SOP for Factory License Application

SOP is what we elaborate as “Standard Operating Procedure”. In this blog, we will be discussing about the SOP for factory license which is necessary to comply with as mentioned under the Act.

The act governing factory license is the Factories Act 1948. So, according to the compliance of the act, every factory owner must know about all the standards for obtaining a factory license as he is required to register his or her premises with the local authorities before commencing the business.

 Let’s continue reading the blog to understand the standards prescribed by the act.

About Factory License

A Factory License is an obligatory license that a factory owner must have to obtain permission from the Commissioner of MCD in writing. Thus, any premises or materially alter, enlarge or extend any factory, workshop or trade premises in which it is intended to employ, steam, electricity, water or other mechanical, must obtain a factory license.

Primarily, a person desiring to become a factory owner is required to obtain permission from the Commissioner. And then after the permission is granted, the second measure is to obtain a trade license as laid down under Section 417(i) before starting with the trade.

Purpose of factory license

In order to provide a good flow of industries to grow, a portal is established for obtaining factory license.  Here are some purposes provided by factory license portal-

• Transformation of legacy process and afresh development of web application as per the current functional and technical requirements.
• Facilitate citizens with cashless, paperless, and faceless system.
• Advanced GUI of Online registration system can help the citizen to easily apply, renewal, amendment and surrender the factory license.
• Allows preservation of reporting forms in digital mode.
• Process-oriented architecture which helps citizen to do easy registration for factory license without visiting MCD department from any internet point.

Categories of Factory License

There are in total five categories of factory license, namely:-

1. Conforming (Industrial) Area
2. DDA/DSIDC/DI Built-up auction/allotted sheds
3. Industries Outside Industrial Area
4. Household Category
5. Local Commercial Category

Different factory license categories required different document requirements. Let us discuss each categories documents starting with the first one.

Documents to be submitted for issuance of new factory license

Conforming (Industrial) Area

1. Ownership/registered occupancy proof in shape of perpetual deed, lease deed along with NOC of owner (complete chain of ownership not required).
2. Company details i.e., certificate of incorporation/MOU, authority letter in name of applicant/NOC of partner with partnership deed.
3. Building plan or sanction letters i.e. Form C & D.
4. Self-undertaking/Self-declaration on letter head (No affidavit required)
5. Additional/Optional documents, if any.
6. DPCC consent.
7. Fire NOC (If premises come under purview above 250 sqm).

DDA/DSIDC/DI Built-up auction/allotted sheds

1. Ownership/registered occupancy proof in the shape of perpetual deed, lease deed along with NOC of the owner (complete chain of ownership not required).
2. Company details i.e., certificate of incorporation/MOU, authority letter in name of applicant/NOC of partner with partnership deed.
3. Building plan or sanction letters i.e. Form C & D.
4. Self-undertaking/Self-declaration on letter head (No affidavit required)
5. Additional/Optional documents, if any.
6. DPCC consent.
7. Fire NOC (If premises come under purview above 250 sqm).

Industries Outside Industrial Area

1. Ownership/registered occupancy proof in the shape of perpetual deed, lease deed along with NOC of the owner (complete chain of ownership not required).
2. Company details i.e., certificate of incorporation/MOU, authority letter in name of applicant/NOC of partner with partnership deed.
3. Self-undertaking /Self-declaration on letter head (No affidavit required)
4. Key plan/Site plan.
5. Additional/Optional documents, if any.
6. DPCC consent.
7. Fire NOC (If premises come under purview above 250 sqm).

Household Category

1. Ownership/registered occupancy proof /lease deed along with NOC of owner
2. Details of applicant i.e. Photo ID proof
3. Copy of electricity bill & Site plan/key plan.
4. Self-undertaking /Self-declaration on letter head (No affidavit required)
5. Additional/Optional documents, if any. 6. DPCC consent. (Not required being A category non-polluting trade)

Local Commercial Category

1. Ownership/registered occupancy proof /lease deed along with NOC of owner
2. Copy of the electricity bill
3. Sanctioned building plan & site plan/key plan.
4. Self-undertaking /Self-declaration on letter head (No affidavit required)
5. DPCC consent
6. Certificate of safety of explosives.
7. Fire NOC (If premises come under purview above 250 sqm).

Standard Operating Procedure for Factory License

• Search on google for “MCD Online”
• Go to “Citizen Login”
• It is necessary for the user to register and therefore click on “New User Click Here for Signup/Registration”
• Fill all the necessary information and click on submit button
• After successful signup, Login with registered mobile no. and the country code with the help of OTP authentication
• When the authentication is successful, from “Online Services” option select “Factory License”
• To change details like phone number click on “Edit Profile” option available.
• All the registered factory licenses details will be shown on Dashboard Page with key details such as Registration Number, Process Name, Category, Applicant, Trade Name etc.
• To search legacy record, go to “Legacy Search” module and search using License number, Factory Name etc.
• Where the validity is shown as expired, then renewal can be done. However, if record found and its validity is not expired then Amendment and Surrender can be done.
• After the details are filled, details will be sent to MCD Officials for scrutiny and approval.
• All the registered details will then be visible on “Action” button the dashboard. Also, some options shall also be given, namely;-
  View : submitted application for factory license can be seen on the dashboard
  Payment Receipt : option will be displayed when successful payment is made
  Provisional License : provisional license will be displayed when applies for new factory license.

