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The Essential Guide to UAE Manufacturing Licences

Mar 5, 2024 | UAE Company Setup

Are you looking to get into the booming manufacturing industry in Dubai? You’re in the right place! In this essential guide, we’ll walk you through the process of obtaining a manufacturing trade licence, including the different types, costs, requirements, and benefits. Read on to learn all you’ll need to know about obtaining the right manufacturing licence for your business activities in the UAE.

With Dubai’s strategic location, pro-business government policies, and top-notch infrastructure, there’s never been a better time for you to set up shop in the UAE. We’ll explore the benefits of setting up a manufacturing company in Dubai and provide a step-by-step guide to obtaining an industrial manufacturing licence.

Manufacturing Licence UAE: Costs & Requirements

Overview of the Manufacturing Industry

Strategically located at the crossroads of major trade routes connecting the East and West, the UAE offers manufacturers a gateway to markets across the Middle East, Africa, and Asia. The nation’s commitment to infrastructure development, with state-of-the-art industrial zones and free zones, provides an enticing environment for manufacturing operations.

These zones offer advanced logistical and operational facilities and present significant incentives, including tax exemptions, 100% foreign ownership, and repatriation of capital and profits, making the UAE an attractive destination for international investors.

The UAE government mandates that manufacturing entities obtain specific manufacturing licences to regulate and encourage this vital sector. These licences, tailored to different manufacturing activities, ensure that businesses adhere to the highest standards of quality, safety, and environmental sustainability.

Companies must navigate through a well-defined licencing process, whether operating in free zones or on the mainland. This underscores the UAE’s commitment to maintaining its status as a leading manufacturing and business hub while safeguarding public interests and ecological balance.

This thriving sector is a major contributor to the country’s GDP, exporting products worth a whopping AED 167 billion annually.

Types of Manufacturing Licences in the UAE

1. Industrial Manufacturing Licence

This licence is essential for companies involved in large-scale manufacturing operations that typically have a significant environmental impact or require substantial resources, such as energy and water. Industries such as petrochemicals, metals, pharmaceuticals, and construction materials often need an industrial manufacturing licence. The application process involves scrutiny of the environmental impact, health and safety measures, and compliance with industrial standards.

2. Small and Medium Enterprise (SME) Manufacturing Licence

Aimed at smaller manufacturing setups, the SME manufacturing licence caters to businesses with limited production capacity and lower environmental impact. This includes manufacturers of consumer goods, light machinery, and components. The requirements for obtaining an SME manufacturing licence are generally less stringent than those for an industrial manufacturing licence, focusing on local compliance and safety standards.

3. Free Zone Manufacturing Licence

Free zones in the UAE offer specialized manufacturing licences for companies operating within these zones. These licences come with benefits such as tax exemptions, full foreign ownership, and ease of doing business. Each free zone has its own regulatory framework, and companies must comply with the specific requirements of the free zone authority. Industries across the spectrum, from food and beverages to textiles and electronics, can obtain a free zone manufacturing licence.

4. Specialized Manufacturing Licence

Certain sectors require specialized manufacturing licences due to the nature of their products or the processes involved. This includes food and beverage manufacturing, which must adhere to stringent health and safety standards, and pharmaceutical manufacturing, which requires compliance with international medical standards. Applications for specialized manufacturing licences undergo thorough review by relevant authorities, including the Ministry of Health and Prevention for pharmaceuticals and the Abu Dhabi Agriculture and Food Safety Authority for food products.

Stock Photo of Manufacturing Workers Working With A Licence

Step-by-Step Guide to Getting a Manufacturing Licence in Dubai

1. Determine the Type of Manufacturing Activity

  • All licences: Identify the specific manufacturing activity to guide the requirements and regulations you must follow. This includes industries like bread, textiles, metal casting, equipment and engines, petroleum, and paper manufacturing.

