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title: "Factory Act Compliance Checklist: Licences, Inspections, and Penalties"

slug: factory-act-compliance-checklist-licences-inspections-penalties

category: Industry Guides

meta_description: "Complete Factories Act 1948 compliance checklist for Indian manufacturers - licences, inspections, penalties, and deadlines every factory owner must know."

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A single missed factory licence renewal can shut down your production line overnight. Under Section 92 of the Factories Act, 1948, operating without a valid licence exposes you to imprisonment of up to 2 years, a fine of up to ₹1,00,000, or both. And if the violation continues, you pay ₹1,000 per day until you fix it.

Most factory owners in India discover these rules the hard way - through a penalty notice from the Factory Inspector. This checklist exists so you don't have to.

Whether you run a 15-person workshop in Rajkot or a 400-worker plant in Pune, the Factories Act applies to you if you cross the threshold: 10 or more workers with power, or 20 or more without. This guide covers every licence, inspection, welfare provision, and penalty you need to know - in plain language, with specific sections and amounts.

Who Does the Factories Act Apply To?

Before you start ticking boxes, confirm whether the Act applies to your unit. Under Section 2(m) of the Factories Act, 1948, a "factory" means:

Key points factory owners miss:

  1. Contract workers count. If you engage workers through a contractor or labour supplier, those workers are included in your total headcount for licensing purposes.
  2. "Manufacturing process" is broadly defined. Under Section 2(k), it includes making, altering, repairing, ornamenting, finishing, packing, oil pressing, and even generating or transmitting power. If you're running a packaging unit or a repair workshop, you likely qualify.
  3. State variations exist. Some states like Maharashtra and Tamil Nadu have lowered the threshold or added sector-specific rules. Always check your state's Factory Rules alongside the central Act.

If you fall within these thresholds, registration and licensing are mandatory - not optional.

Factory Licence: How to Get It and When to Renew

The factory licence is your foundational compliance document. Without it, every other compliance effort is meaningless because you're operating illegally.

Registration vs. Licence

These are two separate requirements under the Act:

Application Process

  1. Apply to your state's Directorate of Industrial Safety and Health (DISH) or equivalent body
  2. Submit factory building plans approved by a competent person (licensed architect or engineer)
  3. Provide details: number of workers, nature of manufacturing, power usage, ventilation plans, and safety arrangements
  4. Pay the prescribed fee (varies by state and worker count - typically ₹500 to ₹5,000 for small factories)
  5. Receive inspection clearance before the licence is granted

Renewal Deadlines

What Happens If You Don't Have a Licence?

Under Section 92, operating a factory without a licence or with an expired licence:

This applies to both the occupier (typically the owner) and the factory manager.

Health and Hygiene Compliance

Chapters III (Health) of the Factories Act lays down specific health standards every factory must maintain. These aren't suggestions - they're inspectable requirements.

Mandatory Health Provisions

Requirement | Section | What You Must Do

Cleanliness | Section 11 | Whitewash or repaint walls every 14 months; sweep floors daily; remove accumulated dirt and waste

Waste disposal | Section 12 | Effective arrangement for treatment and disposal of wastes and effluents

Ventilation | Section 13 | Adequate ventilation and reasonable temperature; state-prescribed standards apply

Dust and fumes | Section 14 | Effective measures to prevent inhalation and accumulation of dust, fumes, or other impurities

Artificial humidification | Section 15 | Prescribed standards for humidity levels where artificial humidification is used

Overcrowding | Section 16 | Minimum 14.2 cubic metres of space per worker (for factories existing before the Act) or 9.9 cubic metres

Lighting | Section 17 | Sufficient and suitable natural and artificial lighting; prevention of glare and shadow

Drinking water | Section 18 | Clean drinking water at convenient points; marked "Drinking Water" in the local language

Latrines and urinals | Section 19 | Separate for male and female workers; adequately lit, ventilated, and maintained

Spittoons | Section 20 | Sufficient number in convenient places; cleaned regularly

Common Inspection Failures

Factory inspectors frequently flag these issues during visits:

Safety Requirements

Chapter IV (Safety) is where the penalties get serious - because violations here can cause injuries or death.

