Cosmetic business
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This article is written by Shreya Samal, pursuing a Diploma in Business Laws for In House Counsels from Lawsikho.

Introduction

The cosmetics market has been growing exponentially in India at an accelerating rate, especially in the urban areas. This can be attributed to several factors like in the influence of western culture, desire to look attractive, beautiful etc. Currently, there is an exhaustive range of various types of cosmetic products in the market. Every cosmetic product consists of different types of chemicals and hence it is important for the government of the country to look after the interest of the consumers and ensure that the products are safe to use.

Earlier, there were no strict regulations for cosmetic products but due to the increase in awareness regarding animal cruelty and harmful effects of chemicals in cosmetic products. Countries today are formulating laws and policies to that effect and are ensuring that stringent steps should be taken for safe use of these products.

In India, the Central Authority for discharging regulatory functions relating to drugs and cosmetics is the Central Drugs Standard Organization (CDSCO) which is headed by the Drugs Controller General of India. It is a statutory authority established under the Drugs and Cosmetics Act 1940 and the Drugs and Cosmetics Rules, 1945.

The primary goal of CDSCO is to ensure the safety, efficiency and quality of drugs, cosmetics and medical devices. Every state also consists of a state level authority known as the SDCA that is the State Drug Control Authority which is responsible for implementation of the regulations under the Drugs and Cosmetics Act, 1940.

The Bureau of India Standards is another statutory authority in India which is empowered to lay down stands for cosmetics under the Bureau of Indian Standards Act, 1986. Now let us further discuss the Cosmetic regulations in India.

Cosmetic regulations in India

According to the Drug and Cosmetics Act 1940, Cosmetic refers to “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 appearance and includes any article intended for use as a component of cosmetic”.

To ensure the safe use of cosmetic products included within this definition, India has laid down the Drug and Cosmetic Act 1940 and rules 1945 which lays down stringent provisions pertaining to the import, manufacturing and Sale & distribution of cosmetics. These provisions primarily deal with licenses for imports & manufacturing of cosmetics. The provisions also contain a list of cosmetics which are prohibited by law to be manufactured or imported and most importantly deal with penalties for contravention of any of the provisions under the Drug and Cosmetic Act 1940.

The cosmetic products in India are also regulated by the Bureau of Indian Standards (BIS) which lays down standards for cosmetics for the products laid down under Schedule ‘S’ of the Drugs and Cosmetics Act Rules 1945 which comprises of a list of 30 different types of cosmetics like skin powders, creams, pastes and tooth powders, hair oil, soaps, shaving creams etc. Any cosmetics in a finished product form which is included under Schedule-S of D & C Rules should conform to the Indian Standards specifications laid down by BIS from time to time.

Regulatory provisions for manufacturing of cosmetics

For the purpose of manufacturing cosmetics, a license needs to be obtained from the state regulatory authority (States foods and Drug Administration) appointed by the state government to manufacture any cosmetic specified under Schedule M-II of the Act for its sale/distribution.

How to obtain the license

The application shall be furnished in Form 31, accompanied by a fee of INR 2,500/- and inspection fee of INR 1000/-, and in case the number of items exceed 10, an additional fee shall be deposited. The application shall comprise of:

  1. Layout plan of the premise of the factory,
  2. Machines and equipment to be installed,
  3. Documents exhibiting the constitution of the firm,
  4. Documents exhibiting that the premise for the factory is possessed by the applicant, and
  5. Affidavits or any other relevant information required by state drug control authorities.

Before granting the license, the officers of the state regulatory agency shall inspect the premise for finding out whether the applicant has provided adequate space for manufacturing, storage of raw materials, packaging and finished products, has adequate equipment and machinery for manufacture and adequate testing facilities for raw materials & finished form of cosmetics. Based on these observations a detailed report is submitted by the inspectors and whether the license is to be granted or not is decided based on these observations.