2. Choose Your Business Location

  • Free Zone Manufacturing Licence: Consider if a free zone’s benefits align with your business needs (free zones offer tax exemptions, 100% foreign ownership, and no import or export duties).
  • Industrial, SME, and Specialized Licences: Decide if operating on the mainland is more suitable for your manufacturing activity (mainland companies can trade directly with the UAE market and undertake government contracts).

3. Formulate a Business Plan

  • All licences: Develop a detailed business plan that outlines your business objectives, market analysis, financial projections, operational structure, and an overview of your manufacturing process. This plan is crucial for obtaining financing and regulatory approvals.

4. Register a Trade Name and Legal Structure

  • Trade Name Registration: Register your trade name with the DED in your chosen emirate. The name should be unique and relevant to your business activity.
  • Legal Structure: Available structures encompass sole proprietorship, limited liability company (LLC), partnership, and free zone companies. Each option carries distinct benefits and considerations regarding liability, tax obligations, and the degree of operational autonomy.

5. Obtain Initial Approval

  • All licences: Apply for initial approval through the DED for mainland setups or the respective free zone authority. This involves submitting your business plan, passport copies of shareholders, and the application form.
  • Businesses manufacturing products that could impact health, such as food, beverages, pharmaceuticals, and cosmetics, may need approval from the Ministry of Health. Additionally, companies whose manufacturing processes have environmental impacts, including chemicals, waste management, and any activities that might affect water resources or air quality, will need approval from the Ministry of Environment and Water.

6. Obtain a Trade Licence

  • All licences: Apply for a trade licence, which serves as your official permission to operate your manufacturing business within Dubai. This is a critical step for legal recognition and outlines the scope of your business activities.

7. Partner with a Local Service Agent (LSA)

  • For Mainland Licences: Engage a Local Service Agent to facilitate dealings with government authorities. This is essential for foreign investors operating outside free zones, ensuring compliance and assistance with regulatory requirements.

8. Apply for the Specific Manufacturing Licence

  • Industrial Manufacturing Licence: Apply through the DED or relevant authority, detailing your operations’ scale and scope.
  • SME Manufacturing Licence: The application focuses on SME criteria through the DED or relevant authority.
  • Free Zone Manufacturing Licence: Direct application to the free zone authority, adhering to specific benefits and regulations.
  • Specialized Manufacturing Licence: Apply through the DED or relevant sector-specific authority with additional documentation for regulated industries.

9. Secure Additional Approvals and Permits

  • Industrial Manufacturing Licence: Focus on environmental permits, safety approvals, and possibly sector-specific approvals due to larger-scale operations. Anyone seeking an industrial licence must also secure a trade licence, environmental permit, fire safety approval, and a DEWA connection. This is crucial for regulatory compliance in Dubai.
  • SME Manufacturing Licence: This may require fewer sector-specific approvals but must still comply with health, safety, and environmental standards.
  • Free Zone Manufacturing Licence: Ensure compliance with the specific free zone authority’s requirements, which may differ from mainland regulations.
  • Specialized Manufacturing Licence: Obtain approvals from relevant authorities like the Ministry of Health for pharmaceuticals or food and beverage manufacturing.
  • All licences: If your business is involved in chemical trading or manufacturing, obtain extra licences and approvals due to the controlled nature of certain chemicals. This may require approval from Dubai police and other relevant agencies, highlighting the need for strict controls around hazardous materials.

10. Hire Staff

11. Start Operations

  • All licences: Undergo a final inspection by the DED or free zone authority before starting operations and ensure your facility meets UAE standards for infrastructure, health and safety, and environmental compliance, including fire safety approval and environmental permits.

Additional Considerations:

  • Minimum Requirements: Businesses must have physical premises, at least AED 250,000 in startup capital, and a minimum of 10 employees.
  • Documentation: Gather essential documents, including plant reports, feasibility studies, and approvals from relevant ministries.
  • Benefits: Holding an Industrial Licence offers favourable rental terms, discounted utility rates, industry guidance, and financial support.
  • Obligations: Businesses are required to start construction within six months of approval, adhere to hygiene and industrial safety guidelines, and keep the DED informed of any significant changes.

