Factory License in India (2026): What Changed Under the OSH Code, Who Needs It and How to Apply

If you run or plan a manufacturing unit — a fabrication shop, a food processing plant, a garment unit, a plastics moulder — you have probably been told you need a "factory licence under the Factories Act". Since 21 November 2025 that Act has been replaced by the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code), and the rules on who counts as a factory have changed. This guide explains, for 2026, who needs a factory licence, what the OSH Code changed, how states are handling the switch, the documents, how fees are worked out, and what to do about renewal.

Quick answer

Under the OSH Code (in force from 21 November 2025), a unit is a factory if it runs a manufacturing process with 20 or more workers using power or 40 or more workers without power. Factories need a licence from the state authority under section 119, which must be issued within 45 days or is deemed granted. Until your state's new rules and portal are in place, its old Factories Rules forms, fees and procedures continue.

• Factories Act, 1948 repealed; old licences stay valid until they expire

• Units with 10 or more workers must still register as an 'establishment' under section 3

• States set the fee — usually by installed power (HP/kW) and maximum workers

• Build or extend a factory only after plan approval from the state factories directorate

Factories Act vs OSH Code: what changed

The OSH Code merged 13 central laws on safety, health and working conditions — including the Factories Act, 1948, the Contract Labour Act and the Inter-State Migrant Workmen Act — into one code. The four labour codes took effect together on 21 November 2025. The central government's OSH rules followed on 8 May 2026 (G.S.R. 345(E)). For factories, though, the state government is the licensing authority, so the state's rules are what count for your unit.

Two details matter a lot for small manufacturers:

1. The state-number proviso. If a state's law set different worker numbers for a factory before the Code began, those numbers continue in that state until its legislature amends them. So the 20/40 thresholds are not automatic everywhere — check your state.
2. The transition rule. The government said that during the transition, the existing Acts' rules, regulations, notifications and procedures continue in force. States are at different stages: some have notified OSH rules, others have only drafts. Until your state switches, expect to use its existing factory licence forms, fee schedule and portal.

Who needs a factory licence in 2026

Work through these questions in order:

Do you need a factory licence?

Step 1

Is a manufacturing process carried on?

making, altering, repairing, finishing, packing, etc.

Step 2

Count workers

include all shifts and relays on the busiest day of the last 12 months

Step 3

With power: 20+? Without power: 40+?

or your state's older numbers

Step 4

Yes → factory licence

section 119, via state authority

Step 5

No, but 10+ workers → register

section 3 establishment registration

Counting workers. The Code counts everyone working in different groups and relays during a day. A unit with 12 workers on the day shift and 10 on the night shift has 22 workers for this purpose, so a powered unit crosses the 20-worker line.

What isn't a factory. The definition excludes armed forces mobile units, railway running sheds, and hotels, restaurants and eating places. Note that the OSH Code counts workers, not all employees, and the definition of worker leaves out people employed mainly in a managerial or administrative capacity and better-paid supervisors — take advice if you are near the threshold.

Below the threshold. A powered unit with 10–19 workers does not need a factory licence under the Code (unless state numbers apply), but it is an "establishment" and must apply for electronic registration within 60 days of the Code applying to it. If the registering officer doesn't act within the prescribed time, registration is deemed granted and the certificate is auto-generated. Any change in ownership, management or particulars must be reported within 30 days, and closure within 30 days of closing.

Before the licence: plan approval

States require prior approval of building plans before you construct or extend a factory building, or convert an existing building into a factory. Puducherry, for example, asks for:

• Site plan, cross sections and elevations, usually in triplicate
• A flow chart and description of the manufacturing process, signed by the occupier
• Proof of land or building ownership or lease
• Industries department registration (Udyam for MSMEs)
• Partnership deed or memorandum and articles of association
• Pollution control clearance for hazardous industries
• For an existing building, details of the previous occupier and cancellation of its factory licence

Apply for plan approval before you sign a long lease on a building that may not meet ventilation, exit, structural or fire requirements for your process. Fixing a building after you've installed machinery costs far more.

How to apply for a factory licence

Getting a factory licence (typical state process)

1. 1

   Check your state's current system

   Find out whether your state has switched to OSH Code rules and forms or still uses its Factories Rules. The state labour department or Directorate of Industrial Safety and Health (DISH) website, or the state single-window portal, will say.

