A factory license is the permission the State factory inspectorate grants before a manufacturing unit can lawfully run with the prescribed number of workers. Since the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) came into force on 21 November 2025, the threshold, forms and fees have changed, and each State is moving on its own timetable. This page explains exactly where things stand in October 2026 and how to apply in Delhi, Uttar Pradesh and Haryana.
What is a factory licence under the OSH Code?
For more than seven decades, factories in India were licensed under the Factories Act, 1948 and each State's Factories Rules. The OSH Code consolidated 13 central labour laws, including the Factories Act, the Contract Labour Act and the Beedi and Cigar Workers Act, into one statute that took effect on 21 November 2025. The licence is still issued by the State, but it is now granted under the Code and the State's OSH rules.
The most important change is who needs one. Under section 2(1)(w) of the Code, premises become a factory when a manufacturing process is carried on with 20 or more workers using power, or 40 or more workers without power, on any day in the preceding twelve months. Under the old Act the figures were 10 and 20. The Government has also kept the power to notify any premises as a factory regardless of headcount, so smaller hazardous units should not assume they are outside the net.
The Code also moves towards a single common licence covering factory, contract labour and beedi establishments, and towards one electronic registration and one annual return. In practice, how this works on the ground depends on whether your State has notified final rules. Uttar Pradesh notified its OSH&WC Rules on 27 August 2026. Delhi, Haryana, Maharashtra and Karnataka had only draft rules as of October 2026, so their existing factory rules and portals continue to be used to the extent they are consistent with the Code.
A factory licence is different from plan approval. Plan approval (now called construction or expansion permission under the Code) is the inspectorate's sanction of your building layout before you build or extend; the licence is the permission to operate once the building is ready. Most States require both, in that order.
Who needs a factory licence?
You need a factory licence if your premises carry on any manufacturing process and cross the worker threshold. Manufacturing is defined widely: making, altering, repairing, finishing, packing, oiling, washing, cleaning, breaking up or otherwise treating an article with a view to its use, sale or disposal. Typical applicants include:
- Engineering, fabrication and auto-component units with 20 or more workers and power-driven machines
- Garment, textile and hosiery units, including job-work units in Noida, Gurugram, Okhla and Faridabad
- Food processing, bakery, packaged water and spice-grinding plants
- Pharmaceutical, cosmetic and chemical manufacturers (often notified regardless of headcount where hazardous processes are involved)
- Printing presses, packaging and corrugated box units
- Furniture, plastic moulding and electrical goods assembly units
- Warehouses or godowns where repacking, labelling or other processing qualifies as manufacturing
- Units without power employing 40 or more workers, such as hand-assembly or manual sorting operations
Benefits of Factory Licence Registration
Lawful operation
Running a factory without a licence is an offence under the OSH Code. A valid licence protects the occupier and manager from prosecution for operating without permission.
Access to finance and subsidies
Banks, NBFCs and State industrial policies routinely ask for the factory licence before sanctioning term loans, capital subsidies or interest subvention.
Eligibility for large buyers and exports
OEMs, multinational brands and export buyers include the factory licence in vendor audits. Missing it is one of the commonest audit findings for MSME suppliers.
Clean title for other approvals
Pollution consent to operate, fire NOC renewals, BIS licences and drug or food manufacturing licences frequently cross-check the factory licence and plan approval.
Insurance and accident claims
After a workplace accident, insurers and inspectors first check whether the factory was licensed and the plan approved. An unlicensed unit is in a far weaker position.
Eligibility & applicability
Before applying, check the following conditions. Several rejections we see stem from a location or occupier issue rather than paperwork.
- Manufacturing process carried on with 20+ workers (with power) or 40+ workers (without power) on any day of the last 12 months, or premises notified as a factory by the State
- Premises located in a conforming industrial or mixed-use zone as per the master plan (Delhi specifically requires a conforming industrial area)
- An occupier formally nominated: proprietor, any partner, any director (for companies), or a nominated officer for government units
- Building plan approved or regularised by the local development authority, and factory layout approved by the inspectorate where the State requires plan approval
- Basic safety infrastructure in place: alternate exit or emergency staircase, fire-fighting arrangements, ventilation, lighting, drinking water and toilets
- Electricity connection with sanctioned load consistent with the horsepower or kilowatt declared
- For hazardous processes: site appraisal and on-site emergency plan as required by the State
Documents required
Entity and occupier documents
- Certificate of incorporation, LLP agreement, partnership deed or proprietor's proof
- Board resolution or partners' consent nominating the occupier
- PAN, Aadhaar and photograph of the occupier and the factory manager
- List of directors or partners with residential addresses
- GST registration certificate and Udyam registration (if available)
Premises and building documents
- Sale deed, lease deed or rent agreement for the premises
- Building plan sanctioned by the development authority, and completion or occupancy certificate where issued
- Factory layout plan showing machine positions, exits, aisles and toilets (approved under plan-approval rules where applicable)
- Latest electricity bill showing sanctioned load
- Fire NOC or fire-safety undertaking, depending on building height and State rules
Process and machinery documents
- Manufacturing process flow chart
- List of raw materials, intermediates and finished products, with quantities
- List of installed machinery with power rating in HP or kW
- Stability certificate from a competent person (many States insist on this)
- Pollution board consent to establish or operate, where the industry category requires it
Step-by-step factory licence process
The broad sequence is the same everywhere; the forms and portal differ by State. In Uttar Pradesh the application now runs under the UP OSH&WC Rules, 2026, while Delhi and Haryana continue on their existing systems until their final rules take effect.
