Factory License in Bangladesh: DIFE Layout Plan Approval, Licence and Renewal in 2026

Factory license Bangladesh: the DIFE framework in 2026

A factory license Bangladesh inspectors will accept is not a single certificate collected at the end of a project. It is the last link in a chain that starts with the building, runs through a layout plan approved by the Department of Inspection for Factories and Establishments (DIFE), and depends on a fire licence and an environmental clearance being in place. Section 326 of the Bangladesh Labour Act 2006 sets the framework, the Bangladesh Labour Rules 2015 set the forms and procedure, and the Bangladesh Labour (Amendment) Act 2026 has just rewritten the renewal rule.[2] [3]

This guide is about the DIFE permissions themselves: when layout plan approval is required, what the licence covers, how renewal now works after the 2026 amendment, the fire and environmental prerequisites that DIFE expects to see, and how the route changes inside an export processing zone or an industrial area under the Invest Bangladesh Act 2026. The wider sequence of company formation, funding and site selection is covered in our separate guide to factory setup in Bangladesh, and is not repeated here.

Summary: DIFE controls two permissions for a factory: prior written approval of the layout plan before the factory is built, established or expanded, and a licence to operate. Both rest on section 326 of the Labour Act. Since the Bangladesh Labour (Amendment) Act 2026, the statute provides for licences to be renewed every five years, with one-year licences for contractor agencies, although DIFE field offices were still issuing one-year renewals in May 2026 while fees and procedures were settled. A fire licence from the Fire Service and Civil Defence and an environmental clearance from the Department of Environment are separate legal requirements that DIFE treats as part of the licence file.

Key point: Section 81 of the Bangladesh Labour (Amendment) Act 2026 (Act No. 43 of 2026) substituted section 326(1)(b) of the Labour Act so that factory and establishment licences are renewed every five years, while a contractor agency's licence stays valid for one year. Until DIFE notifies the new fees and procedure, plan on annual renewal and keep every supporting certificate current.

At a glance

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Table of Contents

Why a factory license Bangladesh inspectors accept starts with section 326

Section 326 of the Bangladesh Labour Act 2006 is headed "approval of plans and fees for licences and registration". It gives the Government two powers. Under clause (a), it may direct that any factory, or class of factories, must not be built, established or expanded without the prior written permission of the Chief Inspector, obtained in the manner prescribed by rules. Under clause (b), it may direct any establishment, factory or class of factories to obtain a licence.[2] The Chief Inspector is the head of DIFE, which now operates under an Inspector General.[6]

Two features of the section are easy to miss. First, the licence power is not limited to factories: shops, commercial establishments and other establishments can be brought within it, which is why DIFE issues establishment licences as well as factory licences. Second, the section is procedural as much as substantive. Registration, licensing and renewal must follow the procedure in the rules and the fees the Government fixes from time to time, so the operative detail sits in the Bangladesh Labour Rules 2015 and DIFE's notified fee schedule rather than in the Act itself.[2]

The notice that precedes operation

Section 325 adds a separate obligation. Every employer must send the Chief Inspector a notice at least fifteen days before starting work in the establishment, giving its name and location, the employer's name and address, the nature of the work, the nature and quantity of power used, the manager's name and the estimated number of workers. Seasonal factories that run for fewer than 180 working days a year must give thirty days' notice before restarting, and a change of manager must be notified within seven days.[1] The notice is not a licence, but a missing notice is one of the first gaps an inspector records.

How DIFE processes applications

Since 2018, DIFE has run applications through the Labour Inspection Management Application (LIMA). Its factory and establishment database module allows employers to apply online for layout plan approval and for a factory licence, and inspection data feeds into the same record.[7] In practice that means inconsistencies between what was approved, what was built and what an inspector sees on site are visible in one place.

Layout plan approval from DIFE

This approval is DIFE's permission to build, establish or expand a factory on a particular plan. The approved plan records the floor-by-floor arrangement of production areas, machinery, exits, stairs, storage and welfare facilities, and it becomes the benchmark against which every later inspection and licence application is measured. A factory license Bangladesh officials issue is, in substance, confirmation that the factory operates as the approved layout plan describes.

