Does a small manufacturing unit with 8 workers need a factory licence?

Under the OSH Code's revised thresholds, in force since 21 November 2025, a 'factory' requiring a factory licence is defined as a premises with 20 or more workers using power in the manufacturing process, or 40 or more without power — raised from the earlier 10/20 thresholds. An 8-worker unit using power would fall below even the revised threshold and would not need a factory licence specifically, though it still needs GST, Shops and Establishments, pollution clearance if its activity is classified Red/Orange/Green, and any activity-specific licence (FSSAI, for instance, if it processes food). Confirm your state's specific implementation of the revised thresholds, since state-level rules were still being progressively notified through 2026 at the time of writing.

Do I need both Shops and Establishments registration and a factory licence?

No — these are alternatives, not additions. Once a premises meets the definition of a 'factory' under the Factories Act/OSH Code (10+ or 20+ workers with power, depending on the current threshold in force), it is regulated under the Factories Act's own licensing regime instead of Shops and Establishments, which explicitly excludes factories from its scope. A manufacturing unit below the factory threshold remains under Shops and Establishments; once it crosses into factory territory, the factory licence takes over as the premises-level approval.

If I process agricultural produce (like rice milling), does that count as manufacturing?

Yes, processing raw agricultural produce into a different form — paddy into milled rice, for instance — is generally treated as a manufacturing activity for regulatory purposes, which means it can trigger factory licensing (if the worker threshold is met), pollution clearance (rice mills generate dust and husk, typically drawing Pollution Control Board classification), and FSSAI licensing (since the output is food), on top of the standard registrations every business needs. See also Documents Required for an Agricultural Trader, which covers the trading side of agricultural produce rather than the processing side.

Documents Required for a Manufacturing Business in India

Manufacturing draws in more of the business-registration map simultaneously than almost any other activity type — it is where structure, tax, premises, pollution, and labour-law requirements stack on top of each other rather than triggering one at a time. This checklist organises what a manufacturing business genuinely needs, distinguishing what applies to every manufacturer from what depends on your specific worker count and activity.

The foundation, same as any business

PAN (personal, if a proprietor; entity PAN if a partnership, LLP, or company).
Business-structure registration — incorporation via MCA for an LLP or company, partnership deed registration for a partnership.
GST registration, mandatory once turnover crosses the threshold, or immediately if you supply inter-state — common for manufacturers selling beyond their home state. See GST Registration Documents for Proprietorship.
Udyam registration — free, voluntary, and particularly valuable for manufacturers given MSME lending and payment-protection benefits apply directly to working-capital-heavy activities like this.

Premises: Shops and Establishments, or Factory Licence — not both

This is the first genuinely manufacturing-specific fork. Under the Factories Act, as revised by the OSH Code (in force since 21 November 2025), a "factory" is defined as a premises engaging 20 or more workers using power in the manufacturing process, or 40 or more without power — an increase from the earlier 10/20 thresholds. If your unit meets this definition, it is regulated by a factory licence from your state's factory inspectorate, not by Shops and Establishments, which explicitly excludes factories from its scope. If you are below this threshold, your premises falls under standard Shops and Establishments registration instead.

Given the recency of the threshold change and the state-by-state pace of implementing rules, confirm your specific state's current position directly rather than relying solely on the central figure if your worker count is anywhere near the boundary.

Pollution clearance: category-dependent, not optional to check

Manufacturing activity involving emissions, effluent, or waste generation — which covers a wide range of processing, from textiles to food milling to metalwork — falls under the CPCB's Red/Orange/Green/White classification, and Red, Orange, and Green categories require Consent to Establish before construction and Consent to Operate before commencing operations, from your State Pollution Control Board. See Consent to Establish vs Consent to Operate for the full framework. Do not assume your specific process is exempt (White category) without confirming — this is one of the costlier categories to get wrong, since operating without required consent can mean closure orders, not just a fine.

Employment-linked registrations

EPFO registration — mandatory at 20 or more employees. See EPFO Registration Applicability.
ESIC registration — mandatory at 10 or more employees for factories specifically (a lower, factory-specific threshold than the variable shop/establishment threshold). See ESIC Registration Applicability.
TAN, once you deduct TDS on any employee salary or contractor payment.

Activity-specific additions

FSSAI registration or licence, if your manufacturing output is food in any form — this applies on top of, not instead of, factory and pollution requirements. See FSSAI Registration vs State Licence vs Central Licence.
Legal Metrology packaged-commodity certificate, if you sell your output in pre-packaged form with a declared quantity.
Import Export Code, if any of your raw material sourcing or finished-goods sale crosses an international border. See Import Export Code (IEC).
Fire NOC, if your premises size, height, or activity risk crosses your state's applicable threshold — commonly relevant for larger manufacturing units and anywhere handling flammable material. See Fire NOC for Businesses.

A worked sequence for a mid-sized manufacturing unit

A unit with 15 workers (using power), processing a raw material into a finished good, selling both locally and inter-state, with moderate effluent generation:

Structure and PAN, then Udyam registration (immediate, no cost).
GST registration (mandatory given inter-state supply, regardless of turnover).
Shops and Establishments registration — 15 workers with power sits below the revised 20-worker factory threshold, so this unit is not yet a "factory" for licensing purposes, though this should be confirmed against the current state-level implementation.
Consent to Establish from the State Pollution Control Board, before any construction, followed by Consent to Operate before commencing production — category confirmed directly with the board given "moderate effluent" could plausibly be Orange or Green.
Fire NOC, if the premises size or height crosses the state threshold.
ESIC registration once headcount and state notification align (factories are covered centrally at 10, so this 15-worker unit is very likely already covered).
EPFO registration once headcount reaches 20 — not yet triggered at 15, but worth monitoring closely as the unit grows.

Common mistakes

Assuming factory licensing and Shops and Establishments both apply. They are alternatives based on the factory threshold, not additive requirements.
Skipping pollution clearance because the activity "doesn't feel" heavily polluting. Confirm your Pollution Index category directly rather than assuming.
Treating FSSAI as irrelevant to manufacturing. Any food-output manufacturing activity needs it, in addition to standard manufacturing compliance.
Not tracking the worker count against both the EPFO (20) and factory-licence (20 with power / 40 without) thresholds simultaneously. These are separate triggers that happen to share the number 20 in one common scenario, which causes confusion about which obligation is actually active.

What to do next

Count your current worker headcount against both the ESIC (10 for factories), EPFO (20), and factory-licence (20 with power/40 without) thresholds separately — they are not the same trigger.
Confirm your specific manufacturing activity's Pollution Index category with your State Pollution Control Board before assuming exemption.
If your output is food in any form, add FSSAI to your list — it does not substitute for, and is not substituted by, factory or pollution compliance.
Sequence pollution clearance (Consent to Establish) and Fire NOC before committing to construction or fit-out, not after.