India has always celebrated Ayurveda, Yoga, Unani, Siddha, and Homeopathy, collectively known as AYUSH, as trusted systems of healing. But when these traditional practices move from household remedies to large-scale manufacturing and commercial sales, they need more than tradition to thrive; they need law. Without clear regulation, the risk of adulterated products, misleading claims, or unsafe practices rises quickly.
This is where the Drugs and Cosmetics Act, 1940, comes in. Originally framed to regulate modern pharmaceuticals, the Act was expanded to include AYUSH systems, setting out rules for manufacturing, quality control, labeling, and licensing. It ensures that Ayurvedic tablets, Unani syrups, or Siddha formulations sold in the market are produced safely and backed by standards.
The goal of this post is simple: to explain how the Drugs and Cosmetics Act governs AYUSH medicines and businesses, why compliance matters, and what entrepreneurs must know before stepping into this industry.
Scope of the Act for AYUSH
Coverage of Ayurvedic, Siddha, and Unani (ASU) medicines
The Drugs and Cosmetics Act extends specific coverage to Ayurvedic, Siddha, and Unani (ASU) medicines, treating them as distinct systems within Indian healthcare. Under Chapter IV-A, the Act defines what qualifies as an ASU drug and sets standards for their preparation, labeling, and sale. These provisions ensure that formulations mentioned in authoritative texts, like Charaka Samhita for Ayurveda or Siddha treatises, can be marketed legally only when manufactured under licensed conditions. This framework helps preserve authenticity while protecting consumers from substandard or spurious products.
Distinction between AYUSH medicines and cosmetics/nutraceuticals
A crucial part of the Act is distinguishing medicines from products marketed for general wellness. Ayurvedic or Unani drugs are meant for diagnosis, treatment, or prevention of disease and must be licensed as such. Cosmetics and nutraceuticals, even if herbal in nature, fall under different regulatory frameworks. For example, an herbal shampoo is a cosmetic, not an Ayurvedic medicine, and an immunity-boosting supplement may be categorized as a nutraceutical. This distinction prevents overlap and ensures consumers clearly understand what they are buying.
Why did AYUSH need separate provisions from allopathic medicines?
AYUSH systems differ fundamentally from modern allopathy in philosophy, formulations, and sources of reference. Applying the same rules designed for synthetic pharmaceuticals would have been impractical. The separate provisions in the Act recognize the uniqueness of ASU medicines, grounding them in classical texts while setting safety, labeling, and manufacturing standards. This balance allows traditional knowledge to flourish in a regulated environment, safeguarding consumer trust while giving AYUSH equal standing in India’s healthcare ecosystem.
Regulatory Authorities under the Act
Central Authority: Ministry of AYUSH and Central Drugs Standards Control Organization (CDSCO)
At the national level, regulation is guided by the Ministry of AYUSH, which frames policies, sets quality benchmarks, and promotes AYUSH systems globally. Supporting it is the Central Drugs Standards Control Organization (CDSCO), responsible for standardization, import/export regulation, and coordinating with states on enforcement. Together, these bodies provide the overarching vision and ensure uniformity in the application of the Drugs and Cosmetics Act across India.
State Authorities: State Licensing Authorities (SLAs)
Implementation happens primarily through State Licensing Authorities (SLAs). These offices receive and process license applications for manufacturing, retail, wholesale, or loan operations under AYUSH. They also conduct inspections, check compliance with Good Manufacturing Practices (GMP), and investigate complaints. By acting as the ground-level enforcers, SLAs bridge the gap between central policy and local business realities, making sure rules are followed consistently within their jurisdiction.
How are responsibilities divided between central and state bodies?
The Ministry of AYUSH and CDSCO set national guidelines, develop regulatory frameworks, and monitor cross-border trade, while the state authorities handle execution, issuing licenses, carrying out inspections, and ensuring day-to-day compliance. In practice, central bodies provide the framework and technical standards, and state bodies ensure those standards are implemented. This dual structure helps maintain balance: centralized oversight with localized accountability, ensuring Ayurvedic and other AYUSH medicines are both authentic and safe.