When approval is required

Approval is required before construction, establishment or expansion. The Act explains what does not count as expansion: replacing or changing machinery or machine parts, or adding new machinery within limits set by the rules.[2] Anything beyond that, such as adding floors, converting storage into production space or adding a new process line, should be treated as expansion and approved before work starts. Owners who expand first and seek approval afterwards create a mismatch that surfaces at licence renewal.

The structural design cannot be changed by the layout

A proviso inserted into section 326(1)(a) by the 2013 amendment provides that the structural design of the factory building approved by the competent authority must not be altered or departed from in the layout plan for installing machinery.[2] DIFE's layout approval therefore sits on top of the building approval issued by RAJUK, a city corporation, a municipality or the zone authority; it does not replace it. A layout that loads machinery onto floors not designed for it, or removes columns or stair cores, will not be approved.

Documents usually required

The layout application is made on Form 76 with a treasury challan for the fee. A 2022 Centre for Policy Dialogue study of factory set-up procedures listed the supporting documents as the trade licence, the rent agreement or land documents, the national identity card of the owner or managing director, a soil test report, structural design and drawings by a recognised engineer or consulting firm, a load-bearing capacity certificate, a building construction certificate and the city corporation-approved building design.[8] Check the current LIMA checklist before filing, because DIFE adjusts document lists by notice.

If DIFE does not respond, or refuses

Section 326(2) provides that if the Chief Inspector gives no order or direction within three months of receiving an application with plans, the owner may apply to the Government for a remedy within the next thirty days. Before 2013, silence for two months meant the permission was deemed granted; that deemed approval no longer exists. Under section 326(3), a refusal of permission for construction, expansion, registration or licensing may be appealed to the Government within sixty days.[2] Both windows are short, so diarise them from the date of filing.

The DIFE factory licence and what it covers

The factory licence is DIFE's permission to operate the factory as approved. It is issued against the approved layout, the building approvals and a site inspection, and it records the licensed workforce and activity. For any factory license Bangladesh application, the application form is Form 77, again with a treasury challan for the fee.[8]

Documents for a new licence

The CPD study listed the trade licence, the rent agreement or land documents, the owner's or managing director's national identity card, the electricity demand note, the memorandum of association, the approved factory layout plan, the city corporation-approved building design and approval letter, the original treasury challan, a list of employees and a copy of the fire licence.[8] Where the unit needs an environmental clearance, expect DIFE to ask for that certificate too. The point to take from the list is that DIFE expects the file to tell one consistent story: the same legal entity, the same address, the same floor areas and the same workforce across every certificate.

Our guides to the trade licence in Bangladesh cover the first of those documents.

Fees

Section 326 leaves fees to the Government, which fixes them from time to time.[2] Fees are paid by treasury challan. Because the 2026 amendment changes the renewal period, DIFE has said the five-year licence will operate once the fees and procedure are settled, so a revised schedule is expected.[6] Quote the fee from the live LIMA system on the day of filing rather than from any published table.

Inspection and grant

After filing, an inspector visits the site and reports to the responsible DIFE office, which grants the licence or raises queries. The inspection looks at the matters the Labour Act regulates directly: building and machinery safety, exits and fire precautions, lighting and ventilation, sanitation, welfare facilities, and the records the employer must keep. Under section 61, an inspector who finds a building, machinery or the internal electrical system dangerous may order remedial measures, and where the danger is imminent may prohibit use until it is repaired.[1] A licence application is often the occasion on which such orders are first made.

Changes after grant

A factory license Bangladesh law grants is tied to the licensee, the premises and the approved layout. A change of owner or name, a move to new premises, an increase in workforce into a higher fee band or a physical expansion should each be treated as a licence event and raised with DIFE before it happens. Buyers of an operating plant should check that the licence, layout approval and supporting certificates match what is being bought; our analysis of buying an existing factory in Bangladesh explains how those gaps become liabilities.

