Opening Your First Factory: The Compliance Checklist

Opening your first factory in India involves a different, heavier compliance track than an office - registration, plan approval, and pollution consent all typically need to happen before you even start construction.

Key facts at a glance

• A premises is generally a factory if it employs 10 or more workers with power, or 20 or more without power, in a manufacturing process.
• Factory plan approval is generally required from the state Chief Inspector of Factories before construction begins, not just before operations start.
• Canteen obligations apply at 100 or more workers under the newer OSH Code, versus 250 under the earlier Factories Act, 1948.
• A crèche facility is required at 50 or more employees.
• A welfare officer becomes mandatory at 500 or more workers.
• Most factories need Consent to Establish and later Consent to Operate from the State Pollution Control Board.
• A separate Boilers Act registration applies only if the factory operates a boiler.

Registration and approval come first, not last

Unlike an office, a factory generally cannot be built first and registered later. Most states require factory building plan approval from the Chief Inspector of Factories (or the equivalent state authority) before construction begins, followed by a formal factory licence before operations start. Skipping this sequence risks having to retrofit or re-approve an already-built structure, which is far more expensive than getting it right upfront.

Pollution Control Board consent is a separate, parallel track

Depending on the category and scale of your industry (classified by the state board as red, orange, green or white category based on pollution potential), you'll typically need Consent to Establish (CTE) before construction and Consent to Operate (CTO) before commissioning. This process runs alongside, not instead of, factory licensing, and timelines can be a significant driver of your overall project schedule.

Welfare obligations scale with headcount, not with "being a factory"

A common misconception is that factory status alone triggers every welfare obligation immediately. In reality, most welfare provisions are tied to headcount thresholds that scale up as you grow:

• Crèche facility: 50 or more employees.
• Canteen: 100 or more workers under the newer OSH Code (250 under the older Factories Act regime, where that still applies).
• Welfare officer: 500 or more workers.

If you're opening a smaller factory, you may not owe all of these on day one - but plan your facility layout with room to add them as you scale, since retrofitting later is disruptive.

Standard registrations still apply

A factory doesn't replace the usual business registrations - it adds to them. You'll still need GST registration, EPF (mandatory at 20+ employees), ESI (mandatory at 10+ employees, or 1+ in hazardous processes), and Professional Tax registration if your state levies it. Factories are generally covered under the Factories Act rather than the state Shops and Establishments Act, so you can usually skip that specific registration for the factory premises itself.

If you use a boiler, add one more registration

Factories operating a boiler need separate registration and periodic inspection under the Boilers Act framework, administered by the state's boiler inspectorate. This is easy to overlook because it's not part of the general factory licensing conversation, but non-compliance here carries serious safety and legal risk.

What changes, at a glance

What to do this week

Start the factory plan approval and Pollution Control Board consent processes in parallel and early, since both typically gate construction rather than just operations. Map your expected headcount growth against the welfare thresholds above so your facility design has room for crèche and canteen space before you're legally required to provide it.

Sources

• Ministry of Labour and Employment - labour.gov.in
• Respective State Pollution Control Board
• Respective state factory/labour department portal
• EPFO - epfindia.gov.in
• ESIC - esic.gov.in

If you're not sure where your business stands on this, ComplianceCheck's labour code and factory compliance assessment gives you a clear picture in a few minutes.

This guide is general information, not legal advice. Requirements vary by state, sector and headcount - confirm specifics with a compliance professional or the relevant authority.