Yes, a herbal medicine manufacturing business is legal in India, but the manufacturer must obtain the appropriate licence and comply with strict quality, safety, labelling and advertising requirements.
India has a large market for Ayurvedic tablets, herbal syrups, oils, powders and other traditional preparations. However, a business cannot manufacture and sell a product as “herbal medicine” merely because it contains natural ingredients. Its legal category must first be identified, as different products require different licences.
Legal Status of Herbal Medicine Manufacturing
Ayurvedic, Siddha and Unani medicines are mainly regulated under the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945. The rules cover manufacturing, quality standards, labelling, packaging and inspection of traditional medicines.
The CDSCO traditional-drugs portal explains that Part XVI of the Drugs and Cosmetics Rules deals with manufacturing Ayurvedic, Siddha and Unani drugs, while Part XVII covers their labelling and packaging.
The Ministry of Ayush frames national policies and standards, but manufacturing licences are normally granted by the AYUSH or drug licensing authority of the respective state or Union Territory.
Decide the Correct Product Category
The term “herbal product” does not represent one single legal category. The required licence depends on the product’s formulation, purpose and claims.
1. Ayurvedic, Siddha or Unani Medicine
A product intended to prevent, treat or manage a health condition may qualify as an Ayurvedic, Siddha or Unani medicine. Such products require a manufacturing licence from the State Licensing Authority.
Classical medicines must follow formulations prescribed in recognised authoritative texts. Patent or proprietary medicines may use permitted ingredients from these texts in a new combination, subject to the applicable rules.
2. Herbal Health Supplement
A herbal capsule, powder or drink marketed for general nutrition or wellness may fall under the food-supplement or nutraceutical category. It would then require an FSSAI licence instead of an AYUSH manufacturing licence.
Health supplements and products containing botanicals are regulated under the FSSAI health-supplement regulations. Such products cannot claim to diagnose, treat or cure diseases like medicines.
3. Herbal Cosmetic
Herbal shampoo, face cream, soap or beauty oil primarily intended for cleansing or improving appearance may be treated as a cosmetic. Its manufacture is governed by the Cosmetics Rules, 2020.
Manufacturing Licence
A business intending to manufacture Ayurvedic, Siddha or Unani medicines must apply to the relevant State Licensing Authority. The application usually requires details of:
- Manufacturing premises and equipment
- Product formulations and ingredients
- Qualified technical personnel
- Testing facilities or approved testing arrangements
- Raw-material and finished-product storage
- Quality-control procedures
- Ownership or tenancy documents
- Proposed labels and packaging
A licence must be obtained before starting commercial production. Manufacturing medicines from an unapproved home kitchen, shop or small workshop is not legally acceptable.
Good Manufacturing Practices
The manufacturing unit must comply with the Good Manufacturing Practices prescribed under Schedule T of the Drugs and Cosmetics Rules.
The premises should have suitable production areas, sanitation systems, ventilation, clean water, waste-disposal arrangements and separate storage for raw materials and finished products. Records should be maintained for ingredient purchases, batch production, testing, complaints and product recalls.
Quality testing may include the identity and purity of herbs, microbial contamination, heavy metals and other pharmacopoeial requirements relevant to the product.
Labelling Requirements
Every medicine must carry accurate and legally compliant information. Depending on the product, the label may need to mention:
- Product and dosage-form name
- Complete ingredient list
- Batch number
- Manufacturing-licence number
- Date of manufacture and expiry
- Manufacturer’s name and address
- Recommended dosage
- Net quantity
- Warnings and storage instructions
- “Ayurvedic Medicine” or the relevant system of medicine
Products containing certain specified ingredients may require additional warnings. A medicine must not be falsely labelled as “100% safe” merely because it is herbal.
Advertising and Medical Claims
Manufacturers cannot advertise miraculous or guaranteed cures. Claims must remain consistent with the licensed formulation and legally permitted indications.
Advertisements are also subject to the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 and consumer-protection laws. The Ayush Suraksha portal identifies exaggerated benefits, miraculous-cure promises and unsupported claims relating to serious diseases as objectionable advertising.
Testimonials, influencer promotions and social-media advertisements must also avoid misleading claims.
Business and Tax Registrations
In addition to the product-specific licence, the business may need company or LLP registration, PAN, GST registration, local trade permission, pollution-control approval, factory-related registrations and trademark protection.
The exact requirements depend on the manufacturing process, workforce, machinery, location and scale of production.
When Can the Business Become Illegal?
Herbal medicine manufacturing may become illegal when a business:
- Manufactures medicines without a valid licence
- Uses prohibited, substituted or undeclared ingredients
- Produces medicines at unapproved premises
- Makes false disease-cure claims
- Sells food supplements as medicines
- Uses another company’s licence number
- Fails to maintain batch and testing records
- Mislabels an FSSAI product as “AYUSH-approved”
- Continues selling a recalled, adulterated or substandard product
Violations may lead to product seizure, licence suspension, fines, prosecution or closure of the unit.
Bottom Line
Herbal medicine manufacturing is legal in India when the product is correctly classified and manufactured under the appropriate AYUSH, FSSAI or cosmetic licence. Before investing in machinery or packaging, the entrepreneur should finalise the formulation, product claims and regulatory category with a qualified consultant. This prevents the common and costly mistake of obtaining the wrong licence.
Frequently Asked Questions
Q1. Can herbal medicines be manufactured at home?
A: Not for commercial sale unless the premises have been inspected, approved and licensed for medicine manufacturing. An ordinary domestic kitchen is unlikely to satisfy GMP requirements.
Q2. Can I launch a herbal medicine brand without owning a factory?
A: Yes. A business may use a properly licensed third-party or contract manufacturer. The product must be covered by the manufacturer’s licence, and the label should correctly disclose the manufacturer and marketer.
Q3. Does an AYUSH licence mean that the Central Government has approved the medicine’s effectiveness?
A: No. Manufacturing licences are generally issued by State Licensing Authorities. A business should not describe its product as “approved by the Ministry of Ayush” unless it has specific written authorisation supporting that statement.
Q4. Can the same herb be sold as both a supplement and a medicine?
A: Possibly, but the classification depends on its formulation, intended use, dosage, presentation and claims. A food supplement cannot make disease-treatment claims simply because the same herb is used in an Ayurvedic medicine.