Renewal after the Bangladesh Labour (Amendment) Act 2026

Renewal is where the law changed most in 2026. The Bangladesh Labour Rules 2015 made DIFE licences valid for one year, so every factory renewed annually. In November 2025 the interim government's advisory council approved a draft extending the renewal period for factory, shop and establishment licences to five years, with contractor organisations kept on one-year licences. DIFE had argued that inspectors were spending too much time on licensing paperwork instead of inspections.[5]

The change was carried through the Bangladesh Labour (Amendment) Ordinance 2025 and then into statute. Parliament passed the Bangladesh Labour (Amendment) Bill 2026 on 9 April 2026, enacting the ordinance with amendments, and the resulting Act No. 43 of 2026 is dated 10 April 2026.[3] [4] Section 81 of that Act substituted section 326(1)(b): licences must now be renewed every five years, except that a contractor agency's licence is valid for one year, and registration, licensing and renewal follow the procedure in the rules and the fees the Government fixes.[2]

What happens in practice in 2026

The statute has moved faster than the system. At a meeting with BGMEA on 18 May 2026, DIFE's Inspector General, Md Farhad Siddique, said the five-year renewal would take effect once fees and procedural matters were settled; BGMEA noted that field-level renewals were still being issued for one year.[6] Until DIFE notifies the new procedure and fees, the safe course is to renew on the existing annual cycle and treat the five-year term as the statutory entitlement that will apply once implemented.

What a renewal file needs

A renewal is not a formality. DIFE reviews the latest inspection findings, and the supporting certificates must themselves be current: a lapsed fire licence or environmental clearance will hold up the factory license Bangladesh renewal even when the DIFE fee is paid. Keep the updated trade licence, employee list, fire licence and clearance certificate on a single compliance calendar. A factory operating on an expired licence is exposed to prosecution.

Why five years does not mean five years of silence

A longer licence term reduces paperwork, not inspection. The Financial Express reported concern within DIFE that some owners might neglect safety once renewal became less frequent.[5] Expect DIFE to rely more heavily on risk-based inspection through LIMA, and expect a five-year licensee to be held to its approved layout throughout the term. Remediation commitments under the national initiative for garment factories also continue; DIFE said in May 2026 that about 1,500 factories were under that monitoring.[6]

Fire licence: the parallel requirement

The fire licence is not issued by DIFE, but a factory license Bangladesh application is rarely complete without it. Section 4 of the Fire Prevention and Extinguishing Act 2003 requires anyone who wants to use a building or premises as a warehouse or workshop to obtain a licence from the Director General of the Fire Service and Civil Defence.[9]

Timelines and renewal

The Director General must grant the licence within ninety days of receiving an application if satisfied that the Act and rules are met; if not satisfied, the applicant must be heard and a decision given within 120 days. A review lies to the Director General within thirty days of an officer's decision, and an appeal to the Government within thirty days of the Director General's decision. Unless the Director General directs otherwise, the licence may be renewed every year on payment of the prescribed fee, and both the application fee and the licence fee are paid by treasury challan.[9]

Transfer and penalties

A fire licence is not transferable. When ownership of the building or premises changes, the new owner may not use it as a warehouse or factory without a licence in its own name.[9] Using a building or place as a warehouse or factory without a licence is punishable under section 17 with imprisonment of not less than three years and an additional fine, and the goods kept there are liable to confiscation.[9] Separately, section 7 of the Act deals with fire-safety approval of designs for multi-storey and commercial buildings, which is why the fire safety plan should be settled at the building design stage, not after construction.

Fire documentation typically includes the trade licence, land or tenancy documents, the building design prepared by an engineering firm, the memorandum of association and, for multi-storey buildings, the fire safety plan; EPZ units add a cover letter from BEPZA.[8]

Environmental clearance as a licensing prerequisite

Section 12 of the Environment Conservation Act 1995 provides that no industrial enterprise may be established, and no project undertaken, without an environmental clearance from the Director General of the Department of Environment, and that expansion requires clearance through the prescribed procedure.[10] The Environment Conservation Rules 2023 classify industrial units into green, yellow, orange and red categories according to their pollution potential, and set the procedure for obtaining the clearance certificate and its validity.[11]

For DIFE purposes, the practical point is sequencing. The site layout submitted to the Department of Environment, including the effluent treatment plant, must match the layout plan approved by DIFE and the building as constructed. Category, validity and renewal of the clearance, and the operating duties that follow, are covered in detail in our guides to environmental impact assessment in Bangladesh and environmental compliance in Bangladesh.

Authorities involved in the licensing chain

A factory license Bangladesh project typically engages at least five public bodies, and each holds a veto over the next stage.