Restrictions on manufacture, sale and distribution of drugs & cosmetics

As per Section 18 of the Drugs and Cosmetics Act, any cosmetic which are not of standard quality or are adulterated, misbranded or spurious are prohibited from manufacturing, sale and distribution. The restriction also extends to a patent or proprietary drug, which by any statement, device or statement accompanies it or it is claimed to prevent or mitigate or cure any ailment or disease or which has any other harmful effect as prescribed under the act. The restriction is also applicable to any cosmetic which contains an ingredient which is harmful for use as per the directions indicated on the label and any other drug or cosmetic which is contravention of any provision of the chapter dealing with manufacture, sale and distribution of drugs & cosmetics.

The terms spurious, misbranded, adulterated or standard quality under the restrictions on manufacture, sale or distribution provision have the same meaning under the provisions for import of drugs or cosmetics products.

In the case of Pratap Sharma Private Limited v. Union of India[1], the Supreme Court held that if a drug is not in compliance with the prescribed standards and has the potential to cause injury to or endanger the life of a person, the prohibition of such a drug if not expressly prohibited under the Act will be implicit and the accused shall be held liable.

Regulations for import of cosmetics

As per the Gazette notification G. S. R 426 (E) dated 19th May, 2010 (see here) issued by the Government of India, the Drugs and Cosmetics Rules 1945 has been amended and the new amendment provides for registration of import of cosmetics into the country. All the products which are imported for sale in India now are required to be registered with the CDSCO i.e. Central Drugs Standard Control Organization which has been appointed as the licensing authority specifically for this purpose. The purpose of this registration requirement is mainly to regulate irregular/indiscriminate import of cosmetics products by traders with no accountability for its content and no mechanism to cater to customers who are not satisfied with the quality. The main goal of having a registration requirement for import is to check the sub-standard sale of cosmetic products in India.

Who can apply

An application is to be filed for import of cosmetics into India by:

A manufacturer who has a registered place of business in India or by his authorized agent or by any of his subsidiary in India, authorized by the manufacturer or any other importer.

Documents required for filing the application for registration

The application should be applied via Form-42 which requires details of the manufacturing sites of the products. The application requires the following:

  1. Challan indicates payment of registration fee of USD 2000 or its equivalent to Indian rupees for each brand of the cosmetics product and USD 50 for each variant,
  2. Power of attorney in case the application is submitted by an authorized agent of the manufacturer. The Indian embassy of the country of the manufacturer is required to legalize the document,
  3. Details of the brand and cosmetic products with respect to the chemical composition and safety,
  4. Details of the actual manufacturer and in cases where the manufacturer is not the brand owner, a label stating ‘Manufactured in ZXY country’,
  5. License for manufacturing is to be attested in English language. In case of multiple manufacturers for the same product, all manufacturers need to provide these documents,
  6. Specifications of the cosmetics products like, details of ingredients used, quality etc, and testing protocols,
  7. A list of countries wherein permission for import has been granted or registration has been granted,
  8. Product specifications which go into packaging has to be provided and information about any potential allergic reaction or side effects has to be duly informed.

All the requisite documents along with the application are required to be submitted to the Drugs Controller General (I), CDSCO, FDA Office, Delhi.

Timeline of processing the application: The registration certificate for import of cosmetics shall be issued within 90 days from the date of submission of the application form and other required documents as discussed above.

Validity of the registration certificate: The registration certificate for import of cosmetics is valid for three years from the date of issuance.

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Other legal compliances

Legal metrology: The Packaged Commodity Rules, 2011 and Legal Metrology Act, 2009 deal with laws and procedure with respect to labelling, packaging, tax laws and imports in India. The legal metrology officers assess the compliances of packers, importers and manufacturers in the interest of consumers.

Shelf -life data: According to BIS, a manufacturer is required to conduct suitable shelf-life study as a protocol to ensure the quality & integrity of the product during the intended shelf life of the product through appropriate data. Tests should be performed on such products to ensure that there are no signs of degradation, fermentation, change in colour, rancidity etc. and that the product is safe to use.

Labelling compliances: As per the Drugs and Cosmetics Rules, 1945, labelling requirements entails that each product must have its site of manufacture address on both the inner and outer labels. In case the container is smaller in size, then the principal place of manufacturing and its pin code shall suffice. The outer label should clearly specify the ingredients used for the manufacturing of the product. The inner label shall entail the ‘directions for use’ accompanied with any other caution or warning that is necessary. The label should also contain names & quantities of any ingredient which is hazardous in nature.