Confirm applicability and category
Count workers including those engaged through contractors, note total connected load and check whether any process is listed as hazardous. This decides whether you need a licence at all, whether plan approval and site appraisal apply, and which fee slab you fall in.
Obtain construction or expansion permission
Submit layout drawings, process details and machinery list for plan approval before building or extending. The OSH Code sets a 30-day window for the authority to decide, failing which permission is deemed granted. Keep proof of the submission date.
Line up dependent approvals
Apply for pollution consent to establish, fire NOC and building completion in parallel. Inspectors routinely ask for these during the licence inspection, so starting early avoids weeks of delay.
Register on the State portal
Create the unit's login: e-District Delhi for Delhi; Nivesh Mitra or the UP Labour Department portal for Uttar Pradesh; HEPC / hrylabour.gov.in for Haryana. Use the occupier's credentials, because only the occupier can sign the application.
File the licence application and pay fee
Enter workers, power, products and manager details, upload the documents and pay the auto-calculated fee for the period you choose. In UP the licence application is in Form-45 under the new rules.
Respond to scrutiny queries
The inspectorate reviews documents online. Delhi gives only three days to respond to a query, failing which the application is rejected and the fee is forfeited, so monitor the portal daily.
Factory inspection
An Inspector-cum-Facilitator visits to verify exits, guarding of machinery, ventilation, welfare facilities, registers and the actual headcount and load against what you declared.
Grant of licence
If the unit complies, the licence is issued digitally. In Delhi the FAQ indicates grant within about a month of a compliant inspection. Download it and display it at the main gate.
Set up post-licence compliance
Diarise renewal, the annual return and statutory registers from day one, and update the licence through an amendment whenever workers, power or occupier change.
Government fees for a factory licence
Fees are fixed by each State on a matrix of installed power and maximum workers on any day. The amount is multiplied by the number of years you choose. Below are verified figures for Delhi and the published range for Uttar Pradesh.
| Item | Amount | Note |
|---|---|---|
| Delhi: no power, up to 20 workers | ₹100 per year | Delhi Labour Department fee schedule |
| Delhi: up to 10 HP, 21–50 workers | ₹400 per year | Delhi Labour Department fee schedule |
| Delhi: above 10 to 50 HP, 51–100 workers | ₹800 per year | Delhi Labour Department fee schedule |
| Delhi: above 100 HP, above 1,000 workers | ₹20,000 per year | Highest slab in Delhi |
| Delhi: amendment or duplicate licence | ₹100 each | Change of occupier, name, address, workers or load |
| Uttar Pradesh: licence fee range | ₹500 to ₹38,000 | Matrix by power and headcount under UP OSH&WC Rules, 2026; 25% surcharge on late renewal |
| Uttar Pradesh: licence transfer / amendment | ₹1,000 / ₹100 | UP OSH&WC Rules, 2026 |
Professional charges are quoted separately after reviewing your case. Government fees are paid directly to the authority. Haryana fees follow its own schedule and are paid through E-GRAS; we confirm the exact slab when preparing your application.
How long does a factory licence take?
With plan approval already in hand and documents complete, the licence stage usually takes about 30 to 60 days, most of it waiting for inspection. Plan approval adds its own cycle, which the OSH Code caps at 30 days before deemed permission. Delays almost always come from unanswered queries or a mismatch between declared and actual load or headcount.
| Stage | Typical time |
|---|---|
| Document collation and drawings | 5–10 working days |
| Plan approval / construction permission | Up to 30 days (deemed thereafter under the Code) |
| Online scrutiny of licence application | 1–2 weeks |
| Inspection and grant | 2–4 weeks after scrutiny |
Validity & renewal
Delhi lets you choose a licence for one, five or ten years, paying the annual fee multiplied by the years. Haryana offers auto-renewal for five or ten years through hrylabour.gov.in, provided the occupier, name, address, maximum horsepower and maximum workers remain unchanged and the multiplied fee is paid through E-GRAS. Under the UP OSH&WC Rules, 2026, the first licence is for one year and can then be renewed for up to ten years at a time, with a 25% surcharge if you renew late. Apply for renewal well before expiry, and file an amendment rather than a renewal if any particulars have changed.