The common failure is treating these as separate errands. Each authority looks at the same building through a different lens, and a discrepancy in one file is usually discovered by another. Appointing one internal owner for the whole chain, with a single set of drawings and corporate documents, prevents most of the delays we see.

Zone routes: BEPZA and Invest Bangladesh industrial areas

Location changes the route. Inside an export processing zone, the Bangladesh EPZ Labour Act 2019 (Act No. II of 2019) governs employment, applies to workers and employers in zones under BEPZA, and provides that its provisions prevail over any other law in force.[14] BEPZA appoints its own Inspector General and inspectors to inspect zone enterprises, and an enterprise operates in a zone on the basis of BEPZA's approval.[14] For an EPZ unit, BEPZA's permission and inspectorate are therefore the starting point, and the zone authority should confirm which steps described above it handles itself; fire and environmental requirements still have to be met.

Invest Bangladesh after Act No. 104 of 2026

Outside the EPZs, the Invest Bangladesh Act 2026 (Act No. 104 of 2026, dated 16 July 2026) merged BIDA, BEZA and the PPP Authority into Invest Bangladesh, which began operating on 23 August 2026 under the Prime Minister's Office.[12] [13] BEPZA is not part of the merger. Three provisions matter for factory licensing.

• Registration with deadlines: section 28 requires private-sector industrial projects to register with the Authority. When it registers a project, the Authority may set deadlines for issuing or renewing clearances and certificates on environment, fire safety, construction, boilers and explosives, and for any licence or permit needed to set up or run the industry. Its decision is treated as the decision of the authority legally empowered to decide, and recipients must act within the time set.[12]
• Exemptions by notification: section 26 allows the Government, by gazette notification, to exempt industrial-area developers, operators and enterprises from, or modify, listed laws including the Building Construction Act 1952, the Fire Prevention and Extinguishing Act 2003 and the Boiler Act 2022. The Labour Act 2006 is not on the list, although the Government may add other laws by notification.[12]
• Single digital platform: section 50 requires all service-providing organisations to connect to a single digital platform for approvals, licences and permits, and separate one-stop portals are to migrate to it within a cut-off timeline.[12] Invest Bangladesh has said it is working on a 14-day business licensing framework.[13]

The practical effect is that a registered project can ask Invest Bangladesh to hold DIFE, the fire service and the Department of Environment to a timetable, but cannot assume the underlying requirements fall away unless a specific notification says so. Our analysis of the Invest Bangladesh Act 2026 industrial-area framework and of investment approvals through Invest Bangladesh and BEPZA explains the entry routes, and our note on relocating a factory into an economic zone covers the move itself.

Step-by-step: obtaining a factory license Bangladesh authorities will grant

The order below reflects how DIFE and the parallel authorities rely on each other's approvals. Running the stages out of order is the most common cause of rejected files.

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Two disciplines apply throughout. Keep a single master set of drawings, revised only through a controlled process, and keep the legal entity, address and workforce figures identical across every form. Where the plant sits in a zone, confirm with the zone authority which of these steps it handles directly before filing anything elsewhere.

Factory license Bangladesh permissions compared

The table summarises the permissions that make up a complete factory license Bangladesh file. On a phone, scroll it sideways.

Penalties, enforcement and the 2026 labour reforms

The 2026 amendment raised the cost of non-compliance across the Labour Act. Section 307, the general penalty for breaching the Act, rules, regulations or schemes where no other penalty is specified, now carries imprisonment of up to three months, a fine of Tk 25,000 to Tk 50,000, or both.[1] That residual penalty is the provision most likely to be engaged where a factory operates without a required licence or approval.

Where a breach causes harm, section 309 applies: up to four years' imprisonment or a fine of up to Tk 1 lakh, or both, if it causes death; up to two years or a fine of Tk 50,000 to Tk 1 lakh if it causes grievous injury; and up to six months or a fine of Tk 10,000 to Tk 20,000 for other injury or danger. The 2026 Act raised both lower fine ranges, and the court may direct the fine to be paid as compensation to the injured worker or the heirs.[1] The 2026 Act also substituted section 90A, so every establishment with fifty or more workers must form a safety committee.[1]

The wider 2026 reforms to trade unions, lay-off and anti-discrimination are covered in our guide to labour law in Bangladesh. For factory licensing, the message is that the licence is now harder to lose track of and more expensive to ignore. Our occupational safety and health governance practice helps manufacturers build the systems that keep a licence defensible between inspections.

