A Complete Guide to Obtaining Your Factory License (DIFE) in Bangladesh

Dhaka, Bangladesh – For any entrepreneur or corporation looking to establish and operate a manufacturing unit in Bangladesh, securing a Factory License from the Department of Inspection for Factories and Establishments (DIFE) is a non-negotiable legal prerequisite. This crucial license ensures that a factory operates in compliance with the Bangladesh Labour Act, 2006, safeguarding workplace safety, worker welfare, and environmental standards.

Operating a factory without this valid license is illegal and can lead to severe consequences, including factory closure, hefty fines, and legal action. This guide, prepared by the experts at LegalSeba LLP, provides a comprehensive walkthrough of the entire process to ensure your business remains compliant and operates smoothly.

Understanding the License: Factory vs. Establishment

Under the labour laws of Bangladesh, every commercial or industrial entity requires a license from DIFE. It’s important to distinguish between two main types:

• Factory License: This is required for any premises where a manufacturing process is carried on, typically involving machinery and a specified number of workers.
• Establishment License: This applies to other commercial entities that do not have a factory, such as shops, commercial banks, insurance companies, and corporate offices.

This article focuses specifically on the process for obtaining the Factory License.

The Regulatory Authority: DIFE

The Department of Inspection for Factories and Establishments (DIFE) is the sole government body responsible for issuing and renewing Factory Licenses. Operating under the Ministry of Labour and Employment, DIFE is pivotal in enforcing labour laws and ensuring safe and healthy work environments across the nation.

Key Contact Information:

• Name: Department of Inspection for Factories and Establishments (DIFE)
   
• Address: Shromo Bhaban, 196, Shaheed Syed Nazrul Islam Soroni, Bijoynagar, Dhaka-1000
• Official Website: dife.gov.bd

The Modern Application Process: Step-by-Step Guide

Thanks to digitalization, the application process is now streamlined through the Labour Inspection Management Application (LIMA) portal, enhancing efficiency and transparency.

Step 1: Online Registration and Application Submission

1. Visit the LIMA Portal: The process begins on the LIMA online portal.
    
2. Create an Account: You will need to create a User ID and Password to access the system.
3. Complete the Application Form: Fill out the designated application form (Form 77) with all the essential information about your factory.
    
4. Upload Required Documents: Scan and upload all the necessary documents. (See the detailed list below).
5. Submit the Application: Once the form is complete and all documents are uploaded, submit the application through the portal. You will receive a tracking number to monitor its progress.

Step 2: Fee Payment

• After submitting the application, you must pay the requisite government fees.
   
• Payment is made via a Treasury Challan at a designated bank.
• Treasury Challan Code: 1/1136/0005/1854
   
• Value Added Tax (VAT): A 15% VAT is applicable on the total license fee.
• The base fee is determined by DIFE, often based on the number of workers employed. It is crucial to verify the exact fee amount on the LIMA portal at the time of application.

Step 3: Document Review and Physical Inspection

1. Initial Review: The submitted application and documents are reviewed by the Deputy Inspector General (DIG) at DIFE.
    
2. Inspector Assignment: The file is forwarded to the inspector assigned to your factory’s geographical area.
3. On-Site Inspection: The DIFE inspector will schedule and conduct a physical visit to your factory premises. The purpose of this inspection is to:
   • Verify the information provided in the application.
   • Assess compliance with health, safety, and environmental standards as per the Bangladesh Labour Act.
      
   • Check for adequate safety measures, such as fire safety equipment, emergency exits, building integrity, and first-aid facilities.

Step 4: License Issuance

1. Inspector’s Report: Following the visit, the inspector submits a detailed report of their findings to the DIG.
    
2. Final Approval: If the DIG is satisfied that all legal requirements and safety standards are met, the application is approved.
    
3. License Grant: The Factory License is then officially issued. Applicants are typically notified via email and can download the license from the LIMA portal.

The official processing time is approximately 15 working days, provided all documents are in order and the inspection is satisfactory.

Gathering the correct documentation is the most critical part of the process. While specific requirements may vary slightly based on the industry, the following list is comprehensive. Attestation by a First-Class Gazetted Officer may be required for some copies.

• Completed Application Form (Form 77) submitted via the LIMA portal.
   
• Original Treasury Challan as proof of fee and VAT payment.
   
• Copy of a valid Trade License.
• Copy of Company’s Tax Identification Number (TIN) Certificate.
• For Limited Companies: Certified copies of the Memorandum and Articles of Association, and Certificate of Incorporation.
• For Partnership Firms: Copy of the Partnership Deed.
• Ownership/Tenancy Documents:
  • Copy of the rental agreement/lease deed.
  • Alternatively, land ownership documents (e.g., Mutation copy).
• National ID Card of the factory owner, Managing Director, or CEO.
• Factory Layout Plan: An approved layout plan of the factory premises, often requiring prior approval from a relevant authority.
   
• List of Employees and Workers detailing their designations.
• Proof of Compliance:
  • Copy of a valid Fire License from the Fire Service and Civil Defense (FSCD).
     
  • Environmental Clearance Certificate (ECC) from the Department of Environment (DoE).
     
  • For construction, a Load Bearing Capacity Certificate and Structural Design/Drawing prepared by a certified engineer may be required.
     
• Recent Electricity Bill or demand note for the premises.

Navigating this extensive list of documents can be daunting. LegalSeba LLP offers expert assistance in compiling, reviewing, and ensuring the accuracy of your application package to prevent delays.

Renewing Your Factory License

A Factory License is typically valid for one year and must be renewed annually before 31st December. The renewal process is similar to the initial application and is also done through the LIMA portal.

Required Documents for Renewal:

• Completed Renewal Application Form.
• Original Factory License (previous year).
• Original Treasury Challan for the renewal fee and VAT.
• Copy of the updated Trade License.
• Updated list of employees.
• Copy of the renewed Fire License.

Late Renewal Penalties: Failure to renew on time incurs significant penalties on the renewal fee:

• Within 3 months of expiry: 25% penalty
• Within 6 months of expiry: 50% penalty
• Beyond 6 months of expiry: 100% penalty

Consequences of Non-Compliance

Operating a factory without a valid DIFE license is a serious offense with severe repercussions:

• Forced Closure: DIFE has the authority to shut down the factory immediately.
• Financial Penalties: Substantial fines can be imposed on the factory owner.
• Legal Action: The government can initiate legal proceedings against the owner.
• Reputational Damage: Operating illegally severely damages business credibility with buyers, financial institutions, and partners.
• Risk to Workers and Environment: Non-compliant factories often compromise the safety and well-being of their workers and negatively impact the environment.

How LegalSeba LLP Can Assist You

The process of obtaining a DIFE Factory License, while streamlined, remains complex and document-intensive. Any errors or omissions can lead to costly delays and potential rejection.

The expert team at LegalSeba LLP provides end-to-end solutions to make this process seamless for you. We offer:

• Comprehensive Consultation: Understanding your specific factory requirements.
• Document Preparation and Vetting: Assisting in gathering, preparing, and verifying all necessary documentation to ensure a complete and accurate submission.
• Application Management: Managing the entire application process on the LIMA portal on your behalf.
• Liaison with DIFE: Coordinating with the authorities and providing prompt responses to any queries.
• Renewal Services: Proactively managing your annual license renewal to ensure you never miss a deadline.

Contact Us

For more information or to begin the process of DIFE Factory License in Bangladesh, contact LegalSeba LLP today. Our team is ready to provide you with tailored assistance to ensure a seamless setup.

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