshold on any single day in the previous twelve months. If you are setting up a new business entity, you may also need to consider registering a startup under DPIIT for additional benefits.

Who Must Register

The "occupier" of the factory is responsible for registration and licensing. Under Section 2(n) of the Act, the occupier means the person who has ultimate control over the affairs of the factory. In a company, this is typically a director or a person designated by the board. In a partnership or proprietorship, the managing partner or proprietor is the occupier.

The occupier must also appoint a "manager" under Section 7(4) to be responsible for the day-to-day compliance with the Act. The manager's name, qualifications, and contact details must be included in the registration application. If you are structuring the entity as a partnership, you may want to explore registering a Limited Liability Partnership (LLP) for liability protection.

Step-by-Step Registration Process

Step 1: Send the notice under Section 7. At least 15 days before the premises is used as a factory for the first time, the occupier must send a written notice to the Chief Inspector of Factories (or the authority designated by the State Government). This notice must include: the name and address of the occupier, the name and situation of the factory, the address for postal communication, the nature of the manufacturing process, the name of the manager, the maximum number of workers likely to be employed, and the amount of power installed or proposed to be installed.

Step 2: Obtain factory plan approval. Before applying for a licence, you must submit a site plan and building plan to the Directorate of Industrial Safety and Health (or the equivalent state body). The plan must show the layout of the factory floor, ventilation, lighting, fire exits, sanitary facilities, and safety equipment. The approving authority will verify that the premises complies with the building, fire safety, and environmental norms applicable in the state.

Step 3: Apply for registration and licence. Submit the application for registration and grant of licence to the Chief Inspector of Factories. Most states now accept online applications through the state labour department portal or the Shram Suvidha Portal (shramsuvidha.gov.in). The application must be accompanied by the prescribed fee (which varies by state and by the number of workers), a copy of the approved factory plan, the Section 7 notice acknowledgment, and the stability certificate from a licensed structural engineer.

Step 4: Inspection and approval. The Factory Inspector will inspect the premises to verify compliance with safety, health, and welfare provisions of the Act. If the premises is satisfactory, the licence is granted. If deficiencies are found, the Inspector will issue a notice listing the required corrections.

Step 5: Receive the licence. Once approved, the licence is typically valid for one year and must be renewed annually before its expiry date. The renewal process involves submitting a fresh application with updated worker counts and any changes to the manufacturing process. Employers should also ensure compliance with EPF requirements under the Social Security Code for all workers.

Documents Required

While the exact list varies by state, the following documents are commonly required: the Section 7 notice (duly acknowledged), an approved factory building plan, a stability certificate from a licensed structural engineer, the occupier's identity proof and address proof, the company or firm's registration documents (certificate of incorporation or partnership deed), the factory manager's appointment letter and qualifications, a no-objection certificate from the local municipal authority, a fire safety certificate from the fire department, and an environmental clearance certificate (if applicable). Factories that engage contract labour under CLRA 1970 must also obtain a separate contract labour licence.

Penalties for Non-Compliance

Section 92 of the Factories Act, 1948 prescribes the general penalty for contravention of any provision of the Act or the rules made under it. If there is any contravention, the occupier and manager of the factory shall each be guilty of an offence and punishable with imprisonment for a term which may extend to two years, or with a fine which may extend to one lakh rupees, or with both. If the contravention continues after conviction, a further fine of up to one thousand rupees per day applies for each day the contravention continues.

Operating a factory without registration is treated as a serious contravention. In addition to criminal penalties, the State Government can order the closure of the factory until registration is obtained. Workers employed in unregistered factories may also file complaints. If you are an employee facing unpaid wages or PF defaults, the guide on filing a labour complaint for unpaid wages or PF default explains the process.

Key Takeaways

Any premises employing 10 or more workers with power (or 20 or more without power) in a manufacturing process qualifies as a "factory" under Section 2(m) of the Factories Act, 1948. The occupier must send a written notice under Section 7 at least 15 days before use, obtain plan approval, and apply for registration and a licence under Section 6. The licence is typically renewed annually. Penalties under Section 92 for operating without registration include imprisonment up to two years, a fine up to Rs 1 lakh, or both, with continuing penalties of Rs 1,000 per day. The process is largely digitised through state labour portals, but physical inspection remains mandatory before licence grant.

Start the process well in advance of commencing operations, as plan approvals and inspections can take several weeks depending on the state.