Compliance Audit Checklist for Garment Industry: India 2026

Use this compliance audit checklist for garment industry units in India to verify labour-code duties, factory safety, payroll, pollution approvals and buyer-ready evidence.

A missing statutory register can now cost a garment unit between ₹50,000 and ₹1 lakh under Section 96 of the Occupational Safety, Health and Working Conditions Code, 2020. That is before an unpaid-overtime claim, pollution-board direction or buyer audit failure interrupts production. A compliance audit checklist for garment industry operations must therefore test the factory floor, payroll and approval files together - not treat compliance as an HR folder reviewed once a year.

This 2026 checklist covers Indian stitching, washing, dyeing and garment-export units, with state duties flagged for review.

What Changed for Garment Factory Audits in 2026?

The central labour-law baseline changed on 21 November 2025. The Government brought into force the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020 and Occupational Safety, Health and Working Conditions Code, 2020, commonly called the OSH Code. Together they replaced 29 central labour laws. The OSH Code replaced the central Factories Act, 1948, subject to its savings and transition provisions.

Use the Ministry's labour-codes page, employer handbook and OSH Code as primary references. Legislation prevails over explanatory material.

For garment units, three thresholds matter:

1. Factory threshold: Section 2(w) of the OSH Code defines a factory, at the central baseline, as premises using power with 20 or more workers, or premises not using power with 40 or more workers. A continuing state threshold may be lower, so verify the state law before classifying a unit as outside factory licensing.
2. Safety and welfare threshold: Ministry FAQs explain that OSH health, safety and welfare protections apply to establishments with 10 or more employees even where the higher factory threshold is not met.
3. Social-security thresholds: The First Schedule to the Code on Social Security, 2020 applies the provident-fund chapter to establishments with 20 or more employees and the ESI chapter generally to establishments with 10 or more persons, other than seasonal factories. The notified ESI wage ceiling remains ₹21,000 per month, according to the Ministry's March 2026 FAQ.

Count direct, piece-rate and contract workers under the definitions in the relevant Code. Reconcile each legal entity, location and contractor separately.

Build an Audit File That an Inspector Can Actually Test

A good checklist identifies the obligation, trigger, owner and proof. Create one row for each requirement rather than one useless row labelled "labour compliance."

Audit field | What the garment unit should record

Requirement | Plain-language action: register, pay, inspect, train, display, report or renew

Legal source | Full Code or Act, section, rule, state notification and licence condition

Applicability trigger | Worker count, power use, process, capacity, chemical, contractor or product

Frequency | Per shift, monthly, annual, before expiry or event-based

Owner and reviewer | Named operating owner plus independent checker

Evidence | Approval, return acknowledgement, challan, register, photograph or test certificate

Finding | Compliant, partial, non-compliant or not applicable, with reasons

Corrective action | Action, accountable person and closure date

Start with a headcount and process map covering cutting, sewing, printing, washing, dyeing, finishing, utilities, storage and outsourced work. A stitching-only unit and a wet-processing plant do not have the same pollution duties. Keep separate central and local legal layers; the latter should cover state OSH rules, minimum wages, fire law, building permission, pollution consent conditions and municipal requirements.

Which Registrations and Approvals Must Be Verified First?

Test permission to occupy and operate before reviewing routine registers. A perfect attendance file cannot cure an unlicensed expansion.

• Establishment registration and factory licence: Sections 3 and 79 of the OSH Code cover registration and factory approval or licensing, subject to the appropriate Government's rules. Verify the approved plan, manufacturing process, worker strength, power load, occupier, manager and licence validity. Check approval before adding a floor, shed, boiler, production line or materially different process.
• Contract labour: Part I of Chapter XI of the OSH Code applies. The licensing threshold is generally 50 contract workers, but Section 53 places responsibility for prescribed welfare facilities on the principal employer. Verify licence where required, deployment, attendance, wage proof and social-security challans.
• Pollution-board consent: A washing, dyeing, printing or effluent-generating unit should test Consent to Establish and Consent to Operate under Section 25 of the Water (Prevention and Control of Pollution) Act, 1974. Section 21 of the Air (Prevention and Control of Pollution) Act, 1981 requires prior State Board consent for an industrial plant in an air-pollution-control area unless a notified exemption applies. Verify the State Pollution Control Board category, approved capacity, fuel, outlet, effluent-treatment conditions, monitoring frequency and expiry. A dry stitching unit may fall in a different category or exemption; do not copy the dye house's answer.
• Fire and building approvals: Verify the state Fire Services Act, building rules, occupancy certificate and actual approval conditions; India has no single national Fire NOC renewal period.
• Boiler and equipment approvals: For a covered boiler, verify registration, inspection, permitted pressure and operator requirements under the Boilers Act, 2025 and applicable rules. Track hoists, pressure vessels and electrical certificates.

