A factory licence is the state permission to run a manufacturing unit, granted after plan and site clearance. Under the OSH Code, it sits alongside a separate establishment registration, and a unit counts as a “factory” only from 20 workers with power or 40 without, up from 10 and 20 under the Factories Act.

What the Code actually requires

There are four moving parts, and people often mix them up.

• Registration (section 3): an employer of a covered establishment applies electronically within 60 days. If the registering officer does not act in time, registration is deemed granted. This applies to any establishment with ten or more workers, and for this chapter a factory with ten or more workers is covered even below the 20/40 line.
• Commencement notice (section 5): a factory, mine, contract-labour or construction employer must send notice, electronically, before starting operations, and again on cessation.
• Plans and site permission (section 79): governments can make rules for plan submission, prior permission for the site, construction or extension, and licensing with renewal. If an electronic application gets no order within 30 days, permission is deemed granted.
• Common licence (section 119): one application can cover a factory, beedi and cigar premises and contract labour, in any combination. It is to be issued electronically within 45 days or is deemed issued.

An existing licence under a Central labour law is treated as obtained under the Code and stays valid until its expiry date, after which it must be obtained afresh. One catch in the definition: where a State’s law before the Code fixed a different worker count, the State figure prevails in that State until its legislature amends it, so a unit near the 20/40 line should check its own state.

What to do in practice

Factory licensing is a State subject, and the Central Rules notified in May 2026 are reported not to cover factory licence procedure, so the form, fee and validity come from your State’s rules. Keep your licence renewal date in the statutory compliance register or a compliance tool and do not assume the old Factories Rules have lapsed in your state. Offices and shops are different: they register under the Shops and Establishments Act.

Frequently asked questions

Is registration the same as a licence?

No. Registration confirms the establishment exists under the Code; the licence permits the factory to operate. Both can be needed, which is why the Code allows a common licence for the licence side.

Does a 15-worker unit with a power-run machine need a factory licence?

Under the Code’s definition it falls below the 20-worker line, unless your State had kept a lower figure under its earlier law. It would still register as an establishment, so confirm the position with your appropriate government before you stop renewing anything.

Who inspects the factory?

The Inspector-cum-Facilitator appointed by the State, with special powers to stop work in a factory facing imminent danger.

Track renewals and notices with the HR and payroll compliance calendar.