Key Provisions in the Act Relevant to AYUSH
The Drugs and Cosmetics Act, 1940, lays down specific provisions to regulate Ayurvedic, Siddha, and Unani (ASU) medicines. These safeguards ensure authenticity, quality, and consumer safety while respecting the traditional roots of these systems.
Chapter IV-A: Special provisions for Ayurvedic, Siddha, and Unani medicines
This chapter, added through amendments, recognizes ASU systems as distinct from allopathy. It defines ASU drugs, mandates licensing for manufacturing, and empowers authorities to regulate quality, labeling, and claims. Without these provisions, traditional medicines would have been subject to unsuitable rules designed for synthetic drugs.
Schedule T: Good Manufacturing Practices (GMP) for ASU drugs
Schedule T sets out Good Manufacturing Practices (GMP) tailored for ASU drugs. It covers infrastructure (separate areas for raw material storage, production, and testing), sanitation, documentation, and staff qualifications. Compliance ensures medicines are safe, consistent, and produced in hygienic conditions.
Schedule E1: List of poisonous substances in Ayurvedic medicines
Some classical Ayurvedic formulations use potent substances like aconite or mercury. Schedule E1 identifies such materials and mandates caution, restricting use, dosage, and labeling to prevent misuse or accidental harm.
Schedule J: Diseases for which claims cannot be made
To protect consumers from misleading promises, Schedule J lists diseases, such as cancer, diabetes, and HIV, where no medicine, including AYUSH products, can claim a guaranteed cure. This ensures marketing stays ethical and evidence-based.
Labeling and packaging requirements
AYUSH medicines must carry clear labels detailing composition, dosage, manufacturing license number, expiry date, and storage instructions. Proper packaging prevents adulteration and builds consumer confidence.
Together, these provisions form the backbone of legal compliance for the AYUSH industry, balancing traditional knowledge with modern standards of safety and accountability.
Licensing Requirements under the Act
Licensing is the most crucial step for any business dealing with Ayurvedic, Siddha, or Unani (ASU) medicines. The Drugs and Cosmetics Act, 1940, supported by rules under the Ministry of AYUSH, sets out distinct license categories based on the role you play in the supply chain.
Manufacturing License – for producing AYUSH medicines
Any business that wants to produce ASU medicines in its facility must obtain a Manufacturing License. This requires a GMP-compliant unit, qualified technical staff (usually BAMS graduates or Ayurvedic pharmacists), and approved formulations. The facility must have proper infrastructure for storage, production, and testing. Without this license, no Ayurvedic drug can legally be manufactured in India.
Loan License – for outsourcing production
For startups or small companies that lack their facility, the Loan License offers flexibility. It allows you to outsource production to an already licensed manufacturer while marketing the medicines under your brand. You must still comply with quality standards and have a formal agreement with the manufacturing partner.
Retail & Wholesale License – for sellers and distributors
Businesses selling ASU medicines directly to consumers typically apply for a Retail License, while those distributing in bulk to pharmacies or hospitals need a Wholesale License. These licenses ensure that sales channels remain transparent and medicines come only from licensed sources.
Export licensing and COPP (Certificate of Pharmaceutical Product)
For companies aiming at global markets, an export license is mandatory. Additionally, a Certificate of Pharmaceutical Product (COPP) may be required to meet importing countries’ regulations. The COPP confirms that the product is manufactured under recognized standards and is cleared for sale in India.
Conclusion
The Drugs and Cosmetics Act provides the backbone for regulating AYUSH medicines, ensuring they are safe, authentic, and responsibly marketed. For entrepreneurs, understanding licensing and compliance isn’t optional. It’s essential for growth and credibility. Whether manufacturing, selling, or exporting, aligning with these rules safeguards consumers and strengthens your brand. Ayurveda and other traditional systems thrive best when backed by trust, and that trust begins with adhering to the Act’s clear legal framework.
