Factory License Requirements for Installing a DG Set: Two Tracks, Three Overlaps

Here’s a mix-up we see constantly: a business assumes that because they already hold a factory license, their diesel generator is automatically covered by it. Or the reverse – they get their DG set’s pollution and electrical approvals sorted and assume the factory license process will be a formality on top. Neither assumption holds. A factory license under the Factories Act, 1948, and the approvals your DG set needs under environmental and electrical law are two genuinely separate regulatory tracks, run by different departments, under different laws, for different purposes. One is about the safety and welfare conditions of a manufacturing workplace. The other is about the emissions, noise, and electrical safety of a specific piece of equipment.

They do intersect – at exactly three points, as it turns out – but understanding them as two tracks that occasionally touch, rather than one combined process, is what keeps businesses from either duplicating paperwork or, worse, assuming coverage they don’t actually have.

The confusion is understandable, honestly. Both tracks involve a site visit. Both ask for a building plan. Both eventually produce a certificate you’re expected to display or keep on file. It’s easy to see two bureaucratic processes that look similar on the surface and assume they’re one process with two names. But the moment an inspector from either side shows up – a labour department factory inspector checking worker safety provisions, or a pollution board officer checking your generator’s emission-control hardware – the difference becomes very concrete very quickly, because each is checking against a completely different legal standard.

Track A: The Factory License Itself

What it is: A mandatory authorisation under the Factories Act, 1948, permitting a business to operate as a “factory” – broadly, premises where a manufacturing process is carried out with the aid of power and ten or more workers, or without power and twenty or more workers. It has nothing to do with your DG set specifically; it’s about the workplace as a whole – working conditions, safety, health, and welfare provisions for the workforce.

Who issues it: The state Labour Department, or the Chief Inspector of Factories for that state. In Delhi, for instance, licenses are granted specifically within conforming Industrial Areas, with limited exceptions for public utility operations.

Applicability threshold: This is worth stating precisely because it’s the most commonly misquoted number in factory-compliance discussions – the Act’s threshold is workers, not equipment. Ten or more workers with the aid of power, or twenty or more without, triggers the requirement, regardless of whether the business has a diesel generator at all.

What the application typically requires:

• Identity proof for the occupier (proprietor, partner, director, or a formally nominated representative) and the factory manager
• A board resolution or NOC establishing who the occupier is, where applicable
• Proof of premises ownership or a registered lease
• A building plan
• Latest electricity bill for the premises
• A manufacturing process flowchart
• Lists of raw materials and machinery – and this is where your DG set enters the conversation, because generating equipment is typically declared as part of the installed machinery and horsepower calculation
• NOCs from the fire department and pollution control board, submitted as supporting documents

Fee structure: Fees generally scale with installed horsepower and the number of workers employed, and in several states, including Delhi, they explicitly range from a modest baseline (around ₹100) up to a considerably higher ceiling (around ₹20,000) depending on scale – with fees typically non-refundable once paid, so it’s worth getting your declared horsepower and worker count right before filing rather than adjusting after payment.

Process and timeline: Applications are generally reviewed online, with a short window – often just a few days – to correct any deficiency the department flags before the application risks rejection. Once complete, the department typically conducts a physical inspection of the premises before granting the license, and Delhi’s process, for example, targets licence issuance within about a month of a complete application.

Renewal: Factory licenses aren’t permanent – validity typically runs from one to five years depending on the state, and renewal has to happen before expiry to avoid the same non-compliance exposure as never having held a license at all. Treat renewal as its own recurring compliance calendar item, separate from whatever renewal cycle your DG set’s Consent to Operate or electrical re-verification runs on – the two rarely align to the same date, and tracking them together in one place is the only reliable way to avoid one quietly lapsing while attention is on the other.

Track B: DG Set Clearances

We’ve covered this track in full detail in our guide to getting a pollution NOC for a DG set, so we’ll keep this summary brief rather than duplicate it. In short, your diesel generator needs clearance from three separate authorities regardless of whether your premises is a licensed factory: the electrical inspector (safety of the installation itself), the pollution control board (Consent to Establish and Consent to Operate, including RECD or dual-fuel compliance where your capacity band requires it), and the fire department (DG room and fuel storage safety). None of these three approvals are issued by the labour department, and none of them are a byproduct of holding a factory license.

If your facility sits in Delhi-NCR, add CAQM’s capacity-band rules under Direction No. 76 on top of this – our GRAP rules for DG sets in Delhi-NCR post covers exactly which capacities require dual-fuel conversion versus a certified RECD.

Where the Two Tracks Actually Intersect

Given that these are run by entirely different departments under entirely different laws, it’s worth being specific about exactly where they touch – because it’s fewer places than most people assume, and knowing which three points matter saves you from over-preparing in the wrong places.

Intersection 1: Your DG set’s capacity feeds into the factory license’s horsepower and machinery declaration. When you list installed machinery and horsepower on your factory license application, your generator counts. Get the kVA-to-horsepower conversion right and keep it consistent across both your DG set filings and your factory license application – a mismatch between what you declared to the labour department and what you declared to the pollution board or electrical inspector is exactly the kind of discrepancy that draws scrutiny during either department’s inspection.

