A Comprehensive Guide For Identifying, Evaluating, And Mitigating Operational Risks In Indian Manufacturing Facilities

India’s manufacturing sector is growing at a rapid pace, with a growth rate of over 9.1% in late 2025. However, with great growth comes great risk. A “Risk Assessment” is simply a way to check what could go wrong and how to stop it before it happens.

This guide provides a simple checklist to keep your facility safe and compliant with Indian laws like the Factories Act, 1948.

Checklist 1: Physical Property And Fire Safety Of Manufacturing Facility

The first thing to check is your building and stock. In India, electrical short circuits are a leading cause of industrial fires. Here are a few things you can regulate regularly to avoid mishaps.

• Fire Equipment: Ensure all fire extinguishers are serviced, and sprinklers are tested.
• Property Damage: Confirm you have coverage for Property Damage caused by fire, lightning, or explosions.
• Exclusions Check: Remember that damage from War & Terrorism is typically not covered in a standard policy.

Checklist 2: Operational Risks And Machinery At Manufacturing Facilities 

If your machines stop, your money stops. Modern Indian factories are using more high-tech automation than ever before.

• Machine Health: Check for loose wires, rust, or unusual noises in heavy machinery.
• Machinery Breakdown: Does your policy include Machinery Breakdown? This is essential for repairing or replacing equipment that fails internally.
• Wear And Tear: Note that plant and machinery insurance does NOT cover Wear and Tear. You must maintain your machines regularly to avoid claims being rejected.

Checklist 3: Legal And Liability Risks In The Manufacturing Sector

Under Indian laws like the Bureau of Indian Standards (BIS) Act, you are responsible if your product hurts someone. Insurance helps protect your business from lawsuits and legal costs.

• Product Quality: Check that every batch meets quality standards.
• Product Liability: This insurance covers the legal costs if a customer sues you because of a defective product.
• Contractual Liability: Be careful with the fine print; most insurance policies exclude Contractual Liability, meaning they won’t pay for risks you “promised” to take on in a private contract.

Checklist 4: Workforce And Safety In The Manufacturing Industry

Workers are the heart of your factory. Keeping them safe is not just the law, it’s smart business and part of industrial insurance. Under the Employee’s Compensation Act (formerly Workmen’s Compensation), it is mandatory to look after your workers’ health. 

• Safety Gear: Ensure all workers use helmets, gloves, and boots.
• Workers’ Compensation: This inclusion pays for medical bills or lost wages if a worker is injured on the job.

All In All,

Conducting a regular risk audit ensures your manufacturing legacy remains secure. By following this checklist, Indian manufacturing facilities can reduce risks, stay compliant, and ensure their manufacturing & industrial insurance policies provide complete protection.