Starting a Manufacturing Unit: What Are the First Steps and Licensing Requirements?

Respected All,

Starting a Manufacturing Unit

What is the first step to start a manufacturing unit? Please guide me about the factory license and other formalities, including the form numbers to be submitted to the relevant government department.

The first step is to approach an expert in the field, like me, and hire their services. You must have your project report ready, the process flow ready, the drawings of the plant and machinery layout ready, and permission to construct a factory building from the local authority.

Next, you need to approach the DISH department with the prescribed form for the registration of the factory and approval of plans. Pay the cess on construction to the local authority and apply to obtain a Factory Licence. The procedure may vary from state to state.

Thank you.

Dear Akshay, the first step to start a factory is to prepare a proper business plan. In the business plan, broadly, you need to assess the following:

Location of the factory: You need to assess the easy accessibility to procure the raw material, transportation of the finished goods, and easy availability of the labor.

Space requirement: Space will depend on the estimated demand for the finished goods and the types of operations. You need to identify types of the plant and machinery, optimal movement of the goods and labor in the factory, etc.

Procurement of the Raw Material: Are the vendors available in the nearby area? What will be the lead time?

Storage of the Raw Material: Depending on the estimated demand, what will be the requirement of the safety stock for the class A, B, and C type of material?

Manufacturing: What will be the process cycle time? What will be the output per batch? What will be the per shift output?

Storage of the Finished Goods: What will be the estimated turnover?

The estimated demand: This is the most important factor. Any wrong estimate will make previous calculations wrong. Your labor requirement per shift, number of shifts, and raw material requirement per shift will be decided based on the estimated demand.

Requirement of the support staff: What will be the requirement of the support staff?

Report Generation: What kind of MIS will be developed, who will develop it, and who will analyze it? What kind of future decisions will be taken based on the information that will generate in the initial phase?

There are so many questions associated with your post. I provide consulting services on "How to Prepare Business Plan?" Feel free to contact me if you wish to avail of my services.

Thanks,

Dinesh Divekar

Respected Dinesh Divekar,

I feel all the things you listed will come in the project report. The queriest is seeking guidance on the factory license and other formalities with form numbers to be submitted to the concerned government department. In my response, I did mention the project report but not in detail. I left out obtaining NOC from Pollution Control, which I think is necessary all over India. Registering the factory, approval of plans, and obtaining a factory license is not applicable if the manufacturing is carried out with less than 20 workers with power and 40 workers without power in some states, and with less than 10 workers with power and 20 workers without power in other states.

First step to start your manufacturing unit:

Form a company, register it with the ROC, and register it under shops and establishments. Based on the business type, product, service, and number of employees, as per applicability, obtain the factory license and pollution control board certificate. If the product is food material or edible, obtain FSSAI registration. If boilers are installed, ensure boiler certification is completed. If the factory is in an industrial area, obtain approvals from the industrial development corporation for better amenities such as power, water, and lighting.

During the operational phase, it is mandatory to obtain all statutory licenses and registrations as per labor laws, GST, professional taxes, etc. BOCW registration will be required during the construction phase. It is advisable to start with small steps, acquire necessary registrations gradually, seek consultation from experts, and network with people in the business to gain further insights.