Common mistakes that delay a factory licence

• Building before the layout is approved: construction or expansion without prior permission leaves no lawful basis for the licence that follows.
• Layouts that contradict the structural design: the 2013 proviso means DIFE will not approve machinery layouts that depart from the approved building design.
• Mismatched documents: different entity names, addresses or floor areas across the trade licence, fire licence, environmental clearance and DIFE forms.
• Understating the workforce: the declared headcount drives obligations such as the fifty-worker safety committee threshold, and inspectors count.
• Letting a supporting certificate lapse: an expired fire licence or clearance blocks renewal even if the DIFE fee is paid.
• Assuming a buyer inherits the licences: the fire licence is expressly non-transferable, and a change of ownership is a licence event for DIFE.
• Missing statutory windows: the thirty-day remedy after three months of silence and the sixty-day appeal against refusal both run from fixed dates.

What to watch for the rest of 2026

Three developments will shape the factory license Bangladesh regime over the coming months. First, DIFE's notification of the procedure and fees for five-year licences, which will decide when the statutory term becomes the working reality.[6] Second, implementing rules under the Invest Bangladesh Act 2026, particularly for the single digital platform and the deadlines Invest Bangladesh can impose on other authorities.[12] Third, any gazette notifications under section 26 exempting industrial-area enterprises from the Fire Prevention and Extinguishing Act or the Building Construction Act, which would change the approvals map inside those zones.

For a new plant, an expansion or an acquisition, the earliest decisions carry the most weight: where the factory sits, which authority leads, and whether the drawings will survive every review. TRW's industrial parks, economic zones and manufacturing facilities practice handles DIFE, fire, environmental and zone approvals as a single programme. Contact TRW to discuss your project.

Frequently asked questions

Who issues a factory licence in Bangladesh?

The Department of Inspection for Factories and Establishments (DIFE), headed by the Chief Inspector under the Labour Act, issues factory and establishment licences under section 326 of the Bangladesh Labour Act 2006.[2]

Is layout plan approval required before building a factory?

Yes, where the Government has directed it under section 326(1)(a). The Chief Inspector's prior written permission is needed before a factory is built, established or expanded, and the layout may not depart from the approved structural design.[2]

How long is a DIFE factory licence valid in 2026?

Under section 326(1)(b) as substituted by the Bangladesh Labour (Amendment) Act 2026, licences are renewed every five years and contractor agency licences are valid for one year. DIFE said in May 2026 that the five-year term would operate once fees and procedure were settled, and field offices were still renewing for one year.[2] [6]

Which forms are used for layout approval and the licence?

Layout plan approval has been sought on Form 76 and the factory licence on Form 77, each with a treasury challan; applications now go through DIFE's LIMA system.[7] [8]

What happens if DIFE does not decide a plan application?

If the Chief Inspector gives no order within three months, the owner may apply to the Government for a remedy within the following thirty days. There is no longer any deemed approval.[2]

Can I appeal if DIFE refuses a licence?

Yes. A refusal of permission for construction, expansion, registration or licensing may be appealed to the Government within sixty days.[2]

Do I need a fire licence as well as a DIFE licence?

Yes. Section 4 of the Fire Prevention and Extinguishing Act 2003 requires a licence from the Fire Service and Civil Defence to use premises as a warehouse or workshop, renewable every year, and operating without one carries at least three years' imprisonment and a fine.[9]

Is environmental clearance needed before a factory licence?

Environmental clearance is a separate legal requirement: section 12 of the Environment Conservation Act 1995 bars establishing an industrial enterprise without it. In practice DIFE expects the clearance to be in place and consistent with the approved layout.[10]

Does the DIFE process apply inside an EPZ?

EPZ enterprises are governed by the Bangladesh EPZ Labour Act 2019, which prevails over other laws, and are inspected by BEPZA's own inspectorate. Confirm the zone's requirements with BEPZA before filing elsewhere.[14]

Can Invest Bangladesh speed up factory approvals?

For registered industrial projects, section 28 of the Invest Bangladesh Act 2026 lets the Authority set deadlines for environmental, fire, construction and other licences and clearances, and the relevant bodies must act within that time.[12]