Critical Safety Provisions

Fencing of machinery (Section 21): Every moving part of prime movers, flywheels, and every dangerous part of any machinery must be securely fenced. This is one of the most commonly violated and most frequently penalised provisions.

Work on or near machinery in motion (Section 22): Only trained male workers wearing tight-fitting clothing can examine, lubricate, or adjust machinery in motion. No loose clothing, no untrained workers.

Employment of young persons on dangerous machines (Section 23): No young person (under 18) can work at any dangerous machine unless fully instructed on dangers and precautions, has received sufficient training, and is under adequate supervision.

Hoists and lifts (Section 28): Must be of good mechanical construction, sound material, and adequate strength. Inspected at least once every six months by a competent person.

Pressure vessels (Section 31): Every pressure vessel must be examined by a competent person at least once every year, and records must be maintained.

Fire safety (Section 38): Every factory must have:

Safety officers (Section 40-B): Factories employing 1,000 or more workers must appoint a Safety Officer. Some states lower this threshold - Maharashtra requires it at 500 workers.

Statutory Safety Records You Must Maintain

  1. Accident register (Form 21 or state equivalent)
  2. Dangerous occurrence register
  3. Machinery inspection register (hoists, lifts, pressure vessels)
  4. Fire drill records (minimum twice a year)
  5. Safety committee meeting minutes (if applicable)

Welfare Provisions

Chapter V covers welfare facilities that are mandatory once your factory crosses certain worker thresholds.

Mandatory Welfare Checklist

Provision | Section | Applicability

Washing facilities | Section 42 | All factories

Storage for clothing | Section 43 | All factories

Sitting facilities | Section 44 | Workers obliged to work standing

First aid | Section 45 | All factories - one first aid box per 150 workers, stocked with prescribed contents

Canteen | Section 46 | Factories with 250+ workers

Shelters and rest rooms | Section 47 | Factories with 150+ workers

Crèche | Section 48 | Factories with 30+ women workers

Welfare officer | Section 49 | Factories with 500+ workers

First Aid - Don't Take This Lightly

Section 45 requires:

Inspectors check first aid boxes. An empty or poorly stocked box is a guaranteed finding in your inspection report.

Working Hours, Overtime, and Leave

Chapter VI governs working hours - and this is where many factories accumulate violations without realising it.

Key Limits

Women Workers - Additional Restrictions

Under Section 66, women cannot be required or allowed to work between 7 PM and 6 AM. However, several states have amended this through state-level notifications - Maharashtra, Karnataka, and Tamil Nadu now allow night shifts for women with additional safety conditions (transportation, security, consent).

Leave Provisions

Records You Must Maintain

These records are the first thing an inspector asks for. Missing or falsified records attract penalties under Section 92.

Inspections: What Happens When the Inspector Visits

Factory inspectors appointed under Section 8 of the Act have sweeping powers. Understanding the inspection process helps you prepare.

Inspector's Powers (Section 9)

A Factory Inspector can:

Typical Inspection Flow

  1. Unannounced visit: Inspectors rarely give advance notice (they don't have to)
  2. Document review: Licence, registers, certificates, and notices are checked first
  3. Walk-through inspection: Safety guards, ventilation, cleanliness, fire equipment, welfare facilities
  4. Worker interviews: Inspectors may speak with workers privately about conditions
  5. Findings report: If non-compliances are found, a written deficiency notice is issued
  6. Deadline: Typically 15–30 days to rectify the issues
  7. Re-inspection: A follow-up visit to verify compliance (some states charge ₹500–₹2,000)

How Often Do Inspections Happen?

