Starting a new factory in India is like building a giant LEGO project. You need the right blocks, permissions, approvals, and plans. Before machines start running and products get made, the government wants to ensure workers are safe, environment is protected, and society is not harmed.

This is why Factory License and Environmental Clearances are needed.

In this guide, we will walk step-by-step through what new businesses must follow to build a legal and environmentally-friendly factory in India.

What is a Factory License?

A Factory License is a legal permission given to a manufacturing unit under the Factories Act, 1948. It allows a business to run a factory where workers operate machines.

Think of it like a school permission slip, but for factories!

A factory must register for a license if:

•   10 or more workers are working with power machines

•   20 or more workers are working without power machines

Why Factory License is Important

A factory license is important because it ensures:

• Safe working conditions for employees

• Machines are handled properly

• Fire safety and health checks are done

• No harm to workers or the nearby community

It protects workers, business owners, and the environment.

🇮🇳 Factory Compliances in India

Factory Compliances in India include:

Compliance Requirement	Why It Is Needed
Worker health & safety	Prevent accidents & diseases
Fire safety measures	Keep workers safe during emergencies
Proper lighting & ventilation	Comfortable and safe workspace
Hazardous material handling	Avoid pollution & chemical misuse
Regular inspections	Ensure rules are being followed

The government wants to make sure factories run smoothly and safely.

What Are Environmental Clearances?

Environmental Clearance means permission from environmental authorities to make sure factories do not harm nature — like air, water, soil, animals, and people.

It includes:

•   Air Pollution Control

•   Water Pollution Control

•   Noise Pollution Limits

•   Proper waste disposal

Without these approvals, a factory can be shut down anytime!

Important Environmental Permissions for a New Factory

When setting up a new plant, you need approvals from State Pollution Control Board (SPCB) or Pollution Control Committee (PCC):

Permission	When Required
CTE – Consent to Establish	Before construction of factory
CTO – Consent to Operate	Before starting production
Environmental Impact Assessment (EIA)	For large or risky industries
Hazardous waste authorization	If handling dangerous waste

This is called Environmental Compliance Monitoring — where authorities keep checking that rules are followed even after starting operations.

Hazardous Waste Recycling Business License

•   Some factories generate dangerous waste, like:

•   Chemical leftovers

•   Used oils

•   Scrap batteries

•   Poisonous liquids

To recycle, store, or transport such waste, businesses must apply for a Hazardous Waste Recycling Business License. It ensures:

•   Waste does not mix with water or soil

•   People handling waste are protected

•   Recycling is done in the correct manner

This keeps India clean and pollution-free.

What is Environmental & Social Due Diligence (ESDD)?

•   Environmental & Social Due Diligence (ESDD) means checking if a factory:

•   Protects the environment

•   Cares for workers

•   Does not harm nearby people

•   Follows laws and compliances

Before investing in or approving a project, experts check:

Factors Reviewed in ESDD

• 
  Land use and pollution impact

• Safety for workers and nearby areas

• Water use and waste treatment

• Energy conservation

• No illegal encroachment or community harm

It’s like a health check-up for industries — to make sure everything is safe and responsible.

Steps to Get a Factory License in India

1. Factory Plan Approval
   Submit your layout and building maps to the labour department
2. Online Registration
   Register under the Factories Act through the state portal
3. Safety Documents Submission
   Provide safety and health details for workers
4. Factory Inspection
   Authorities visit the site
5. License Issuance
   You’re ready to start operations!

Steps to Get Environmental Clearances

Step	What Happens
Step 1	Apply to State Pollution Control Board
Step 2	Submit project report with pollution control plans
Step 3	Air & water testing plans submitted
Step 4	Public hearing (for major projects)
Step 5	Grant of CTE
Step 6	Apply for CTO after installation

These steps ensure ZERO harm to nature.

What Happens if You Don’t Get a License?

•   Factories operating without proper licenses may face:

•   Heavy fines

•   Factory shutdown

•   Legal action

•   Damage to brand reputation

It is always wiser to get approvals first.

Who Helps Businesses in This Process?

Getting all documents prepared and approvals from different departments can feel confusing.
So Environmental consultants like Enterclimate help businesses in:

•   Filing applications

•   Preparing reports

•   Pollution monitoring

•   Getting waste management licenses

•   ESDD documentation

•   Meeting all Factory Compliances in India

This saves time and avoids mistakes.

Benefits of Proper Factory Compliance

For Business	For Environment	For Workers
Legal protection	Less pollution	Safe workplace
Good reputation	Clean air & water	Health protection
Investor trust	Wildlife safety	Job satisfaction

A compliant factory = A responsible factory 

Frequently Asked Questions (FAQs)

1. What is the main rule for running a factory in India?

You must get a Factory License and follow Factory Compliances in India to ensure worker safety and legal operations.

2. Why do we need Environmental Compliance Monitoring?

To keep checking that factories do not pollute the environment and follow safety rules.

3. Who gives Hazardous Waste Recycling Business License?

State Pollution Control Boards or Central Pollution Control Board depending on type of waste.

4. What is ESDD?

ESDD stands for Environmental & Social Due Diligence, a study done to ensure a project does not harm people, nature, or society.

5. Can a factory start without a CTO?

No. Without Consent to Operate, running a factory is illegal.

Author Profile

Upendra Sharma — Enterclimate | Environmental Compliance Writer & Industry Researcher

Upendra Sharma specializes in writing about industrial licenses, pollution management rules, environmental approvals, and business sustainability in India. His content helps new entrepreneurs understand legal requirements in very simple and human language. He believes that responsible factories build a better and greener India for future generations.