A picture taken in a Manufacturing Company in the UAE.

Additional Licencing Requirements for an Industrial Company in Dubai

Comprehensive Environmental Report

Companies must submit a detailed report on their production plant when applying for an environmental permit. This report should include the plant layout design, process flow chart, and a list of required equipment and machinery.

Fire Safety Compliance

Adhering to fire safety regulations set by the Dubai Civil Defence is essential for all industrial establishments. This involves obtaining an initial approval certificate, submitting the commercial lease documents, and installing fire safety equipment according to the guidelines.

DEWA Connection Guidelines

Companies should ensure they follow DEWA‘s guidelines and regulations. Compliance with these requirements supports the flourishing manufacturing industry and allows businesses to enjoy special customs and tax exemptions if they meet certain criteria.

Additional Considerations for an Industrial Manufacturing Licence UAE

If you’re planning to establish an industrial business in Dubai, it’s essential to understand the requirements and processes involved in obtaining an Industrial Licence. This licence is important for companies like yours to be involved in producing, processing, and packaging various products.

The procedure for obtaining an Industrial Licence involves securing permission from Dubai authorities, which includes the DED, obtaining municipality permission for plant construction, and gathering approvals from the Dubai Municipality and other relevant ministries.

To successfully apply for an Industrial Licence, your business must meet certain requirements, including partnering with a local service agent, securing a physical office and warehouse space, and allocating a minimum capital of Dh 250,000.

Required documentation includes:

  • Plant reports
  • Passport and residence copies for non-citizens
  • Feasibility studies
  • Partnership contracts (if applicable)
  • Trade licence copies
  • Balance sheets
  • Approvals from relevant ministries

Remember to keep the DED informed about the following:

  • Any changes or amendments to your factory’s records
  • That you are not selling or leasing designated industry development property
  • Employee data
  • That you are using imported goods and materials for their intended purpose
  • That your company is adhering to land laws and regulations
  • That your company follows hygiene, fitness, and industrial safety guidelines

Any changes, such as the appointment of a director, must be reported to the DED.

A manufacturing warehouse.

Cost of Setting Up a Manufacturing Business in the UAE

Contemplating the costs involved in establishing a manufacturing business in Dubai? The initial investment can vary significantly, typically ranging between AED 15,000 and AED 50,000. This variance is attributable to several factors, including:

  • The type of manufacturing licence needed
  • Machinery and equipment costs
  • Rental costs for premises or warehouses
  • Visa applications
  • Government approvals
  • Staffing solutions

Additionally, obtaining a trade licence is a prerequisite. The cost of securing a manufacturing business licence in Dubai also depends on your location choice—mainland or free zone—with an average expenditure of around AED 35,000.

Obtaining an industrial licence in Dubai typically incurs costs between AED 25,000 and 27,000, covering licence application fees, registration, and other procedural expenses. Note that the exact cost may vary based on the specific industrial activities, location, and other factors.

Benefits of Holding an Industrial Licence in Dubai

Though the investment might seem substantial, the benefits of holding an Industrial Licence in Dubai are significant:

  • Preferential Rental Agreements: Enjoy favourable terms for leasing industrial spaces.
  • Reduced Rates for Government-Allocated Land: Benefit from lower rates on land provided by the government.
  • Subsidised Utility Costs: Receive subsidies on utilities, including electricity and water.
  • Government Support: Gain access to sector-specific guidance, financial support for R&D, and reduced interest rates for innovative products.
  • Priority in Government Procurement: High-quality products are prioritised during official procurement processes, offering a competitive advantage.

Responsibilities of Industrial Licence Holders

Holding an industrial licence also entails a set of responsibilities:

  • Commence Construction Timely: You must start construction within six months of receiving approval.
  • Submit Relevant Data to the DED: Ensure all necessary information is provided to the Department of Economic Development.
  • Register in the Industrial Registry: Complete the registration to formalise your industrial operations.
  • Adhere to Regulations: Follow all relevant laws and standards concerning land use, hygiene, and industrial safety.

