What is Factory License in India?

In order to ensure the safety and well-being of workers and to maintain a healthy and safe work environment, the government introduced the Factory Act 1948. Under this act, every factory owner is mandated to register their premises with local authorities before commencing business operations. The Factory License is an official document of approval issued by authorities, allowing the factory to conduct manufacturing activities. The Labour Department or Department of Factories and Boilers is responsible for issuing Factory License depending on the state, with a primary focus on ensuring the health, safety, and welfare of workers.

What is Factory License Eligibility?

The government has established certain eligibility norms and specific guidelines that factories must follow based on their worker count and power consumption. These guidelines classify factories into two categories as follows:

• Those with a minimum of 10 workers and power consumption
• Those with a minimum of 20 workers but without power consumption. Furthermore, factories are categorized as either hazardous or non-hazardous based on their manufacturing processes.

What is Factory License Registration Benefits?

Obtaining a Factory License serves multiple purposes:

• Provisions for Employees: The Act outlines provisions related to female employees and young workforce, wage regulations, work hours, and working conditions, ensuring the welfare of the workforce.
• Legal Benefits: Factory owners can avail for themselves various legal benefits provided to them by the government through different schemes.
• Boosts Productivity: Strict adherence to the compliance and guidelines of the Factories Act, 1948 leads to improved employee welfare thereby enhancing productivity.
• Regulation of Employment Matters: The Act regulates various aspects related to employment in factories like working hours, wages, leaves, holidays, employment of juveniles and women, hiring and termination of workers, and other terms and conditions related to individuals working in different establishments.
• Ensuring Uniform Benefits: Compliance with the Factories Act helps guarantee that every employee receives equal benefits. 

What are the Documents Required for Factory License?

To obtain a Factory License, the following documents are necessary:

• Form-1
• Copy of the factory building plan
• Identification and address proof of the applicant
• Bank account details
• Expected date of commencement of work
• Payment receipts
• Tax receipts
• A detailed list of all directors
• Memorandum of Association (MOA), Articles of Association (AOA), and Board resolution
• Land deeds
• Partnership deed, if applicable
• Consent from all relevant authorities
• Particulars of equipment
• Details of hazardous and non-hazardous waste
• Information on raw materials, by-products, and finished products, including copy of process procedures in a flowchart

What is Factory License Registration Process?

Under Section 6 of the Factory Act, the State government are empowered to monitor the Licensing and registration rules of the factories Act. The registration process also varies according to hazardous and non hazardous industries. The process for obtaining a Factory License in India involves the following steps:

• Factory Plan Submission: The applicant needs to submit a factory plan for approval from the appropriate state authorities before applying.
• Submission of Application and Documents: The application for factory license needs to be filed with the state labour department or with the Department of factories along with all the necessary documents.
• Payment of Requisite Fees: Fees for the license must be paid for obtaining approval for the application.
• Obtaining a License: After completing the necessary inspections and confirming that all documents and application forms adhere to the desired rules and norms, the Department issues the license.

What is Factory License Validity and Renewal?

A Factory License is valid for up to one year and should be renewed before it expires. The renewal process is identical to the initial registration process. The required documents for renewal include Form-4, Form-4B, and a Treasury Online Challan. Failure to renew on time may result in a penalty.

Voluntary Suspension of a Factory License Registration

In cases where a licensee needs to surrender their factory license to the government, the following process should be followed:

• Submit an application with a reason for the suspension.
• Attach the necessary documents along with details of the workers and their grievances.
• Once the application is submitted, the relevant authority will take the necessary steps for the suspension of the factory license.

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