Factory License in India

Since 21 November, 2025, the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) has replaced the Factories Act, 1948, to govern factory licenses in India. Under the new rule, a unit needs a Factory License if it employs 20 or more workers using power, or 40 or more workers without power. With Agile Regulatory, you can apply for a factory license as per the latest rules with ease and in minimal time, as running a factory without one can lead to fines, sealing, or prosecution.

Introduction of a Factory License

Getting a factory license ensures that the unit meets building, machinery, and working conditions as per the authority’s standards (OSH Code). For more than 70 years, factory licenses were handled and regulated by the Factories Act, 1948. Recently, the Occupational Safety, Health and Working Conditions Code, 2020 (usually called the OSH Code) came into force on 21 November 2025 and repealed the Factories Act along with twelve other labour laws.

So, if you are now setting up a new manufacturing unit or planning to renew your factory license, the authority regulating and deciding everything would be managed by the OSH Code as per your state’s OSH rules.

The requirement for a factory license depends on how many workers you have and whether your manufacturing process uses power (like electricity-run machines). Under the new update and law, the OSH Code doubled the threshold to apply for it. Here’s the eligibility criteria:

Situation	Old Factories Act, 1948	New OSH Code, 2020
Manufacturing with power	10 or more workers	20 or more workers
Manufacturing without power	20 or more workers	40 or more workers

Let’s understand this with an example. Suppose Rohan’s uncle runs a small furniture workshop with electric saws and drills, and he employs 15 people. Under the old law, he’d have needed a factory licence. Under the new law, he doesn’t fall into the “factory” category because he has fewer than 20 workers. But if his business grows and he hires 22 people, he’ll need one.

Another thing to keep note of while gauging the Factory License Requirements. The worker count is checked throughout the 12 months, so if a business employs even one employee crossing the 20-person requirement, then it will be considered a “factory”. Second, states can still bring smaller units under factory rules through a notification, and several states have kept the older 10/20 limits for hazardous processes. So if your unit works with chemicals, explosives, or other dangerous materials, you may need a licence even with a small team.

 Additionally, even if your unit isn’t a factory, you still have duties under the OSH Code. A 15-member unit may still need to follow all regulations under Section 3 since it has 10 or more workers. 

As per Section 2(m), the term "factory" refers to any premises, along with its surroundings, where either:

At least ten workers are currently or were engaged on any day within the past twelve months, and some part of the premises is involved in a manufacturing process aided by power or is commonly used for such a process.

At least twenty workers are currently or were engaged on any day within the past twelve months, and some part of the premises is engaged in a manufacturing process not aided by power or is commonly used for such a process.

However, this definition excludes the following:

• a mine under the jurisdiction of the Mines Act, 1952
• a mobile unit owned by the armed forces of the Union, a railway running shed, or
• an establishment like a hotel, restaurant, or eating place.

Approval to Commence Manufacturing Operations: The prime objective for obtaining the factory license is to ensure that appropriate safety measures are adopted to promote the employees' safety, welfare, and health wherein the license acts as a municipal approval for the factory's business to ensure that the owners adopt appropriate safety measures to promote their workers' welfare and health.

1. Legal Compliance Benefits: Securing a factory license enables the factory proprietor to access legal advantages offered by the government as per the selected scheme.

2. Protects Interests of the Workers: Since the act has specific guidelines concerning salaries, health and safety, work conditions, and the number of hours, etc. It helps to safeguard the interests of the workers.

3. Boosts Productivity: Complying under the guidelines set by the Factories Act 1948 further enhances the productivity of all workers.

4. Compliance with Factory Act Law: Owning a Factory license helps the factory owners or manufacturing entities carry out their business operations without stress and prevents stringent penalties.

The exact list of documents varies from state to state, but most documents required are:

• Application form: The prescribed form for licence and notice of occupation, filled and signed by the occupier.

• Approved building plan: A layout of the factory showing machinery placement, emergency exits, fire safety points, and worker welfare areas.

• Manufacturing process flow chart: A simple diagram explaining each stage of what you produce.

• Ownership or rent proof: Sale deed, lease agreement, or rent agreement for the premises.

• Identity and address proof: PAN, Aadhaar, and other ID of the occupier and the factory manager.

• Fire NOC: A no-objection certificate from the state fire department.

• Pollution Control Board consent: Consent to Establish and Consent to Operate from the State Pollution Control Board.

