To be able to comply with regulation requirements, a manufacture of any type or size must obtain a Factory License in Delhi before it can legally operate as a Manufacturer in the National Capital Territory (NCT) of Delhi. This applies to both small workshops and large industrial installations and requires an understanding of how to obtain a Factory License in Delhi as well as the processes involved including; Eligibility to Apply, Required Documentation and Factory Licensing Fees in Delhi. Without first obtaining a Factory License you run the risk being subject to penalties or fines when operating as a Manufacturer.

According to the Factories Act, 1948, it is required that a Factory License is obtained prior to carrying out manufacturing activity within your facility and it stipulates registration for any manufacturing location which employs a prescribed number of workers. The DIY Factory License is therefore both a required legal document and fulfills an important role of ensuring compliance with safety, health and environmental regulations and providing a safe working environment for your employees.

What is a Factory Licence in Delhi?

In Delhi, the government issues a factory license to the owner's legal representative who occupies a business in a manufacturing facility. It is intended to signify conformance with the Delhi Factories Rules of 1950, and of the 1948 Factory Act.

* The factory owner defined as the legal representative of the manufacturer must be in place to apply for the Factory License.

* A factory license is required when the manufacturing facility:

o Engages in the manufacture of goods, and

o Emply or provide power to more than 10 workers or more than 20 employees without power at any time.

Failure to have a factory license is an offence under both Acts, and is punishable by a monetary fine, as well as imprisonment. Therefore, it is vital that you meet these legal requirements for compliance with respect to operating your facility.

How to Apply for a Factory License in Delhi

Obtaining a factory license in Delhi entails following a number of steps that define legal compliance and safety as well:

- Determine eligibility: In order to apply for the license, you must first make sure that your establishment meets all of the requirements for being considered a "factory" under the law. Once you've determined that you're eligible, the next step is for you to apply via the occupier (which is typically the owner or appointed director).

- Prepare documents: The main documents you will need when filing your application for a factory license are Form No. 2, proof of ownership or lease, and a policy for your company's health and safety (applicable to factories with hazardous processes). In addition to these documents, other supporting documentation as outlined within the regulations, may be necessary.

- File application: When preparing to file your application, you will need to go to the Office of the Directorate of Factories to submit your application; you also must complete the Treasury Challan and pay the required application fee at the State Bank of India at the Old Secretariat in Delhi.

- Inspection: Once you get an inspector assigned to inspect your application and your factory; an inspector will come to your factory and verify that you are compliant with health and safety standards.

- Granting of licence: If the Director of Factories has received sufficient documentation showing compliance and safety, they will issue your factory licence (as per Form No. 4).

Your factory licence will be valid through December 31 of the year in which it was issued. You may also apply for renewal after the expiry date of up to one year or any longer time period, depending on your compliance history.

Factory Licence Fees in Delhi

For the purpose of obtaining a factory licence in UP, it is important to have knowledge about the fee structure associated with obtaining such a licence. The fees associated with a factory licence will differ from one factory to another depending on numerous factors, namely the installed horsepower (HP) of the machines within the factory and the total number of employees that work at that particular factory.

The fees the factory owner pays to acquire a factory licence in Delhi will depend on both the installed HP and the number of workers employed at the factory per the Delhi Factories Rules.

There is a scale of fees for a one year licence based on both installed HP and the number of workers. For example, if a factory has more than 100 HP installed and employs more than 1000 workers, then that factory will pay a higher fee. A smaller factory will pay proportionately lower fees based on installed HP and employee count.

If you choose to obtain a five year licence, generally speaking, you will pay five times the amount of the one year licence fee.

In addition to the government fees like those listed above, the municipal government (i.e., the Municipal Corporation of Delhi) also charges licences fees that differ depending on the location of your business based on property tax and consumption of electricity. Therefore, factory licence applicants should also be aware of their potential municipal fees related to their location. Recently established policies have also linked factory licence fees in Delhi to 5% of the annual property tax for those units operating in industrial areas, thereby providing an easy means of complying with the regulations that govern your business and the administrative burden associated with those regulations has also been reduced.

Renewal, Penalties & Compliance

To avoid penalties for not renewing your Delhi factory license in a timely manner, you must renew your license before it expires. If you don't renew your license on time, you may be subject to additional fees and the fee structure at the time of renewal can change, depending on municipal regulation changes. By complying with safety inspections/audits, making payments on a consistent basis, you will also keep your factory up and running.

If you fail to apply for or renew your factory licence in Haryana a timely manner, you may be fined, your factory may be shut down and/or subject to court action. As a result, timely renewals, having proper documentation and making payments/renewals on time will be the main issues facing factory owners.

Conclusion

It is crucial for entrepreneurs and those in industry who want to start operations in Delhi to obtain a licence for factory operations; the factory licence is one of the most basic legal steps an entrepreneur or industrialist can take. The entire factory licence process as outlined above consists of various steps. Understanding each of these steps will assist an entrepreneur/industrialist with obtaining both a new and/or renewals of their factory licence in Delhi ; keeping track of changes or modifications to government policies and procedures and/or using government systems to streamline(simplification) the factory licensing process will enhance and promote the ease and efficiency of both the new and/or renewal process for the factory licence.