Safety data: According to BIS, it is the prerogative of a manufacturer/distributor to suitably inform the customers on the labels on such products if there are any precautions to be taken while using the product, which have been known to show safety concerns for a section of people. Proof/study of such data should be available with the manufacturer/distributor if required.

Prohibitions: The import of certain cosmetic products in India is prohibited as per Section 10 of the Drugs & Cosmetics Act and Rules 134A, 135,135A of the Cosmetics and Drugs Rules, 1945 and they are:

  • A cosmetic not of standard quality,
  • A cosmetic which is spurious or misbranded or adulterated,
  • A cosmetic containing ingredient which is unsafe or harmful or is rendered injurious to use,
  • Any cosmetic having hexachlorophene,
  • Any cosmetic which has lead or arsenic compounds for colouring purposes,
  • A cosmetic comprising of mercury compounds,
  • Any cosmetic which is prohibited by Cosmetics and Drugs Rules, 1945 to be imported in India.

Recent developments

  • The Drugs and Cosmetics Bill, 2013 had been introduced in 2013 to replace the current Drugs and Cosmetics Act, 1940 which aimed at bringing a comprehensive legislation to cover various aspects of cosmetics and drugs. However, the bill was withdrawn from the Rajya Sabha in 2016. (See here)
  • The Ministry of Health & Family welfare issued a Gazette notification G. S. R 718 (E) dated 13. 10. 2014 (See here) which amended the drugs and cosmetics rules, which banned animal testing of cosmetics as well as disallowing imports of animal tested cosmetics in the country. India was the first country in South Asia to impose this ban. Further clarifications were issued in this regard which stated that the importer should get an original undertaking from the manufacturer (legal/brand owner) which shall state that the cosmetic products have not been tested on animals on and after 12/11/2014. New applicants should submit this undertaking along with the registration related documents to CDSCO & the copy of the undertaking is necessary to be produced at the ports for clearing the consignments.

Cosmetic regulations in the USA, EU and India: comparison

The manufacture and sale of cosmetics products are regulated by different regulatory systems in different countries around the world. In industrialized countries like the United States and the European Union (EU), the regulations have evolved and become extensive as these countries have the two largest markets in the world for cosmetic products. The cosmetic market in India is growing at 15-20% annually, which is twice as fast as the EU and US markets (see here). However, the cosmetic regulations in India are very time consuming as well as complex for pre-market approval of the products. Hence, it is imperative for a cosmetic manufacturer to understand the difference of regulatory compliances of India when compared to EU and USA.

Sr. No

Compliances

US

EU

INDIA

  •  

Legal authority & manufacture of cosmetics

In the US, cosmetics are governed by the Federal food, Drugs and Cosmetic Act, The Role of the FDA is to oversee the compliance of these regulations. Manufacturers or Distributors have to use Voluntary cosmetic registration program (VCRP) which is a post-reporting marketing system for cosmetics products that are in distribution for commercial purpose and is applicable only to products sold to customers in the US and not applicable for professional use such as in spas, salons etc.

The EU cosmetic regulations are enforced at the national level of each country which is a part of the EU having an authoritative body for overseeing compliance. The manufacturers are required to comply with their laws before selling it in the market. The importers or manufacturers are responsible for demonstrating that products are safe to use.

The Central Authority for discharging regulatory functions relating to drugs and cosmetics is the Central Drugs Standard Organization (CDSCO) which is headed by the Drugs Controller General of India. The Cosmetics regulations in India are governed by the Drugs & Cosmetics Act 1940. For the manufacture of cosmetic products for sale or distribution, the compliances for building a factory has to be according to Schedule M-II and application for license via form 31. The details are reviewed by the state licensing authority for granting license.

  •  

Labelling

The labelling requirements under the FDA are extremely stringent in the US. For example, the cosmetics which may be harmful if misused must bear appropriate label warnings indicating so, and adequate directions should be provided for safe use. The statements should be conspicuous and prominent. The FDA has the right to inspect and investigate such products and seize such misbranded cosmetics. In the aspect of labelling the expiry date of a product, in US there is no legislation pertaining to this.