• Stability certificate: A certificate from a qualified engineer confirming that the building structure is safe.

• List of machinery: Details of machines installed along with their power load in horsepower or kilowatts.

• Business registration proof: Certificate of incorporation, partnership deed, or other proof of how the business is set up.

Note: Some states may also ask for a water testing report, details of the number of workers per shift, or a safety policy.

The Factory License application process is now mostly online. Under the OSH Code, each state appoints an officer called the Chief Inspector-cum-Facilitator who handles plan approvals and licences. Here’s how the application procedure works:

Step 1: Check if your unit qualifies as a factory

Count your workers and see whether you use power in your manufacturing process. Then check your state’s rules to confirm whether any special conditions apply to your industry.

Step 2: Get your building plan approved

Before you construct or start using a building as a factory, the plans need approval. In states that have notified their OSH rules, this application is filed online through the state portal along with the required documents listed on the portal’s checklist. The plan usually includes the site layout, machine positions, exits, and ventilation details.

Step 3: Collect other clearances

While your plan is being reviewed, apply for the Fire NOC and Pollution Control Board consents. These often take time, so starting early helps.

Step 4: Submit the licence application

Once your plan is approved, apply for the licence. The occupier shall apply on-line at least 15 days prior to commencing the use of the premises as a factory. Upload all documents and pay the fee shown on the portal.

Step 5: Inspection and verification

The authorities may inspect your factory to check that everything matches your application and plan. Make sure fire extinguishers, first-aid kits, exits, and safety guards on machines are all in place.

Step 6: Receive your Factory License

Once everything checks out, your licence is issued and can usually be downloaded from the portal. Keep it safely displayed or easily available at the factory, because inspectors can ask to see it at any time.

Important: Every state has its own portal. For example, Haryana factories apply through the Haryana Labour Department website, while other states use their own national safety or labour department systems. Since many states have been notifying their own OSH rules throughout 2026, it's advisable to check for the appropriate rules with the state’s portal before applying. 

There’s no fixed fee for a factory license, each state charges it on its own terms. Factory license fees are based on the number of workers you employ and the amount of power your machines consume. A smaller unit with fewer workers pays less, and a large factory with heavy machines pays more.

The timeline for a factory license also varies, as plan approval and license issuance together may take more than a few weeks to a couple of months. Depending on the state, the completeness of your documents, and whether an inspection is needed, the timeline changes.

Validity and Renewal of Factory License 

Factory licenses expire in 3 to 5 years depending on the OSH rules applied in your respective state. For example, as per Kerala’s OSH rules, a license remains valid for up to 5 years from the date of approval, subject to paying the required fee. Other states may set different priority dates, so it is better to inquire prior to the application for renewal of the factory license.

Another thing to remember is that if you hold a license under the old Factory Act, don’t assume it will be automatically carried over. Some states require transferring to the new Act with a fresh application. Maharashtra’s draft rules, for instance, require factories registered under the old Act to apply afresh online within 6 months of the Code coming into force.

1. Factory Structure, Grounds: The physical area designated for the factory should be proper for conducting manufacturing operations securely.

2. Design of Factory Arrangement: A comprehensive design outlining the arrangement of the factory premises, encompassing the positioning of machinery and the workflow, needs to be provided.

3. Clearances from Fire, Water, and Pollution Authorities: Approvals from the fire, water, and pollution control authorities are essential to authorize adherence to safety and environmental rules.

4. Notification to Chief Inspector: The owner of the factory is obligated to send an official notification to the chief inspector at least 15 days before initiating any operations or inhabiting the factory space.

In the event that an individual breaches regulations outlined in the Factories Act of 1948, penalties in accordance with the act will be enforced. The potential penalties include Imprisonment for a duration of up to one year, or Monetary fine reaching up to one lakh or A combination of both.

Dealing with forms, plans, NOCs, and state portals can feel overwhelming, especially when the law has just changed. Our team takes care of the entire process for you.

• License Applicability Assessment: Determine whether your factory requires a licence under the new OSH Code and applicable state regulations.

• Factory Plan Approval: Assist with factory layout plan approvals and coordinate the necessary clearances and NOCs.

• Regulatory Coordination & Follow-ups: Liaise with relevant authorities, track application progress, and address queries or deficiencies.

• Application Filing: Manage end-to-end application filing through the appropriate state government portal.

• License Issuance Support: Follow up with the concerned departments and guide you through the process until your factory licence is issued.