The central government has designed a new way to handle certain regulatory mistakes made by India’s pharmaceutical industries – paying a fine instead of going through a full court trial, News18 learnt.
This change stems from the Drugs and Cosmetics (Compounding of Offences) Rules, 2025, introduced under amendments made through the Jan Vishwas Act. The Central Drugs Standard Control Organisation (CDSCO), under the Ministry of Health and Family Welfare, has made a detailed guidance document explaining the new process, called “compounding of offences”. The document doesn’t list the amount of fine and offences. “The union health ministry has appointed the Additional Director General of Health services dealing with the matters of Central Drugs Standard Control Organisation (CDSCO) as the compounding authority to deal with the compounding of offences under the recently amended Drugs and Cosmetics (Compounding of Offences) Rules, 2025,” said the document seen by News18. The industry experts view the reform positively, saying it encourages faster self-correction, reduces court burdens, and supports business growth while upholding drug safety and quality standards.
What Does “Compounding” Mean?
Compounding allows companies or individuals accused of less serious violations — such as technical or paperwork errors that do not endanger public health — to apply to settle the matter by paying a penalty. If the application is approved and the fine is paid, they receive immunity from prosecution for that “specific offence.”
Serious violations, like manufacturing adulterated or spurious drugs that could harm patients, are not eligible and will continue to face strict criminal penalties.
How The Rules Came About?
According to the document, “The Drugs and Cosmetics Act, 1940, ensures the safety, efficacy and quality of drugs, cosmetics, and medical devices in India. Traditionally, non-compliance under the Act could result in prosecution.”
However, it said, “recognising the need to address minor and technical contraventions without overburdening the judicial system, Section 32B was introduced to allow for compounding of offences.”
The move stems from the Jan Vishwas Act, which aims to promote ease of doing business by decriminalising minor offences across various laws, including the Drugs and Cosmetics Act, 1940.
The guidance document, seen by News18, provides clear procedures, frequently asked questions, a standard operating procedure, and a step-by-step flow chart to help manufacturers, importers, distributors, and regulators.
Applications are submitted to a designated compounding authority, usually a senior drugs control official. The authority reviews reports from local inspectors, decides on eligibility, and sets the fine amount. Applicants must pay within 30 days and cooperate fully to secure immunity.
But the given immunity can also be withdrawn. “The immunity from prosecution in certain cases shall stand withdrawn, if person fails to pay sum of specified order of compounding passed by the compounding authority.”
