Centre notifies rules for compounding of offences under Drugs & Cosmetics Act

New Delhi: The union health ministry has notified the Drugs & Cosmetics (Compounding of Offences) Rules 2025 to allow minor offences to be settled by fine or penalties.

Mint earlier reported about the Centre framing draft rules for compounding of offences under Drugs & Cosmetics Act.

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This is applicable to any pharmaceutical company, or any other person(s) involved in manufacture, import, sale, distribution or other activity covered under the Act.

Any company or person can file an application for compounding offence—a mechanism that allows companies to avoid legal proceedings and settle the matter by paying a fine. However, only a first-time offenders will be considered for penalty, and repeat offenders have to pay a fine and face imprisonment.

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Under the application, along with the name and address of the applicant, he/she has to furnish other details like name and composition of the product, manufacturing license, manufactured or imported by, exported or import code, brief facts of the case and particulars of the offence, details of show cause notice, whether it is a first time offences etc.

This follows the notification of the Jan Vishwas Act 2023 which converts several fines to penalties of up to ₹5 lakh, meaning legal prosecution is not necessary. It also removes imprisonment as a punishment for many offences.

The stated objective of the Act is to de-criminalize certain offences to promote ease of doing business.

“The Drugs & Cosmetics (Compounding of Offences) Rules 2025 have been notified so as to avoid legal proceedings in the court for small offences. Relevant penalties have been defined in the Jan Vishwas Act. A Compounding Authority will be constituted to look after the matters Compounding Authority having rank of officer,” said a government official.

“Offences like misprinting in labels of the medicine packaging, or over-writing, or logistic issues, or not displaying all the list of medicines etc, will be considered as minor offences and a person cannot be put in jail for this – basically, an offence which is unintentional in nature, but quality and safety of the medicines should not be compromised,” the official added.

The compounding authority has been empowered to grant immunity to a company or a person from prosecution and withdraw the same on certain conditions.

The immunity can be withdrawn if the person or company fails to pay the penalty, or is found to have concealed any particular material or given false evidence.

This assumes importance as the pharmaceutical sector is expected to reach $100 billion by 2025 owing to the robust domestic manufacturing base with over 10,500 manufacturing facilities.

Queries sent to the health ministry spokesperson remained unanswered.