There's no fixed schedule - it depends on your state and factory risk category. However, expect at least:

How to Prepare

Complete Penalty Reference

Here's every penalty provision you need to know, in one place:

Section | Offence | Penalty

Section 92 | General contravention of any provision | Up to 2 years imprisonment, fine up to ₹1,00,000, or both

Section 92 (continuing) | Continuing offence after conviction | ₹1,000 per day

Section 93 | Owner's failure to maintain leased premises (drainage, water, electricity) | Fine as prescribed

Section 94 | Death due to contravention | Fine of at least ₹25,000

Section 94 | Serious bodily injury due to contravention | Fine of at least ₹5,000

Section 95 | Obstructing an inspector | Up to 6 months imprisonment, fine up to ₹10,000, or both

Section 96 | Wrongful disclosure of trade information | Up to 6 months imprisonment, fine up to ₹10,000, or both

Section 97 | Worker contravening provisions | Fine up to ₹500

Section 98 | Using false fitness certificate | Up to 2 months imprisonment, fine up to ₹10,000

Important: Both the occupier (owner) and the manager are jointly liable for violations. You cannot escape liability by claiming your manager handled operations.

The Occupational Safety Code: What's Coming Next

The Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) is set to replace the Factories Act, 1948, along with 12 other labour laws. Key changes to watch:

Until the OSH Code is notified and implemented (state rules are still pending), the Factories Act, 1948 remains fully in force. Do not assume future relaxation and skip current compliance.

Your Factory Compliance Action Checklist

Use this checklist to audit your own factory today:

Licensing

Health and Hygiene

Safety

Welfare

Working Hours and Records

Inspections

Frequently Asked Questions

What is the minimum number of workers for the Factories Act to apply?

The Factories Act applies to premises with 10 or more workers where power is used in the manufacturing process, or 20 or more workers without power (Section 2(m)). Contract workers hired through labour contractors count toward this threshold.

How much does a factory licence cost?

Fees vary by state and the number of workers. For a small factory (10–50 workers), expect ₹500 to ₹5,000. Large factories with hundreds of workers pay more. Check your state's Directorate of Industrial Safety and Health (DISH) for the exact fee schedule.

Can a factory inspector visit without notice?

Yes. Under Section 9, a Factory Inspector can enter any factory at any reasonable time without prior notice. They have broad powers to inspect premises, examine machinery, review records, question workers, and take samples.

What happens if a worker is injured due to a safety violation?

If a worker suffers serious bodily injury due to contravention of the Act, the occupier and manager face a fine of at least ₹5,000 under Section 94. If the worker dies, the minimum fine is ₹25,000. Criminal prosecution under the Indian Penal Code may also apply separately.

Do I need a separate pollution board consent even if I have a factory licence?

Yes. The factory licence under the Factories Act is completely separate from Consent to Establish (CTE) and Consent to Operate (CTO) under the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981. You need both - one doesn't replace the other.

Are the new Labour Codes replacing the Factories Act?

The Occupational Safety, Health and Working Conditions Code, 2020 is designed to subsume the Factories Act. However, it has not been enforced yet - state rules are still pending. Until the Code is officially notified and implemented, the Factories Act, 1948 remains fully in force. Comply with the current law.

Is night shift allowed for women workers in factories?

Section 66 of the Factories Act restricts women from working between 7 PM and 6 AM. However, several states including Maharashtra, Karnataka, and Tamil Nadu have issued notifications allowing night shifts for women with conditions - employer-provided transport, security arrangements, and written worker consent.

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Running a factory in India means juggling multiple compliance requirements across health, safety, welfare, working hours, and licensing - and the Factories Act is just one piece of the puzzle. You've also got PF/ESI, pollution board consents, GST, and potentially FSSAI, BIS, and sector-specific regulations to manage.

That's exactly why Compliance Radar exists. Describe your business once, and get a complete timeline of every compliance that applies to you - with real-time alerts when rules change. Check your compliance posture free at complianceradar.in.