2. 2

   Get plan approval and build or adapt

   Apply with drawings and process details; complete construction as per the approved plan.

3. 3

   Collect the documents

   Premises proof, occupier and manager ID and address proof, constitution documents, list of machinery with horsepower, stability certificate from a competent person, and fee payment.

4. 4

   Apply online and pay the fee

   Fill the licence form on the state portal, upload documents and pay the fee for the years you want (many states offer multi-year licences).

   Example: Tamil Nadu DISH procedure (PDF)
5. 5

   Answer queries and face inspection

   Officials scrutinise the application and may raise queries — Tamil Nadu's process gives 7 days for them — and may inspect the factory before deciding.

6. 6

   Download the licence

   Under the OSH Code, the licence must be issued electronically within 45 days of a complete application, or it is deemed issued. If rejected, you get reasons and can appeal within 30 days.

Documents most states ask for

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• Proof of occupation of premises — sale deed, lease or rent agreement
• Identity and address proof of the manager (government-issued)
• Identity proof of the occupier (the person with ultimate control — a director or partner)
• Memorandum and articles of association, or partnership deed
• List of directors or partners
• List of machinery with horsepower or kW rating
• Approved factory building plan and stability certificate from a competent person
• Process flow chart signed by the occupier
• Pollution control board consent, where your industry needs it
• Udyam registration certificate and GST registration

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Factory licence fees: what drives the amount

The fee is set by each state, not by the OSH Code. Most states' schedules use a grid of total installed power (HP or kW, sometimes including mobile equipment) against the maximum number of workers on any day in the year. Delhi's published schedule under Rule 5 of the Delhi Factories Rules, 1950, is a simple example:

Delhi factory licence fee — sample slabs (per year)

Installed power	Maximum workers	Fee
Up to 10 HP	Up to 20	₹200 a year
Above 10 and up to 50 HP	21 to 50	₹600 a year
Above 50 and up to 100 HP	51 to 100	₹1,200 a year
Amendment (name, address, workers, load) or duplicate	—	₹100 each

Up to 10 HP

Maximum workers

Up to 20

Fee

₹200 a year

Above 10 and up to 50 HP

Maximum workers

21 to 50

Fee

₹600 a year

Above 50 and up to 100 HP

Maximum workers

51 to 100

Fee

₹1,200 a year

Amendment (name, address, workers, load) or duplicate

Maximum workers

—

Fee

₹100 each

Delhi lets you take a licence for one, five or ten years, paying the annual fee multiplied by the number of years. Worked example: a Delhi unit with 35 HP of machines and up to 45 workers falls in the "above 10 and up to 50 HP / 21–50 workers" slab. A five-year licence costs ₹600 × 5 = ₹3,000. If it later adds machines and goes to 60 HP, it pays ₹100 to amend the licence and moves to the next slab at renewal.

Other states' amounts are different — Tamil Nadu's current schedule comes from a 2018 government order, Puducherry's from 2002 — and states moving to OSH rules may publish new schedules. Always use your state's current table. Besides the licence fee, budget for plan-approval scrutiny fees, the stability certificate, and any pollution-control consent fees.

Renewal, amendments and existing licences

• Existing licences. A factory licence obtained before the Code is treated as a licence under the Code and stays valid for its full term. After that, you obtain a fresh licence under the Code and your state's rules.
• Renewal. Apply before the expiry date shown on the licence, through the same state portal, paying the fee for the renewal period. Check your state's rules for late-renewal fees; don't run the factory on an expired licence.
• Amendments. Report changes in occupier, manager, factory name or address, number of workers or installed power. Under the OSH Code, changes in registration particulars must be reported within 30 days.
• Contract labour. Under the OSH Code, the common licence can also cover engaging contract workers, so you may be able to combine licences that were separate before.

State variations to watch

Because the factory licence sits with the states, expect differences in:

• Thresholds — the Code's 20/40 numbers, or older state numbers that still apply until amended.
• Rules and forms — some states have notified final OSH rules, others are still on drafts or old Factories Rules.
• Portals — usually the state single-window system (for example, the Tamil Nadu Single Window Portal) or the state labour/DISH website.
• Fees and licence periods — set by each state, often with multi-year options.
• Inspections — whether and when an inspector visits before the licence is issued depends on the state's procedure and your process.

