Laws & Legal Compliances for Selling Cosmetics in India: Lawyers Advice

It is estimated that the Indian Cosmetics market is growing at a rate of 15% to 20% annually. The reasons for this are several, one of which is the rise in the purchasing power of citizens which allows for an increased spending on vanity. Cosmetics include skin care products, hair and scalp products, nail and cuticle products and oral hygiene products. If an entrepreneur wishes to embark on an endeavour to sell cosmetics in India, the following legal compliance requirements are to be kept in mind to avoid running into unnecessary hassles.

Manufacturing Cosmetics in India
The statute that regulates and governs the manufacture of cosmetics in India is the Drugs and Cosmetics Act, 1940 (the “Act”). Section 3(aaa) of the Act defines a cosmetic as “any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of a cosmetic.”

The Drugs and Cosmetic Rules, 1945 (the “Rules”) lay down the procedure that ought to be followed for the manufacturing of cosmetics. In order to carry out the manufacturing of a cosmetic, a licence for the same has to be obtained from a licensing authority who is appointed by the concerned State Government.

The Gujarat High Court, in the case of Subodh S. Shah & Ors. v. Director, Food and Drugs Control Office, Ahmedabad and Anr. (AIR 1997 Guj 83), held that the manufacture of cosmetics and drugs which come under the purview of the Act without obtaining a valid licence will attract a penalty under the Act which can lead to imprisonment for a term of 2 years and a fine of Rs. 2000.

It is also essential that once the product is manufactured, it is stored properly so as to ensure that there are no leakages. The Supreme Court in the case of State of Haryana v. Brij Lal Mittal & Ors. (1998 (5) SCC 343) held that vicarious liability will ensue to the person in charge and responsible for the conduct of business of the company

The rules further stipulate that the application for a manufacturing license has to be submitted in Form 31 with a Rs. 2500 license fee and a Rs. 1000 inspection fee. Further, manufacturing activities have to be carried out by competent and qualified technical staff who are registered under the Pharmacy Act, 1948.

Cosmetics’ Labelling Compliances
There are several labelling requirements that are mandated by the Rules which ought to be borne in mind by the manufacturer. The address of the place of manufacture has to be conspicuously mentioned on the label along with the product name. The ingredients used in the manufacturing process has to also be provided on the label. Clear warnings and directions for use along with the batch number and manufacturing number should also be provided.
The Supreme Court held in the case of Indian Soaps & Toiletries Makers v. Ozair Husain & Ors. (Civil Appeal No. 5644 of 2003) held that the consumer of food products should know the contents of the food that they are consuming.

Regulations on import for sale in India
There exists a prohibition on the import of cosmetics that are spurious, misbranded, unsafe or prohibited by any law in force by virtue of section 10 of the Act. A spurious cosmetic is defined in section 9D as a cosmetic that is imported under a name which belongs to another cosmetic, imitates another cosmetic or if it bears the name of a fictitious company as the manufacturer.
If a spurious cosmetic is imported, the importer will be liable to imprisonment for a period which may extend to 3 years and fine which may extend to five thousand rupees. In addition to this, there will be additional liability that is incurred for the breach of the provision of any law pertaining to sea customs. Therefore, it is essential that the importer ensures that the product is not spurious before importing for sale in India.

Registration of Cosmetics in India
It is mandatory for all cosmetic products that are imported into India for sale to be registered with the licensing authority as provided for under Rule 21 of the Rules. The application for registration has to be made in Form – 42 to the Drugs Controller General. In order to obtain a registration certificate, the following documents need to be provided –
• A cover letter from the applicant;
• Form 42;
• Treasury Challan;
• Power of Attorney;
• Schedule D III;
• Original or a copy of the Label;
• Free Sale Certificate (FSC) or a Marketing Authorisation Letter and the Manufacturing License if any;
• Product specification and testing protocol;
• A list of all the countries where Market Authorisation/ import permission/ registration was granted;
• Samples; and
• Information pertaining to the brand, manufacturer and product.

Advertising Compliances
The Advertising Standards Council of India (ASCI) is a non – statutory tribunal, established to promote ethical advertising practices. The ASCI came out with a code that mandates that
• Truthful and honest representations are made in advertising;
• No offensive material is broadcast;
• Harmful products to individuals, minors and/or society are not promoted; and
• Fair competition and consumer interests are given paramount importance.
The Kerala High Court in the case of A.S.P. Kurup v. Union of India and Ors. (AIR 1983 Ker 259) observed that in the situation wherein the advertisement does not mislead the consumer, there is no violation of Section 4 (c) of the Act.

The Government of India made it mandatory that the ASCI code be followed in August 2006. If an entrepreneur who wishes to sell cosmetics in India is aware of and follows the abovementioned compliance requirements, they can be rest assured that business will run smoothly and that they will not run into any sort of roadblocks with the regulatory authorities
Authored By: Adv. Anant Sharma & Vismay G.R.N.