Compliance after you get the licence
- File the annual return on the State portal (UP: Form-17 by 31 January under the new rules)
- Report accidents and dangerous occurrences promptly (UP: Form-10/11 within 12 hours)
- Maintain registers of workers, attendance, wages, overtime, leave and accidents, increasingly in electronic form
- Provide welfare facilities as headcount grows: crèche above 50 workers, canteen ordinarily at 100, ambulance room above 500
- Constitute a safety committee once you have 500 or more workers and appoint a welfare officer at 250
- Get periodic stability, pressure vessel and lifting equipment tests done by competent persons
- Apply for amendment within the prescribed time when workers, power, products or occupier change
- Complete the OSH single registration on the Shram Suvidha portal or State portal where applicable
Factories Act 1948 vs OSH Code 2020: what changed for licensing
| Point | Factories Act, 1948 (old) | OSH Code, 2020 (from 21 Nov 2025) |
|---|---|---|
| Threshold with power | 10 or more workers | 20 or more workers |
| Threshold without power | 20 or more workers | 40 or more workers |
| Licences | Separate factory, contract labour and other licences | Move towards one common licence |
| Returns | Multiple returns under different laws | Single electronic annual return |
| Plan approval | State rules, no statutory deemed approval | 30-day decision window with deemed permission |
| Penalties | Largely criminal, lower fines | Higher fines, compounding for first offences, 30-day notice to comply |
Common mistakes & rejection reasons
Ignoring contract workers in the headcount
Workers engaged through contractors count towards the 20/40 threshold. Units that declare only payroll staff are caught out at inspection.
Non-conforming location
Delhi grants licences only in conforming industrial areas. A unit in a residential or unauthorised colony will be rejected regardless of paperwork.
Load mismatch
Declaring 20 HP while the electricity bill shows 75 kW sanctioned load invites a query or a higher slab. Convert kW to HP correctly and declare the installed figure.
Missing the query deadline
Delhi rejects applications if a query is not answered within three days and keeps the fee. Assign one person to monitor portal notifications.
Wrong occupier
A manager or employee cannot be the occupier of a company or firm. It must be a director, partner or proprietor, backed by a resolution or consent.
Building without plan approval
Starting construction or adding a floor before layout approval leads to regularisation hurdles and, in some States, refusal to license the extended area.
Penalties for non-compliance
The OSH Code replaced many jail terms with higher monetary penalties, but imprisonment remains for serious contraventions. Before prosecution, inspectors must usually give a 30-day notice to comply, and first-time offences punishable only with fine can be compounded at 50% of the maximum fine (75% where imprisonment is also prescribed). Compounding is not available for repeat offences within the prescribed period.
| Default | Consequence | Provision |
|---|---|---|
| Failure to register the establishment | Up to ₹2 lakh; up to ₹5 lakh for continuing contravention | OSH Code, 2020 – penalty provisions |
| Contravention of safety provisions (first offence) | Up to ₹2 lakh | OSH Code, 2020 – penalty provisions |
| Repeat contravention of safety provisions | Up to ₹5 lakh | OSH Code, 2020 – penalty provisions |
| Contravention resulting in death of a worker | Imprisonment up to 2 years and/or fine up to ₹5 lakh | OSH Code, 2020 – penalty provisions |
Practitioner tips
- Do the headcount test on your worst day, not an average. The Code looks at any day in the preceding twelve months, and seasonal peaks or contractor-heavy weeks often push units over 20.
- If you were licensed under the old Act with 10–19 workers using power, do not simply let the licence lapse. Check your State's transition notification and surrender formally if you fall outside, so the portal does not keep generating non-renewal notices.
- Take a dated screenshot or acknowledgment of your plan-approval submission. The Code's 30-day deemed permission is only useful if you can prove when the clock started.
- Inspectors look first at machine guarding, fire exits being unlocked and the first-aid box. Fixing these three before the visit removes most inspection remarks.
- Choose a five or ten year period where the State allows it. The fee is simply multiplied, but you avoid annual renewal risk and inspection cycles.
How Lawgical Guru helps
Applicability and State-rule check
We confirm whether the OSH Code threshold applies to you and which rules your State is currently using, including UP's new 2026 rules and the interim position in Delhi and Haryana.