Ask whether each approval describes today's factory. A certificate that no longer matches the capacity, fuel, effluent, headcount or layout is weak protection.

How Do You Audit Wages, Hours and Social Security?

Garment payroll risk hides in piece rates, overtime and contractor bills. Sample at least three months, including the busiest production month. Match gate entry, biometric or muster data, production records, wage slips, bank transfers and contractor invoices.

Check these controls:

1. Minimum wages: Section 5 of the Code on Wages, 2019 prohibits payment below the minimum rate fixed by the appropriate Government. Use the current state notification for the correct garment or scheduled-employment category, skill grade and zone. Record the notification date and effective period.
2. Equal remuneration: Section 3 prohibits discrimination on the ground of gender in wages for the same or similar work and restricts discriminatory recruitment, subject to lawful restrictions. Compare rates for operators performing substantially similar work, not merely job titles.
3. Working time and overtime: The OSH framework uses eight hours a day and 48 hours a week as the standard. Section 27 of the OSH Code and Section 14 of the Code on Wages require overtime at not less than twice the normal rate where applicable. Test whether pre-shift meetings, line clearance and post-shift work are captured.
4. Wage payment and deductions: Section 17 of the Code on Wages sets the applicable time limits for wage payment, while Section 18 limits total deductions in a wage period to 50% of wages. Sample advances, canteen charges, damage deductions and absence deductions for authorisation and supporting records.
5. Wage definition: Since 21 November 2025, the common statutory definition of wages applies. The Ministry's March 2026 FAQ confirms that excluded allowances exceeding 50% of total remuneration are added back for statutory calculations. Recalculate a sample instead of trusting the payroll label.
6. Provident fund: The Code on Social Security schedule generally applies EPF at 20 or more employees. Verify UAN enrolment, eligible wages, employee and employer contributions, Electronic Challan-cum-Return and payment. EPFO states that contributions must be paid within 15 days of the close of each month.
7. Employees' State Insurance: ESI generally applies at 10 or more persons, with the current ₹21,000 monthly wage ceiling. ESIC Regulation 31 requires contributions within 15 days of the last day of the calendar month in which they fall due. Check accident reporting and benefit records as well as challans.

For contractors, reject a consolidated challan with no worker mapping. Connect each deployed worker to attendance, wages, UAN or insurance number and contribution record.

Which Safety and Welfare Checks Are Garment-Specific?

Sections 6, 23 and 24 of the OSH Code require safe working conditions and prescribed welfare facilities. Garment production adds predictable risks: fast reciprocating needles, rotary cutters, steam, lint, overloaded electrical circuits, blocked aisles and repetitive work.

Walk the floor and verify:

• guards on needles, belts, cutting machines and presses, plus tested emergency stops;
• needle-breakage control, fragment recovery and documented disposal;
• electrical earthing, protected panels, safe isolation and no daisy-chain wiring;
• boiler, steam-line and iron insulation, pressure control and burn response;
• local exhaust or ventilation for lint, dust, fumes, adhesives and printing chemicals;
• current safety data sheets, labels, compatible chemical storage and spill response;
• unobstructed exits, outward-opening doors where required, emergency lighting, alarms, extinguishers and drill records;
• ergonomics for seated operators, standing workers, material handlers and repetitive tasks;
• potable water, separate hygienic toilets, washing, first aid and eating facilities; and
• incident, near-miss and corrective-action records.

Section 24 lists welfare facilities and provides a central canteen baseline at 100 or more workers, including contract labour. It also contemplates welfare officers at 250 or more workers and ambulance rooms at more than 500 workers, subject to applicable rules. State rules or licence conditions may be more protective.

Women may work in all establishments and may work before 6 a.m. or after 7 p.m. with consent and prescribed safety, transport and security safeguards under Section 43 and applicable rules. Do not turn a protective rule into a blanket ban on women in particular shifts.

What People, POSH and Worker-Voice Records Must Be Present?

Section 6 of the OSH Code requires an appointment letter for every employee. Sample letters against actual role, wage, shift, location and employer. A worker's label does not erase statutory rights.

For sexual-harassment prevention, Section 4 of the Sexual Harassment of Women at Workplace Act, 2013 requires an Internal Committee at every office or administrative unit with 10 or more employees. Verify the presiding officer, required members, external member, current orders, policy, awareness sessions, confidential complaint records and annual reporting. Section 26 permits a fine up to ₹50,000 for specified non-compliance; a repeat conviction can lead to twice the punishment and licence cancellation or non-renewal.

