Nothing in the world can stop manufacturers and industrialists from rolling in money. As sure as eggs is eggs, entering a manufacturing industry can cost you the earth, but what else can be as rewarding as producing sought-after products is?! If you are determined to stand out in the crowd with your brand and your decision to start a manufacturing unit in Dubai or any other part of the UAE is carved in stone, then this blog is for you!
What’s my first step?
Whether manufacturing or trading, in order to start a company in Dubai you have to obtain a trade licence along with several approvals and permissions from the relevant authorities or governmental bodies (if applicable) in line with the type of business activity you choose to conduct. Production, segregation, assembling, fabrication, collection, packaging, etc. are essentially the activities that come under Industrial Licence in Dubai. Therefore, obtaining an Industrial Licence from the Department of Economic Development (DED) becomes your foremost and mandatory step to begin your manufacturing business in Dubai, UAE. You also need to have a physical warehouse or set-up inside the UAE for the approval of an industrial trade licence request. Virtual offices are not permitted.
What is an Industrial Licence in Dubai?
Registering a factory in the industrial register, Industrial Licence is a certificate that allows eligible companies or factories to conduct the DED-approved activity while benefiting from various schemes and perks such as duty exemption services on machinery, equipment, spare parts, unprocessed raw materials, semi-manufacturers and packaging materials. The licence also enables the exporting of products to GCC and Arab countries if it fulfils certain criteria. The Industrial Licence is issued by the Department of Economic Development in the emirate where the plant is situated. For instance, the issuing authority for a unit to be set up Ras Al Khaimah, would be the Department of Economic Development – RAK. Rules may slightly vary as per the emirate. In case of a plant establishment in Dubai, both a physical office and a warehouse for storage are obligatory.
What activities or sectors fall under an Industrial Licence in the UAE?
The process of transforming raw materials or natural resources from their natural state to a final or refined state is what we call industrial activity. Here the raw materials are subjected to structural or appearance-oriented transformation and the end product could either be in the semi-manufactured or fully-manufactured form. The conversion can be carried out either via manual or mechanical intervention. A general rule of thumb says, if your business involves fabrication, preparation, production or manufacturing of goods then you will likely need an Industrial Licence in the UAE. There is a huge list of activities that have been classified as industrial and manufacturing activities under the UAE Industrial Licence. Some of the Industrial Licenced activities are:
- Raw materials processing
- Petroleum & metals extraction
- Metal casting
- Reprocessing of the recyclables
- Manufacturing of any product such as petroleum products, appliances & machinery, food & beverage items, textiles, paper & paper-based commodities, structural steel, sculptors, magnetic technology equipment, etc.
- Adhesive & paper slitting
- Books binding
- Cards & envelops printing
- Helicopters repair & maintenance
- Lathe workshop
- Paper pulp production
- Waste collection and treatment
- Meat processing
- Processing like filling, segregating and packaging of products
- Assembling of air conditioning units
- Metal products coating
- Multidimensional images production (hologram)
- Pharmaceuticals packaging
- Saddle & animal, bird training requisites making
- Safety harness fabrication
What are the prerequisites for Industrial Licence application?
You must meet certain requirements to qualify for an Industrial Licence to run a manufacturing company in Dubai, UAE. Such as you must:
- Have a physical premise for warehousing and official purposes
- Present Memorandum of Association (MoA). You may acquire the e-MOAs and all their addendums through Dubai Economy service centres or via approval to the text message from 6969 from the comfort of your home now
- Obtain a local Industrial Licence from the area of operation in addition to your trade licence
- Pay up share capital i.e., AED 250,000 in case of Dubai mainland
- Hire at least 10 workers
- In view of the exact nature of your business, appoint a local sponsor if you wish to set up an industry in the mainland and the business activity you want to carry out doesn’t belong to the positive list of activities eligible for 100% ownership. For instance, manufacturing of wines & other spirits from barley, military apparel, ballistics & guided missiles, distillation, refining & mixing of spirits, basic precious & other non-ferrous metals and weapons & ammunition to name some. The local Emirati sponsor would hold a 51% stake in your business but usually doesn’t intervene in the management of the business or decision-making. If you wish to enjoy 100% ownership rights of your business, opt for the free zone business setup in Dubai, home to 30+ free zones.
Documents required for Industrial Licence in Dubai
Licence issuance procedure involves certain Ministries and external agencies. You have to be prepared with the relevant documents for a successful approval of your Industrial Licence in Dubai from DED.
- A detailed report of the factory or industry including the plan, pursuits behind factory set-up, details about the equipment and tools concerning the production, detailed technical information, the estimated cost of production, capital involved and source of funds including proofs such as a bank statement or a letter of credit / bank guarantee from a bank or financial institution in the United Arab Emirates. The report should also contain the information about the employees
- You must also be a member of the local Chamber of Commerce & Industry; and documentation to this effect needs to be enclosed
- A copy of the Emirates ID or passport of all the partners (if applicable), plus all company formation documents that clearly show who the owners are
- The location plan showing the area where the industrial unit is to come up. The document should also demonstrate where the different constituent units such as cooling towers, electrical power unit, chemical storage tanks, etc. will be. This must be approved by the Government in advance
- Your copy of residence proof/passport
- Feasibility study
- Partnership contract in case of partnership firms
- National Media Council Approval
- Approval from the Ministry of Health
- Copy of the Balance Sheet
- Approval from the Ministry of Environment & Water
How can I apply for my Industrial Licence in Dubai?