Plan approval drawings coordination
We coordinate with your architect so the factory layout shows exits, aisles, machine positions and welfare facilities the way the inspectorate expects.
Portal filing
We prepare and file the application on e-District Delhi, Nivesh Mitra or the Haryana portals, calculate the correct fee slab and track the application daily.
Query and inspection support
We draft replies to scrutiny queries within the deadline and give you a pre-inspection checklist so the site matches the application.
Connected licences
We sequence your pollution consent, fire NOC, contract labour licence and PF/ESIC registrations so one approval does not hold up another.
Renewals and returns
We track renewal dates, amendments and the annual return so the licence stays valid.
Factory Licence Registration: frequently asked questions
How many workers require a factory licence under the new labour code?
Under section 2(1)(w) of the OSH Code, 2020, premises are a factory if a manufacturing process is carried on with 20 or more workers using power, or 40 or more workers without power, on any day of the previous twelve months. The earlier Factories Act thresholds of 10 and 20 no longer apply after 21 November 2025, though a State can still notify smaller hazardous units as factories.
Is the Factories Act, 1948 still applicable in 2026?
No. The Factories Act was subsumed into the OSH Code, which came into force on 21 November 2025. However, licensing is done by States, and many States had not finalised their OSH rules by October 2026. Until they do, the existing State factory rules and portals continue to be used to the extent they are consistent with the Code.
What is the fee for a factory licence in Delhi?
Delhi charges an annual fee based on installed horsepower and maximum workers. It starts at ₹100 for a unit with no power and up to 20 workers and rises to ₹20,000 for units above 100 HP with more than 1,000 workers. If you take a licence for five or ten years, the annual fee is multiplied by that number of years.
How do I apply for a factory licence in Uttar Pradesh?
Apply online through Nivesh Mitra or the UP Labour Department portal. Under the UP OSH&WC Rules, 2026 notified on 27 August 2026, the licence application is in Form-45, fees range from ₹500 to ₹38,000 depending on power and headcount, and the first licence is for one year, renewable for up to ten years.
What is the difference between factory plan approval and factory licence?
Plan approval is permission for the building layout before you construct or extend the factory. The factory licence is permission to operate the unit once it is ready. The OSH Code gives the authority 30 days to decide on construction or expansion permission, after which it is deemed granted. You still need the licence before starting operations.
Can a residential property be used for a factory licence?
Generally no. Licensing authorities require the premises to be in a zone where industrial use is permitted under the master plan. Delhi explicitly requires a conforming industrial area. Some States allow small non-polluting units in mixed-use zones, so check the local master plan and the development authority's land-use certificate first.
Who can sign the factory licence application?
Only the occupier, meaning the person with ultimate control over the factory. For a company this is a director, for a firm a partner, and for a proprietorship the proprietor. A board resolution or partners' consent nominating the occupier must be uploaded. The factory manager's details are given separately in the application.
What is the validity of a factory licence?
It depends on the State. Delhi offers one, five or ten year licences. Haryana allows auto-renewal for five or ten years if nothing has changed. Uttar Pradesh issues the first licence for one year and then permits renewal for up to ten years. Fees are generally the annual fee multiplied by the years chosen.
Do I need a factory licence if I have fewer than 20 workers?
Not as a factory under the OSH Code, unless the State has specifically notified your premises or process. You will still need registration under the State shops and establishments law or OSH registration if you have ten or more employees, plus GST, pollution consent and fire approvals as applicable.
What happens if I run a factory without a licence?
Operating without the required registration or licence is a contravention under the OSH Code. Penalties can reach ₹2 lakh, rising to ₹5 lakh for continuing contraventions, and serious safety failures can attract imprisonment. An unlicensed unit also faces problems with insurance claims, bank finance and buyer audits.
Is a factory licence required for a warehouse?
A pure storage warehouse is usually not a factory. But if you carry out repacking, labelling, assembling, cleaning or similar processing with 20 or more workers using power, those activities can amount to a manufacturing process. Review what actually happens on the floor before concluding that no licence is required.
Related guides
Reviewed by Satyam Gupta, Company Secretary (CS) & Advocate
8+ years of industry experience. This page was last reviewed on 16 October 2026 against the official sources below. Rules and fees change — confirm on the official portal before you apply.
Official sources
- PIB Factsheet – Occupational Safety, Health and Working Conditions Code, 2020
- OSH Code, 2020 – full text (PRS India)
- Delhi Labour Department – Factory licence FAQ
- Delhi Labour Department – Fee schedule for registration, renewal and amendment
- Haryana Labour Department portal
- Nivesh Mitra – Uttar Pradesh single window