Licensing Requirements for Setting up a Drug Manufacturing Business in India

India is globally recognized as a pharmaceutical powerhouse—ranking among the top in the production of generic drugs, vaccines, and bulk Active Pharmaceutical Ingredients (APIs). With a well-established scientific infrastructure and cost-effective manufacturing capabilities, the country attracts both domestic and international players seeking to enter the pharmaceutical sector.
However, establishing a drug manufacturing unit in India is not just about infrastructure and investment—it involves navigating a robust regulatory framework designed to ensure the safety, efficacy, and quality of pharmaceutical products. Missing even a single legal step can lead to operational delays, regulatory penalties, or even license cancellation.
This comprehensive guide outlines the essential licensing and compliance requirements for setting up a drug manufacturing business in India, helping you stay legally compliant and audit-ready from day one.

1. Drug Manufacturing License

This license is the foundation of your pharmaceutical business. It is issued by the State Drugs Control Authority under the Drugs and Cosmetics Act, 1940. It legally permits the manufacturing of pharmaceutical products for sale and distribution.

Types of Manufacturing Licenses:

Form 25 – License to manufacture allopathic drugs not specified in Schedule C, C1.
Form 28 – License to manufacture drugs specified in Schedule C and C1 (e.g., vaccines, injectables).
Form 29 – License to manufacture drugs for the purpose of examination, test, or analysis.
Loan License (Form 25A/28A) – For units operating using another manufacturer's infrastructure.

Requirements:

• GMP-compliant facility as per Schedule M guidelines.
• Dedicated manufacturing and quality control areas.
• Stability testing and in-process quality checks.
• Proper documentation systems for batch manufacturing and quality testing.

2. Qualified Technical Staff (B. Pharmacy or Equivalent)

A drug manufacturing business must employ at least one competent technical person to supervise manufacturing operations.

Eligibility Criteria:

• A degree in Pharmacy (B.Pharm/M.Pharm) from a recognized university.
• Registered with the State Pharmacy Council.
• At least 18 months of practical experience in manufacturing drugs.

Significance:

Qualified personnel are crucial for ensuring adherence to regulatory guidelines, maintaining product quality, and avoiding non-compliance penalties. Their expertise directly impacts the efficiency and credibility of manufacturing operations.

3. State Pollution Control Board Consent (CTE & CTO)

Regulatory Requirement:

Manufacturing units are required to obtain environmental clearances from the State Pollution Control Board (SPCB) under the Air and Water (Prevention and Control of Pollution) Acts.

Types of Consent:

• Consent to Establish (CTE): Must be obtained before construction or installation
• Consent to Operate (CTO): Required before starting commercial manufacturing

Environmental Compliance Includes:

• Installation of an Effluent Treatment Plant (ETP).
• Proper hazardous waste disposal mechanisms.
• Noise, air, and water pollution levels within permissible limits.

Importance:

Environmental compliance is non-negotiable. Failure to comply can lead to license suspension, plant closure, or legal penalties.

4. Ground Water NOC (No Objection Certificate)

If your manufacturing unit uses groundwater for operations, you must obtain a NOC from the Central Ground Water Authority (CGWA) or State Ground Water Board.

Role in Operations:

Sustainable water sourcing is critical to avoid depletion and legal complications. This NOC ensures that your unit operates responsibly within groundwater extraction limits.

Process:

• Submit hydrogeological reports and water demand estimates.
• Install water meters and monitoring systems.
• NOC validity usually ranges from 2 to 5 years, subject to renewal.

Role: Ensures responsible water usage, supports sustainability goals, and prevents legal or environmental conflicts.

5. Factory License under the Factories Act, 1948

This is a mandatory license issued by the Department of Labour or Chief Inspector of Factories for premises employing 10 or more workers with power, or 20+ without power.
Key Requirements:

• Building plan approval.
• Compliance with safety, ventilation, and sanitation norms.
• Installation of safety equipment like emergency exits and safety signs.

Compliance Relevance:
This license ensures that the working environment is safe, legally compliant, and geared toward worker welfare—thereby reducing liability and increasing operational efficiency.

6. Fire Safety NOC

A No Objection Certificate (NOC) from the local Fire Department certifies that your premises follow fire safety regulations.
Requirements:

• Installation of fire extinguishers, alarms, hydrants, and smoke detectors.
• Adequate exits and evacuation routes.
• Building layout and occupancy compliance with the National Building Code (NBC).

Operational Importance:
A Fire NOC not only safeguards life and property but is also mandatory for other government clearances, insurance policies, and licensing continuity.

7. Quality Management System (QMS) and GMP Compliance

In the pharmaceutical industry, where public health and safety are paramount, the implementation of a robust Quality Management System (QMS) and adherence to Good Manufacturing Practices (GMP) are not just regulatory requirements—they are fundamental to business integrity and product credibility.
A well-established QMS ensures that drugs are manufactured consistently to the highest standards of quality, safety, and efficacy, in compliance with both Indian and international regulatory frameworks. It forms the backbone of a company’s ability to maintain regulatory approvals, pass inspections, and expand into regulated markets.

Key Components:

• WHO-GMP certification or ISO 9001:2015 for quality management.
• In-house Quality Control (QC) and Quality Assurance (QA) teams.
• Batch Manufacturing Records (BMRs) and SOPs for every process.
• Validation of processes, equipment, and cleaning protocols.
• Standard documentation practices for traceability and audits.

Strategic Value:
A robust QMS framework enhances brand credibility, supports regulatory audits, and enables smoother entry into global markets—making it a critical pillar of pharmaceutical operations.

8. Import and Export Licensing 

In the pharmaceutical industry, the supply chain often extends beyond national borders—whether it’s importing raw materials such as Active Pharmaceutical Ingredients (APIs), excipients, or packaging materials, or exporting finished drug formulations to global markets. These activities are strictly regulated to ensure the safety, quality, and traceability of pharmaceutical products.
Engaging in import and export operations requires multiple licenses and registrations under Indian and international regulatory frameworks.
Must-Have Registrations:

• Import Export Code (IEC) from DGFT.
• Import License from CDSCO for pharmaceutical items.
• Export Permissions and registration with Pharmexcil for international trade.

International Certifications:
For exporting to regulated markets, you may also need:

• USFDA approval
• EU-GMP certification
• WHO Prequalification (WHO PQ)
• Country-specific dossier registration and audits

Global Significance:
These approvals unlock access to international markets, boost competitiveness, and demonstrate adherence to global pharmaceutical standards.

Conclusion

Setting up a drug manufacturing unit in India is a high-stakes venture that goes far beyond building infrastructure or acquiring capital. It demands meticulous planning, regulatory foresight, and unwavering commitment to compliance at every stage of the business lifecycle. From securing essential licenses like the Drug Manufacturing License and Factory License to adhering to environmental regulations, QMS protocols, and international export standards—each step is critical to establishing a legally compliant, operationally efficient, and globally competitive pharmaceutical enterprise.
By proactively meeting these regulatory requirements, businesses not only mitigate legal and operational risks but also position themselves for long-term growth, global market access, and brand trust in an industry where quality and compliance are non-negotiable.

For more details, please visit Metacorp Pharma Licensing