Common mistakes

• Assuming the 20-worker rule applies everywhere. Check whether your state's older numbers still prevail.
• Counting only one shift. Add up all shifts and relays on your busiest day.
• Skipping registration because you're under 20 workers. Register as an establishment if you have 10 or more workers.
• Starting construction before plan approval. Get plan approval first; it saves expensive rework.
• Letting the licence lapse during the transition. Renew on time under whichever system your state is using.
• Forgetting to amend after adding machines or workers. File an amendment — it is cheap and avoids penalties.

Official links

Official sources

• OSH Code, 2020 — full text (PDF)Sections 2, 3, 119 and 143
• PIB — Labour Codes made effective21 November 2025; transition provisions
• Ministry of Labour and EmploymentCodes, central rules and notifications
• Delhi DISH — factory licence fee scheduleExample of an HP × workers fee grid
• Tamil Nadu — factory registration and licensing procedure (PDF)Process flow, documents and fees
• Puducherry — approval, licensing and registration of a factoryPlan approval documents and fees

What to do next

Count your workers properly, check your state's current rules and portal, and apply for plan approval before you build. Keep your Udyam registration and GST in order — most states ask for them. Once licensed, plan for the labour-code duties that come with a growing workforce, such as gratuity and minimum wages, and consider ISO certification if your buyers ask for it. Use our startup cost calculator to budget licence, approval and compliance costs.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Is the Factories Act, 1948 still in force in 2026?

No. The Occupational Safety, Health and Working Conditions Code, 2020 came into force on 21 November 2025 and section 143 repeals the Factories Act. But during the transition, the Government said the existing Acts' rules, forms and procedures continue until replacement rules are in place, so many states still process factory licences under their old Factories Rules.

How many workers make a unit a factory under the OSH Code?

A premises is a factory if it carries on a manufacturing process with 20 or more workers using power, or 40 or more workers without power, on any day in the previous twelve months. Under the old Factories Act the numbers were 10 and 20. If your state had already set different numbers in its law, the state's numbers continue to apply until amended.

Do I need a factory licence if I have fewer than 20 workers?

Usually not a factory licence under the OSH Code, unless your state's older numbers still apply. But if you employ 10 or more workers, your unit is an 'establishment' and must register electronically under section 3 of the Code within 60 days. Check your state's notified rules and portal, because states run both processes.

How long does it take to get a factory licence?

Under section 119 of the OSH Code, the authority must issue the licence electronically within 45 days of receiving a complete application; if it doesn't, the licence is deemed issued and auto-generated. Under older state procedures, timelines vary and usually involve an inspection. Plan approval for a new building comes before this and takes extra time.

What is the factory licence fee?

States set the fee, usually on a grid of installed power (HP or kW) and the maximum number of workers on any day. Delhi's published schedule, for example, charges ₹200 a year for a unit with up to 10 HP and up to 20 workers, and ₹1,200 a year for 50–100 HP and 51–100 workers, multiplied by the years of the licence.

Is my old factory licence still valid after the OSH Code?

Yes. Section 119(5) says a factory licence obtained under the earlier central law is treated as a licence under the Code and stays valid for the period it was issued for. When it expires, you must obtain a fresh one under the Code and your state's new rules.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.The Occupational Safety, Health and Working Conditions Code, 2020 (full text) — Ministry of Labour and Employment (Gazette text, hosted by DGMS) · accessed 7 October 2026
2. 2.Government makes the four Labour Codes effective — Press Information Bureau, Ministry of Labour and Employment · accessed 7 October 2026
3. 3.Fee schedule — registration, renewal and amendment of licence — Labour Department, Government of NCT of Delhi · accessed 7 October 2026
4. 4.Factory registration and licensing — procedure, documents and fees — Directorate of Industrial Safety and Health, Tamil Nadu (TN Single Window Portal) · accessed 7 October 2026
5. 5.Approval, licensing and registration of a factory — Labour Department, Government of Puducherry · accessed 7 October 2026
6. 6.The Occupational Safety, Health and Working Conditions (Central) Rules, 2026 — G.S.R. 345(E) dated 08.05.2026 — StaffNews (reproducing the Gazette notification) · accessed 7 October 2026
7. 7.OSH Central Rules 2026: registration, hours, contract labour — iPleaders · accessed 7 October 2026