Background and Rationale

Drugs and Cosmetics Act, 1940 regulates the manufacture, sale, and distribution of drugs and cosmetics in India. To streamline minor regulatory offences without prolonged litigation, the 2024 draft rules proposed a compounding framework. After public consultation and review of feedback, the Central Government has now officially introduced the Drugs and Cosmetics (Compounding of Offences) Rules, 2025. This move aims to encourage quicker resolution of offences, reduce the burden on courts, and ensure greater compliance with regulatory norms.

Detailed Overview of the Rules

The Rules define important terms such as “applicant”, “compounding authority”, and “reporting authority”.

Key highlights include:

• Compounding Authority: Officers (not below the rank of Reporting Authority) appointed by the Central or State Government.
• Application Process: Applicants (companies or individuals) can apply for compounding before or after prosecution starts, using the prescribed Form.
• Procedure:
  • Application is examined with a report from the Reporting Authority.
  • Compounding Authority can approve or reject the application after a hearing opportunity.
  • If approved, the applicant must pay the specified compounding amount within 30 days.
• Immunity: Upon successful compounding, immunity from prosecution is granted.
• Withdrawal of Immunity: Immunity can be withdrawn if conditions are violated, payment is not made, or false information is found.
• Form for Application: Detailed fields include applicant information, licence details, offence particulars, prior cases, and declarations.

Amendments and Their Implementation

The Rules are a new insertion and do not amend existing rules. They create an entirely new procedural framework under the Act. The effective date is the same as the date of publication — April 24, 2025.

Implications and Future Prospects

The introduction of these Rules will likely reduce the caseload related to minor drug and cosmetic regulatory violations. It is expected that manufacturers, importers, and distributors will increasingly opt for compounding to avoid criminal prosecution, fostering a compliance-first culture. Going forward, State Governments may also issue separate notifications to operationalise compounding at the local level.