Provisional License remains valid for a period of 90 days for all categories from the date of registration except for household category of factory license. Where the factory’s area is above 250 sq. mtr then validity of provisional license depends upon DPCC date and Fire NOC date whichever is lesser. However, where the area of factory is below 250sq. mtr then validity depends upon DPCC date if it is lesser.

Obtaining a factory license is not easy as it requires expert knowledge who is aware of the compliances and the act. Also, many a times, deficiency of information is raised by MCD officials which. So, consulting a factory license consultant would be a good option rather than trying yourself out. Avoid mishap and consult a good consultant specialized in providing factory license.

Factory License Fees and Charges

NDMC Fee Chart for New Factory License

Total Amount = Registration fee + Processing fee + Factory License fee + Permission fee

1. Permission fee = Unit charge + (HP rate x Total HP)
   2. Registration fee (Rs)
   a) upto 5 H.P = 2000.00/-
   b) 6 to 15 H.P = 2000.00/-
   c) 16 to 50 H.P = 2000.00/-
   d) ABOVE 50 H.P = 2000.00/-

*In case of Household – 0.00/-
3. License fee (Rs) – 0.00/-
4. Processing fee (Rs) = 550.00/-
5. Unit Charge (Rs) = 80.00/-
6. Per H.P (Rs) = 4.00/-
7. Convenience Fee (Rs) = 2.5937% of the Total Amount

NDMC Fee Chart for Renewal of Factory License

1. Renewal in grace period i.e. April every year

➢ Total Amount = Permission Fee + Processing Fee + Transaction Fee + Convenience Fee

1. License Fee = H.P. rate × Total H.P.
2. Permission Fee = Unit Charge + License Fee
3. Processing Fee = 550.00/-
4. Transaction Fee = 10 (Fixed)

Renewal after April and prior to ending of current financial year.

➢ Total Amount = Permission Fee + Processing Fee + Transaction Fee + Late fee + Convenience Fee

1. License Fee = H.P. rate × Total H.P.
2. Permission Fee = Unit Charge + License Fee
3. Processing Fee = 550.00/-
4. Late fee = 150 (for 3 months @5% of License fee per month)
5. Transaction Fee = 10 (Fixed)
6. Renewal after One year

➢ Total Amount = Permission Fee + Processing Fee + Transaction Fee + Late fee + Arrear + Convenience Fee

1. License Fee = H.P. rate × Total H.P.
2. Permission Fee = Unit Charge + License Fee
3. Processing Fee = 550.00/-
4. Late fee = 150 (for 3 months @5% of License fee per month)
5. Transaction Fee = 10 (Fixed)
6. Arrear = 2000 (1000 License fee X 2.)

* Convenience Fee (Rs) will be charged as 2.5937% of the Total Amount

NDMC charges associated with Amendment of Factory License

1. Application/Processing Fees – Rs.550-00 + 2.5937% of the total amount towards Online Payment Convenience Fee will be collected at the time of Submission of Application Form for Amendment of Factory License
2. Registration Charges – NIL
3. Amendment Fee – will be decided by NDMC officials depending on the Type of Amendment at the time of approval of the application.

NDMC charges associated with Surrender of Factory License

Application/Processing Fees Rs.550-00 + 2.5937% of the total amount) towards Online Payment Convenience Fee will be collected at the time of Submission of Application Form for Surrender of Factory License.

Renewal of Factory License documents required

• DPCC (Delhi Pollution Control Committee)
• Fire NOC (if area is greater than 250 sq. mtr)

Documents required for amendment in factory license

• Constitution of firm/Incorporation certificate in case of public or private limited company. (for Change of constitution of firm)
• NOC/Authority in favor of applicant (for change of name of director/partner).
• Details of proposed machinery with H.P. rating. (For change in power load).
• Undertaking on company letter head.
• Consent from DPCC, If any, as per norms laid down for the applied industry (Required for all purposes and for change of trade)
• Additional Undertaking/indemnity Bond/affidavit as prescribed for clusters of industrial concentration earmarked for redevelopment into conforming industrial areas as per MPD-2021

Documents required for surrendering a factory license

• UID
• Undertaking

Final Words

This was all about the standard operating procedure for obtaining a factory license. Go through it to be informed about the obligations as given under the Act. Stay tuned to know more about of the information relating to factory license.