Intersection 2: The fire department NOC is genuinely shared ground. Fire safety clearance for your factory premises as a whole, and fire safety clearance for your DG room and fuel storage specifically, are closely related – in many cases, the same fire department visit and largely the same building plan cover both, though the DG room typically needs its own specific sign-off within the broader fire NOC rather than being automatically included. Coordinate this application once, covering both scopes, rather than filing with the fire department twice.

Intersection 3: Pollution clearance is a prerequisite document for the factory license, not an independent parallel track. This is the intersection people miss most often. Factory license applications typically require a pollution department authorisation letter as a supporting document – meaning your DG set’s Consent to Establish or Consent to Operate (or your broader facility’s pollution consent, which will reference the DG set) needs to already exist, or be sufficiently in process, before your factory license application can be considered complete. Filing for your factory license before your pollution consent is underway is one of the more common reasons factory license applications sit incomplete.

It’s worth restating why this matters practically rather than just as a legal technicality: businesses that treat the two tracks as one process tend to either over-file (submitting the same DG-set technical documentation to the labour department in far more detail than it actually asks for, wasting time on paperwork nobody there will review) or under-file (assuming a supporting document mentioned once, like the pollution authorisation letter, means the whole DG-set clearance process has effectively been absorbed into the factory license and doesn’t need independent attention). Neither error is really about missing information – it’s about misunderstanding which of the three intersection points is doing the actual work of connecting the two tracks.

Outside these three points, the tracks run independently. Your electrical inspector approval, your DG set’s noise compliance, your pollution board’s site inspection of the generator itself – none of these are factory-license concerns, and your factory license’s worker-welfare provisions, safety committee requirements, and working-hours compliance aren’t DG-set concerns either.

Scenario 1: You’re Adding a DG Set to an Already-Licensed Factory

This is the more common real-world scenario – a facility that already holds a valid factory license decides to install a backup generator, whether because of grid unreliability, expansion, or a new GRAP-related compliance push.

In this case, your factory license itself generally doesn’t need to be reopened just because you’re adding equipment – but check your state’s specific rules, because some jurisdictions treat a material change in installed horsepower or machinery as requiring an amendment to the existing license rather than treating it as incidental. What you do need to do, regardless, is run the full DG set clearance track (Track B above) independently: electrical inspector approval, pollution board consent covering the new equipment specifically, fire department sign-off for the DG room, and RECD or dual-fuel compliance if your capacity band requires it. Don’t assume your existing factory license’s fire or pollution clearances automatically extend to cover a new piece of equipment installed after the fact – in most cases, they don’t, and the DG-specific approvals need to be sought fresh.

Scenario 2: You’re Setting Up a New Factory With a DG Set From Day One

Here, sequencing the two tracks together properly can save real time, because of Intersection 3 above. A sensible order looks like this: settle your site layout and DG set specification early, since both tracks will ask for it; begin your DG set’s pollution board Consent to Establish and fire department process in parallel with your factory license application rather than sequentially; and hold off on finalising your factory license submission until your pollution clearance is at least filed, since the labour department will typically want to see that as a supporting document. Filing your factory license application first, with the pollution NOC listed as “pending,” tends to slow things down more than starting both tracks together and letting the pollution track feed into the factory license once it clears.

For the DG-set-specific portion of this sequencing – including realistic week-by-week timing – our DG set registration process guide for Delhi NCR is a useful companion if your facility sits within NCR.

Two Misconceptions Worth Correcting Directly

“My factory license covers my generator’s pollution compliance.” It doesn’t. The factory license process asks to see your pollution clearance as a supporting document; it doesn’t issue or substitute for one. Your DG set’s Consent to Operate, RECD or dual-fuel certification, and electrical inspector approval remain entirely separate obligations that don’t lapse or get satisfied just because your factory license is current.

“I don’t need a factory license because my DG set is fully compliant.” Also not connected. DG set compliance says nothing about whether your broader manufacturing operation meets the worker-count threshold that triggers factory license requirements in the first place. A fully compliant generator sitting inside an unlicensed factory doesn’t make the factory license unnecessary – the two obligations are triggered by entirely different facts (worker count and manufacturing activity versus equipment type and capacity).

If your business isn’t a manufacturing facility at all – a commercial building, a residential society, or a data centre running backup power – the factory license track likely doesn’t apply to you in the first place, and only Track B matters. Our comparison of residential vs. industrial diesel generator use cases is a useful check if you’re unsure which category your installation falls into.

Two Different Inspections, Two Different Checklists

It’s worth being clear that the physical inspection your factory license process involves and the inspection your DG set undergoes are not the same visit, don’t check the same things, and in most states aren’t even conducted by people from the same department.

A factory license inspection, carried out by or on behalf of the Chief Inspector of Factories, is looking at the workplace as a whole – safety provisions like fire exits and first-aid arrangements, working-hours and welfare compliance, machine guarding, ventilation and lighting in work areas, and whether what’s physically installed matches the machinery list declared in the application. Your DG set is one line item among many in that inspection, checked mainly for whether it matches what you declared, not for its emissions or noise performance.