In EU countries, the labelling of expiry dates are based on the criteria of durability of the products which is either within 30 months or beyond 30 months, with the statement of “Best before use…”

In India, the labelling for expiry date as per the BIS standards, should consist of the expiration date or the statement “Best before use… ”

The EU and US however have a robust, harmonized detailed and systematic labelling requirements. However, in India the labelling requirements are distributed amongst various authorities due to which many complications arise.

Notification to the authority

When a cosmetic product is ready to be sold in the market and if it has a pre or post approval modifications with respect to safety and quality, the manufacturer is required to send a notification to the authorities. In the US, it is mandatory.

Some member states in the EU also have this mandatory provision of notifying such modifications to the authorities.

However, in India, the notification procedure is not too stringent for raw materials but it is required before commercializing the product as per the law.

Prohibited and restricted lists

The US maintains lists of restricted and prohibited non-active or active ingredients along with positive lists for UV filter, preservatives and colouring agents. The restricted and negative lists are updated from time to time by the relevant authorities.

The EU also maintains lists of restricted and prohibited non-active or active ingredients along with positive lists for UV filter, preservatives and colouring agents. The restricted and negative lists are updated from time to time by the relevant authorities

BIS too has specified its prohibited list of ingredients under its annexures A, B, C and D. But there are a few elements which are unspecified and flexible. Also, the US/EU testing methods are way more superior than the Indian authorities. India should implement their testing methods for its cosmetics products.

  •      

Data on Product safety

In the USA, the products can be placed on the market without filing any information pertaining to the safety of the product. However, such products must have a specific warning on the label of the product.

The EU cosmetics directive entails that it is essential for the manufacturer to keep a product information file about each product which should comprise information pertaining to quality, safety testing, proof of claims made or data of any undesirable effects. These files need to be made available to the regulatory authorities upon request as it provides evidence that the manufacturer has complied with the regulatory laws.

In India, there is no such requirement of providing the authorities with product information files as per the regulations.

  •         

Pre-marketing approval

Not required in US.

Not required in EU countries.

As per the Indian regulations, the manufacturer for sale of cosmetics should get a pre marketing approval before commercializing the product in the market.

Conclusion

Despite the many differences in the regulations pertaining to cosmetics in various jurisdictions, each country has a common goal which is protection of consumers by ensuring that the cosmetic products are safe. The International Organization for standardization and International cooperation on Cosmetics Regulation (ICCR) along with other major international organizations have been working towards a harmonization model in which two unions of EU countries and ASEAN countries (10 countries association) shall frame a mutual and collective regulatory framework which will set the best example for other countries around the world.

There are basic compliances which need to exist in every regulatory system for the benefit of the consumers. For example, a company should be responsible towards its consumers and the community as a whole by providing details pertaining to safety and composition of the products and undesirable effects on human health resulting from the usage of the products and the same should be published in the public domain. In case any clarification is sought by any customer, the customer should be able to contact the company via email or telephone and the information provided should be published in the public domain. The queries should be followed up and replied by the company in simple language and a record should be maintained for all the complaints made by customers.

We are no strangers to the fact that the Indian regulatory scenario has major loopholes with respect to Indian cosmetic regulations as the regulations are multiple and complex and there are multiple authorities which make the process of approval of cosmetic products cumbersome and time consuming. There is a major issue of lack of implementation of guidelines under CDSCO and BIS regulations. There is no uniformity in the license approval criteria and there is inconsistency amongst different authorities for interpretation of any particular issue.

Therefore, the need of the hour is that the cosmetic rules and regulations need to be harmonized for the purpose of product development, stability, safety, quality and efficacy of the cosmetic products. All guidelines and regulations must be combined and synchronized at the national level having a single authority which is CDSCO instead of different state authorities functioning under their respective state guidelines. Thus, to safeguard and protect the consumer there is a need to enhance the regulations pertaining to control standards and safety information for cosmetics in India to ensure safe finished cosmetic products.

 References


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