Also review:

• grievance and worker-representation mechanisms required by the Industrial Relations Code, 2020 and applicable rules;
• disciplinary records, standing orders and termination or retrenchment files where applicable;
• age proof and controls against prohibited child or adolescent labour;
• maternity-benefit, nursing-break and crèche records under the Code on Social Security and applicable rules;
• worker complaints about abusive supervision, forced overtime, wage deductions or unsafe targets; and
• contractor grievance access, not only direct-employee access.

Interview workers confidentially across shifts. Ask whether they know the complaint channel, receive wage slips and can refuse unsafe work.

How Should Environmental and Chemical Compliance Be Audited?

Separate dry garment manufacturing from wet processing. For washing, dyeing, printing or finishing, compare actual water use, chemicals, fuel, effluent and production capacity with the pollution consent.

Test the following evidence:

• effluent-treatment logs, flow records and laboratory results;
• emission, stack, generator and fuel conditions in the consent;
• hazardous-waste authorisation, storage, manifests and disposal;
• chemical inventory matched to purchases and safety data sheets; and
• renewal plus approval before expansion or process change.

Section 25 of the Water Act prohibits establishing an effluent-generating industry or new discharge without previous State Board consent, subject to notified exemptions. Section 21 of the Air Act similarly requires previous consent for covered industrial plants in notified control areas. Under Section 15 of the Environment (Protection) Act, 1986, a contravention without a separate penalty can attract ₹10,000 to ₹15 lakh, plus ₹10,000 for each continuing day. Section 15A sets a company penalty of ₹1 lakh to ₹15 lakh, plus ₹1 lakh per continuing day.

Environmental classification and consent validity can change by state and process. Record the exact State Board order or portal acknowledgement instead of writing "PCB not applicable" without a legal basis.

How to Use This Compliance Audit Checklist for Garment Industry

1. Freeze the audit scope by legal entity, location, process and contractor.
2. Reconcile gate count, muster, payroll, contractor deployment and social-security records.
3. Verify licence, plan, consent and fire approvals against current operations.
4. Test one normal payroll month and one peak-production month.
5. Walk every production, utility, chemical, warehouse and worker-welfare area.
6. Sample machine guards, electrical controls, fire exits and equipment certificates.
7. Interview workers confidentially across shifts and employment types.
8. Check legal changes since the last review at central and state level.
9. Rank findings as immediate-danger, licence/shutdown, financial, worker-rights or documentation risk.
10. Close findings only after an independent reviewer sees the evidence.

Track immediate dangers daily, expiries weekly, payroll monthly and the full applicability map quarterly. Re-run it after expansion, a threshold change, new process, accident or legal amendment.

Frequently Asked Questions

Is the Factories Act, 1948 still the main audit law in 2026?

No. The OSH Code took effect on 21 November 2025 and repealed the central Factories Act, subject to savings and transition rules. Check the OSH Code, 2026 rules, state provisions, saved approvals and current factory-licence conditions.

Does a stitching unit below 20 workers have no safety duties?

No. The factory-definition threshold and the general safety-and-welfare threshold are not identical. The Ministry states that OSH protections apply to establishments with 10 or more employees, and state laws or other safety requirements may apply below that level.

Does every garment unit need pollution-board consent?

Not automatically. Applicability depends on the process, discharge, emissions, state classification and notified exemptions. Wet processing, dyeing, printing, boilers and generators create different obligations from dry cutting and stitching. Obtain a written, source-backed applicability decision.

Is an Internal Committee required when most workers are contractors?

The POSH Act uses a broad workplace and employee framework. At 10 or more employees in an office or administrative unit, constitute the Internal Committee and make the channel accessible to contract and other covered workers. Verify the exact structure under Sections 2, 4 and 6.

Can an export buyer's social audit replace a statutory audit?

No. Buyer standards may add controls, but they do not replace government registration, minimum wages, social-security deposits, POSH duties, pollution consent or prescribed records. Keep buyer findings and statutory findings linked but separate.

How often should a garment compliance audit be performed?

Run a full audit at least quarterly for a labour-intensive unit, with monthly payroll and social-security testing and daily safety checks. Audit immediately after expansion, a new process, contractor change, serious complaint, accident or legal update.

Make the Checklist a Live Compliance System

A compliance audit checklist for garment industry operations must connect each requirement to the factory's headcount, process, owner, date and evidence. Separate central and state rules, and test contractors like direct payroll.

Static sheets still depend on a person noticing each rule change. Check your compliance posture free at complianceradar.in to identify the obligations that apply to your garment unit and build a timeline across central, state, municipal and sector regulators.