Like commercial and professional licences in the UAE, the procedure of obtaining an Industrial Licence in Dubai is not at all complex, provided you have the right knowledge or guidance and are following the protocol. If all the requirements and documents are through, the final approval doesn’t take more than two weeks. Let’s learn how many hoops you’ve to jump through to acquire your Dubai Industrial Licence.
- First and foremost, get the Initial Approval from the concerned authorities prior to incorporation of industrial concern or factory in Dubai. You are obligated to take the Initial Approval even if you are altering the present factory specifications or settings
- The next step is to gather all the necessary documents and get in touch with the DED to file the application for your Industrial Licence. The department may take up to 3 months to process the licence application and come up with their conclusion. You will be notified about DED’s final decision on application approval, which may take another 15 days
- You need to obtain prior permission from the local Municipality in case you are planning to build a factory/manufacturing plant outside of a free zone. Getting additional approvals from agencies and Ministries like the Ministry of Health, Chamber of Commerce & Industry, etc. is also mandatory in this case. A business set-up expert can acquire all of these approvals for you
- As the holder of an Industrial Manufacturing Licence, you are expected to comply with industrial safety regulations as well as strictly adhere to Labour Law when it comes to your workers.
If everything is in order, you can expect your Industrial Licence to be issued in as little as 3-4 weeks. To avoid delay in the application process, make sure you have all additional consents from relevant authorities such as from the Ministry of the Interior, the Ministry of Environment & Water, and the Ministry of Health & Prevention before applying to the DED for an Industrial Licence. Be informed that the licence is issued with validity in compliance with the terms and conditions specified at the time of issuance.
What are the advantages of Industrial Licence?
First of all, holding a valid Industrial Licence is a mandatory requirement to be able to legally conduct manufacturing or industrial activities in Dubai, UAE. Besides that, the licence holder also enjoys several privileges provided by the UAE government to encourage industries and entice more investments in the sector.
- The Government will provide land for free or at subsidised rates, plus assistance in R&D if your product is anticipated to add value to the UAE economy
- Terms for renting industrial space exclusively drafted to benefit the investor
- Discounted rates for electricity, water and other essential requirements
- Guidance based on modus operandi of similar industries, to enrich your industry
- Innovative products are eligible for a loan at reduced rates
- If your product is expected to strengthen the UAE economy, the Government will support you financially during the course of R&D
- The products with premium quality will be prioritised by the UAE Government during official procurement
- If you are building your plant away from the free zone on approval of the local Municipality, electricity and water will be provided at subsidised rates to your plant as per its needs
- There is a possibility to get financed by a UAE Government bank if your product is new to the market
What are the obligations of an Industrial Licence holder?
The federal authorities have established certain obligations for the Industrial Licence holders in Dubai. To ensure the smooth functioning of your business and to keep the shock waves at bay you must:
- Initiate construction of the industrial space within six months of receipt of the project approval
- Report any changes, including the appointment of a director, to the DED in writing. In that case, the shareholders along with the director will be accountable for all the activities, law enforcement, and maintaining stringent regulations for the industrial safety of the company
- Submit periodic reports to the authorities without a miss
- Provide all the requisite data to the DED, Dubai, as required
- Submit a letter to the DED as and when you are ready to begin the industrial activity. The DED will grant a certificate of authorization afterward
- Furnish a letter to the concerned authority for inclusion of your industry in the register of industries
- Submit a letter, in the prescribed format, to the DED detailing the changes in case of any alterations or amendments in the data regarding the plant
- Submit a copy of the document containing employees’ information hired by the company to the DED
- Not use the products and materials imported after claiming exemption from customs duties unless specified during the import
- Not sell or lease the property that has been allocated by the government for establishing the industry
- Employ a minimum of 25% local Emiratis
- Comply with the rules, regulations and policies of the land
- Pursue all the directives to maintain hygiene, health conditions and industrial safety without fail
How much the Industrial Licence will cost me?
The cost of getting an Industrial Licence in Dubai, UAE and setting up a plant majorly depends on the location of the industry – Mainland or Free Zone. The total cost may go beyond AED 30,000. However, this may differ from time to time, with revisions in existing pricing rules. The costs of getting additional approvals and registrations according to the type of industry you are incorporating also add up to the overall expense. In light of the initial set-up charges and other costs, establishing an industry in the Free Zone jurisdiction would be the best option for budget-savvy entrepreneurs.
How Adam Global can help?
Despite being a simple and straightforward process, getting an Industrial Licence in Dubai can seem daunting to many of you because of the paperwork and legwork involved. Adam Global Dubai, one of the best business setup consultancies in Dubai, has helped various entrepreneurs acquire Industrial Licence in Dubai. Do not hesitate to consult our qualified team of business formation specialists in Dubai, no matter how general you think your query is regarding Industrial Licence. Get in touch with us for free consultancy.