A pollution board inspection of your DG set, by contrast, is narrowly focused on the generator itself – whether a mandated RECD or dual-fuel kit is actually installed and functioning, whether declared capacity matches what’s on site, stack height, and operating records. An electrical inspector’s visit is narrower still, checking wiring, earthing, and the changeover arrangement specifically. None of these three inspecting parties is checking the other two departments’ requirements, which is exactly why passing one inspection provides no assurance about the others. If you want the specifics of what a pollution board visit actually involves, start to finish, we’ve laid that out separately in what happens during a pollution control board inspection.

A Combined Document Checklist, Mapped to Each Track

Because a handful of documents genuinely serve double duty across both tracks, here’s a consolidated view of what you’ll need and where it’s actually used, so you’re not producing the same document twice under different cover letters:

Document	Used for factory license	Used for DG set clearances
Site/building layout plan	Yes – required for the application	Yes – required by electrical inspector, pollution board, and fire department
Fire department NOC	Yes – required supporting document	Yes – DG room and fuel storage specifically
Pollution board authorisation letter	Yes – required supporting document	This is the DG set’s Consent to Establish/Operate
Machinery and horsepower list	Yes – DG set capacity included here	Indirectly – capacity must match what’s declared to the pollution board and electrical inspector
Single-line electrical diagram	No	Yes – electrical inspector requirement specifically
RECD/dual-fuel certification	No (not directly requested)	Yes – precondition for pollution consent above threshold capacities
Latest electricity bill	Yes	Sometimes, as premises proof
Occupier/business identity proof	Yes	Yes, across all three DG gates

Where a document serves both tracks, prepare it once and keep consistent figures – especially declared capacity – across every filing it goes into.

A Note on State Variation

Factory license processes vary meaningfully by state – fee slabs, validity periods, and even which industrial areas are eligible for licensing at all differ between, say, Delhi’s conforming-industrial-area restriction and how other states structure eligibility. What doesn’t vary is the underlying structural point of this article: the factory license and DG set clearance tracks remain separate everywhere, even where local process details differ. If you’re checking your specific state’s DG set requirements alongside your factory license process, our DG set emission regulations page indexes current notifications by state.

Frequently Asked Questions

Do I need a factory license just because I have a DG set? No. The factory license requirement is triggered by worker count and manufacturing activity (ten or more workers with power, twenty or more without), not by owning a diesel generator. Plenty of non-manufacturing businesses run DG sets without ever needing a factory license, because Track B applies to them and Track A simply doesn’t.

If I already have a factory license, do I still need separate pollution consent for my DG set? Yes. The factory license process asks to see proof of pollution clearance as a supporting document – it doesn’t replace the need to actually obtain and maintain that clearance for the generator itself, including RECD or dual-fuel compliance where applicable.

Does adding a DG set require me to amend my existing factory license? It depends on your state’s specific rules around material changes to declared machinery and horsepower – some jurisdictions require an amendment, others treat it as incidental as long as it doesn’t change your worker-count classification. Check with your state’s labour department directly rather than assuming either way.

Can I get my factory license before my DG set’s pollution consent is finalised? You can typically begin the process, but most labour departments will want to see the pollution authorisation as a supporting document before granting the license, which is why starting both tracks in parallel – rather than sequentially – tends to be faster overall.

What happens if I run a DG set in a licensed factory without the separate electrical, pollution, and fire approvals? You’d be exposed to the same enforcement risk as any unregistered DG set, regardless of your factory license status – the two are independent, and one being current doesn’t shield the other from penalties. Our detailed breakdown of penalties for running an unregistered diesel generator covers exactly what that exposure looks like.

Is the factory license fee affected by whether I have a DG set? Indirectly, yes, in states where fees scale with installed horsepower – since your generator’s capacity typically feeds into the total horsepower figure used to calculate the fee slab, adding a DG set (or upgrading its capacity) can shift you into a higher fee bracket even though the fee itself isn’t a DG-specific charge.

If my factory license lapses, does that affect my DG set’s pollution consent or electrical approval? Not directly – the two tracks remain independent even at the point of lapse, so a lapsed factory license doesn’t automatically invalidate your DG set’s separate approvals. That said, operating an unlicensed factory is its own serious compliance failure, and an inspection triggered by that issue would very likely also surface any DG-set-side gaps at the same time.

Getting Both Tracks Moving Together

The cleanest path through both tracks is to stop treating them as sequential – settle your DG set’s capacity and emission-control approach (RECD or dual-fuel) early enough that it can feed into your factory license’s machinery declaration and supporting pollution documentation at the same time, rather than after.

If the emission-control piece is what’s still outstanding, Aceget’s retrofit emission control devices come with CPCB-tested documentation that works for both your pollution board filing and, indirectly, the supporting paperwork your factory license application will ask to see. Get in touch if you’d like help figuring out which track to start first for your specific setup.