How to Apply for a Drug Manufacturing License Under the Drugs and Cosmetics Act 1940 in India

Manufacturing pharmaceutical products in India requires a drug manufacturing license issued under the Drugs and Cosmetics Act 1940 and the Drugs and Cosmetics Rules 1945. This license ensures that drugs produced in the country meet prescribed standards of quality, safety, and efficacy. Whether you are setting up a new pharmaceutical manufacturing unit or expanding existing operations, obtaining the correct license is a mandatory legal requirement. This article explains the step-by-step procedure for applying for a drug manufacturing license, the forms involved, Good Manufacturing Practices (GMP) compliance under Schedule M, and the role of the State Drug Licensing Authority and the Central Drugs Standard Control Organisation (CDSCO).

Legal Framework Governing Drug Manufacturing in India

The Drugs and Cosmetics Act 1940 is the principal legislation regulating the import, manufacture, distribution, and sale of drugs and cosmetics in India. The Drugs and Cosmetics Rules 1945, framed under this Act, lay down detailed procedural requirements for obtaining manufacturing licenses. Part V of the Rules, particularly Rules 69 to 78, deals with the manufacture of drugs. Any person intending to manufacture drugs for sale or distribution must obtain a license from the State Drug Licensing Authority. The regulatory framework for pharmaceuticals works alongside other health and safety laws, and businesses dealing with consumable products should also be aware of food safety regulations under FSSAI. The CDSCO, headed by the Drugs Controller General of India (DCGI), exercises supervisory and appellate functions and directly licenses certain categories of drugs.

Types of Drug Manufacturing Licenses

The type of license required depends on the category of drugs to be manufactured. For drugs other than those specified in Schedules C, C1, and X, the application is made in Form 24 and the license is issued in Form 25. For drugs specified in Schedules C and C1, excluding Schedule X, the application is made in Form 27 and the license is issued in Form 28. Schedule C and C1 cover specialized products such as vaccines, sera, and biological products. For loan licenses, where a licensee uses the premises and equipment of another licensee, the application is in Form 24-A and the license is issued in Form 25-A. Schedule X drugs, being narcotic and psychotropic substances, are subject to additional controls. Non-profit entities engaged in pharmaceutical research may consider registering a Section 8 company in India as a suitable corporate structure for such activities.

Eligibility and Prerequisites

Before applying for a drug manufacturing license, the applicant must ensure several prerequisites are met. The applicant must have suitable manufacturing premises that comply with the requirements of Schedule M regarding Good Manufacturing Practices. A qualified technical staff, including a person holding a degree in pharmacy or pharmaceutical chemistry, must be employed. The manufacturing unit must have adequate equipment and testing facilities as prescribed under Rule 71 of the Drugs and Cosmetics Rules 1945. The applicant must operate through a legally constituted business entity. Entrepreneurs setting up new ventures may wish to review the process of registering a partnership firm under the Indian Partnership Act 1932 or incorporating a private limited company. Companies holding manufacturing licenses must also fulfil ongoing corporate compliance obligations, including filing MCA annual returns and other statutory filings.

Step-by-Step Application Process

The application process for a drug manufacturing license involves several stages. First, the applicant prepares the manufacturing premises in full compliance with Schedule M requirements, including proper layout, ventilation, water supply, and waste disposal systems. Second, the applicant submits an application in the prescribed form (Form 24 for non-Schedule C drugs or Form 27 for Schedule C drugs) to the State Drug Licensing Authority along with the prescribed fee. The application must include details of the premises, equipment, technical staff, drugs proposed to be manufactured, and a site master file. Third, upon receipt of the application, the licensing authority deputes a Drug Inspector to conduct an inspection of the premises. The Inspector verifies compliance with GMP norms, adequacy of equipment, qualifications of staff, and suitability of the premises for the proposed manufacturing activities. Fourth, the Drug Inspector submits an inspection report to the licensing authority. If the report is satisfactory, the license is granted in the appropriate form. If deficiencies are found, the applicant is given an opportunity to rectify them before a re-inspection is conducted.

GMP Compliance Under Schedule M

Good Manufacturing Practices are a cornerstone of the drug manufacturing licensing framework in India. Schedule M of the Drugs and Cosmetics Rules 1945 prescribes detailed requirements for premises, plant, and equipment used in pharmaceutical manufacturing. The revised Schedule M, notified on 28 December 2023, brought Indian GMP standards substantially closer to WHO-GMP and EU-GMP standards. Key requirements under the revised Schedule M include implementation of a Pharmaceutical Quality System (PQS), Quality Risk Management (QRM), comprehensive validation requirements, data integrity protocols aligned with ALCOA+ principles, and proper documentation of all manufacturing processes. Large manufacturers were required to comply with the revised Schedule M by 28 June 2024, while Micro, Small, and Medium Enterprises with a turnover of up to INR 250 crore received an extended compliance deadline of 31 December 2025.

Role of the CDSCO

While the State Drug Licensing Authority handles most licensing functions, the CDSCO plays a significant role in certain areas. The CDSCO directly licenses the manufacture of drugs specified in Schedule C and Schedule C1, including vaccines, sera, recombinant DNA products, and certain special products. The CDSCO also grants No Objection Certificates for new drugs, conducts periodic inspections of manufacturing units, and handles appeals against decisions of the State Drug Licensing Authority. Manufacturers who import raw materials or active pharmaceutical ingredients should also understand the procedure for obtaining an essentiality certificate for import of goods under foreign trade policy to ensure smooth procurement of inputs.

License Validity and Fees

Under the recent amendments to the Drugs and Cosmetics Rules 1945, drug manufacturing licenses issued in Form 25 are now valid in perpetuity, subject to payment of a license retention fee every five years. This replaced the earlier system of fixed five-year validity with mandatory renewal. However, the license can be suspended or cancelled at any time if the licensee fails to comply with the prescribed conditions or if the manufacturing premises are found to be non-compliant with GMP standards. The fees for a drug manufacturing license vary by state, as individual state governments prescribe the applicable fee structure. Compliance inspections are conducted not less than once in three years or as required based on a risk-based approach.

Conclusion

Obtaining a drug manufacturing license is a critical regulatory requirement for any pharmaceutical manufacturing business in India. The process involves careful preparation of manufacturing premises, compliance with Schedule M GMP requirements, and a thorough application and inspection process. Applicants should ensure full compliance with the Drugs and Cosmetics Act 1940 and Rules 1945 and engage qualified professionals to navigate the regulatory framework. With evolving regulatory obligations, including data protection compliance under the DPDPA, pharmaceutical businesses must maintain an ongoing awareness of their full compliance landscape.