Indian Government Notifies Rules for Compounding of Offences Under Drugs & Cosmetics Act

Indian Government Notifies Rules for Compounding of Offences Under Drugs & Cosmetics Act

The Union Health Ministry has officially notified the Drugs & Cosmetics (Compounding of Offences) Rules, 2025, introducing a mechanism that allows minor offences under the Drugs & Cosmetics Act, 1940 to be settled through fines rather than legal proceedings.

The newly framed rules aim to streamline regulatory compliance and reduce the burden on courts by permitting pharmaceutical companies and individuals involved in drug manufacturing, import, sale, and distribution to apply for compounding of offences. This means that first-time offenders can avoid prosecution by paying a penalty, while repeat offenders will face both fines and imprisonment.

The notification follows the Jan Vishwas Act, 2023, which sought to decriminalize certain business-related offences to promote ease of doing business. Under the new rules, offences such as misprinting on medicine labels, logistical errors, and minor packaging violations will be considered unintentional and will not lead to imprisonment, provided they do not compromise the quality and safety of medicines.

A Compounding Authority will be constituted to oversee the process, with officers designated to review applications and determine penalties. The authority also holds the power to grant immunity from prosecution, which can be withdrawn if the applicant fails to pay the penalty or is found to have concealed material facts.

The Indian pharmaceutical sector, projected to reach $100 billion by 2025, is expected to benefit significantly from these reforms, as they provide a structured approach to handling minor regulatory violations without lengthy legal battles.

Industry experts have welcomed the move, stating that it will enhance compliance, reduce unnecessary litigation, and foster a more business-friendly environment. However, concerns remain regarding the implementation and oversight of the compounding process.

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