The UAE, with its strategic location, business-friendly laws, robust transport network, world-class infrastructure, and transparent customs processes, presents an attractive opportunity for establishing manufacturing units.

Reasons to Set up a Manufacturing Company in Dubai

Access to International Markets

Dubai’s prime location provides seamless connectivity to global markets across Asia, Europe, and Africa. This advantage allows manufacturing companies to reach their target markets easily. Furthermore, Dubai’s advanced infrastructure includes top-tier seaports, roads, and airports, connecting major cities worldwide.

Pro-Business Government Policies

The Dubai government actively promotes business growth through numerous policies, including low registration costs, favourable regulations, tax exemptions, and support for startups and incubator programmes. These initiatives create a welcoming atmosphere for international investors, especially in the manufacturing sector.

Competitive Industrial Sector

Dubai’s manufacturing industry contributes significantly to the UAE’s GDP and is considered the most competitive in the Arab world. The city’s Industrial Strategy 2030 aims to increase the industry’s GDP contribution further. With the “Made in UAE” label symbolising quality and value, Dubai proves itself as a top contender for manufacturing businesses.

World-Class Infrastructure

Dubai’s transportation, communication, and logistical infrastructure adhere to the highest standards, enabling manufacturing companies to efficiently transport their products across borders and reach target markets. This reliable infrastructure ensures smooth operations for businesses settling in the UAE.

Talented Workforce

Dubai boasts a pool of skilled workers, including engineers, technicians, and labourers, capable of operating and managing manufacturing facilities. This local talent mitigates the need to source skilled labour from other countries, making it easier for companies to launch their manufacturing operations in Dubai.

When setting up a manufacturing business in the UAE, entrepreneurs like yourself must follow a step-by-step process that includes product selection, trading name choice, document submission to the DED, drafting a Memorandum of Association, and obtaining all necessary clearances and licences.

With proper guidance and essential permits and licences, entrepreneurs can successfully establish their businesses and contribute to Dubai’s thriving manufacturing industry.

Flourishing Future for Manufacturing Businesses in the UAE

The UAE’s lucrative manufacturing sector offers numerous opportunities for entrepreneurs like you seeking to take advantage of its strategic location, pro-business government policies, top-notch infrastructure, and skilled workforce.

By carefully navigating the process of obtaining a manufacturing licence in Dubai and adhering to the necessary guidelines and regulations, your business can successfully establish itself within this thriving industry.

Moreover, the UAE government’s commitment to expanding the manufacturing sector’s GDP contribution creates a promising landscape for investors, making the UAE an ideal destination for you to establish a flourishing and profitable manufacturing business.

FAQ’s

Which industries require an industrial manufacturing licence in the UAE?

Some industries that require an industrial licence include:

  • Bread manufacturing
  • Textile manufacturing
  • Metal casting
  • Equipment and engine manufacturing
  • Petroleum product manufacturing
  • Paper manufacturing.

How much does a manufacturing licence in a free zone in Dubai cost?

Obtaining a manufacturing licence in a free zone in Dubai could range from AED 15,000 to over AED 50,000. This estimate includes the licence fee itself and may cover initial setup fees. However, it’s important to note that costs can differ greatly depending on the specific requirements of the business and the chosen free zone’s pricing structure. Some free zones offer packages that include the licence fee, office space, and other services, which can provide savings compared to arranging these separately.

How much does an industrial licence cost in Dubai?

The cost of an Industrial Manufacturing Licence in Dubai varies, influenced by location (mainland vs. free zone), the type and scale of manufacturing, and required industry-specific approvals. Mainland setup costs, including a local service agent or sponsor, office or warehouse rentals, and government approvals (from entities like the DED, Dubai Municipality, etc.), start from AED 25,000 to AED 30,000, excluding other operational expenses. In contrast, free zone costs range from AED 15,000 to AED 50,000, offering packages that may cover licence fees, office space, and utilities, with benefits like 100% foreign ownership and tax exemptions.

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