Factory Licensing for Foreign Manufacturers in India

Factory Licensing for Foreign Manufacturers in India

The VCL Stance: Structuring Industrial Operations. Foreign manufacturing enterprises establishing manufacturing plants in India must obtain licenses under state and federal industrial laws. Navigating these requirements demands coordination with pollution control boards, local municipal bodies, and state industrial development departments. At Vera Causa Legal, our Global Services desk provides foreign manufacturers with a structured roadmap to secure approvals and ensure compliance.

II. Core Approvals and Registrations

Setting up an industrial facility involves several sequential statutory approvals:

• Consent to Establish (CTE) & Consent to Operate (CTO): Securing permissions from the State Pollution Control Board (SPCB) under the Air (Prevention and Control of Pollution) Act, 1981 and the Water (Prevention and Control of Pollution) Act, 1974.

• Factory License: Obtaining approval under the Factories Act, 1948, which governs worker safety, working hours, and operational conditions in manufacturing facilities.

• Power & Water Sanctions: Liaising with state electricity boards and local municipal corporations for utility allocations.

III. FDI and Trade Compliance in Manufacturing

Foreign Investment and Import Regulations

Industrial operations must align with cross-border trade guidelines:

• FDI in Manufacturing: Under current guidelines, 100% FDI is permitted under the automatic route in manufacturing sectors, including contract manufacturing.

• Import of Capital Goods: Registering with the Directorate General of Foreign Trade (DGFT) to obtain an Import Export Code (IEC) and utilizing schemes like EPCG (Export Promotion Capital Goods) for customs duty exemptions on machinery.