Government steps in to regulate imports of cosmetics

Next time you enter a store to buy your favourite perfume, and the salesperson tells you that it is an "imported" brand that will soon be "out of stock", believe them. However, this will not be because of poor inventory management by the store. It is because of the introduction of new regulations which came into effect in April this year, as a result of which the unregulated import of cosmetics in India has completely stopped. The new rules, introduced by the Ministry of Health and Family Welfare and administered by the Drug Controller General of India, now require a compulsory registration certificate to import cosmetics into India.

The new rules, which amend the existing Drugs and Cosmetics Rules 1945, were first published (as draft rules) in February 2007. Subsequently, following a few amendments, they were finalised as the Drugs and Cosmetics (Fourth Amendment) Rules 2010 on May 19 2010. Due to concerns raised by many importers about the timely grant of registration certificates, the government deferred the implementation. However, these rules were finally brought into effect on April 1 2013.

According to a research report entitled “Indian Cosmetic Sector Analysis (2009-2012)”, published by Research and Markets, the Indian cosmetics industry has immense potential for growth. The report notes that the cosmetics industry registered sales worth Rs422.3 billion (approximately $9.3 billion) in 2010. It further observes that this rise is attributed to the ever-growing purchasing power and rising fashion consciousness of the Indian population. The 'brand fetish' of the urban Indian population never seems to be satisfied, giving rise to increasing imports of cosmetic products.

Under the new rules, all cosmetic products that are imported for sale in India must now be registered with the Central Drugs Standard Control Organisation (CDSCO), which has been appointed as the licensing authority for the purpose of these rules.

This new registration requirement aims primarily to regulate the import of beauty and personal care products by traders who have no accountability for the contents of the goods and provide no mechanism to attribute responsibility if a consumer is not satisfied with the quality of the product. In many cases, because of the lack of regulation of imported cosmetics, these were found to contain hazardous materials. Thus, the new rules attempt to curb the sale of sub-standard cosmetic products and to bring the requirements for imported products into line with those applicable to products manufactured in India.

All cosmetic products which are "imported" for "sale and distribution in India" are covered by the rules. The Indian Food, Drugs and Cosmetics Act contains a broad definition of 'cosmetics':

“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 cosmetics.”

New definitions introduced under the rules include the following:

1. The 'manufacturer' is the ‘brand/trade name owner' and not the actual manufacturer; and
2. A ‘brand’ is a category/class of products, as opposed to a trade name/brand. For example, the ‘brand’ will include all brands of lipsticks imported by the applicant and not just a particular ‘brand name’ of lipstick. For each class of products, a separate application for registration must be filed. For example, shampoo and conditioner belong to different classes. even though these may have a common ‘brand name’. A single application may be made to register more than one brand of cosmetics (including its different variants and pack sizes) by the same manufacturer.

The registration procedure is as follows. A trademark owner who has no manufacturing unit in India, but intends to sell its goods by way of import through its appointed importers/distributors/marketers in India, is now required to obtain a registration certificate to continue its marketing activities in India. For this purpose, an application for registration (Form-42), along with all the requisite documents, must be submitted to the Drugs Controller General, CDSCO, in New Delhi.

The new rules attempt to identify the source of the ingredients used in a cosmetic product, its place of manufacture, its alleged benefits and, most importantly, its safety standards. Hence, under the rules, the compulsory registration requires the submission of documents providing this information together with the application.

An application for the issue of a registration certificate for cosmetics intended to be imported into India must be made on a specific form (Form 42) by:

1. the manufacturer himself;
2. its authorised agent;
3. its importer in India; or
4. the Indian subsidiary authorised by the manufacturer.

Further, the documents to be provided along with the application include:

1. A request letter on the letterhead of the importer or authorised agent applying for registration, duly stamped and signed by the authorised person.
2. Details such as the location of the actual manufacturing sites of the products; a single application can cover many brands (read trademarks/brand names), variants, pack sizes and manufacturing units corresponding to the products at issue.
3. Proof of payment of the requisite fee (ie, the original treasury challan indicating the payment of a registration fee of $250 or its equivalent in Indian rupees for each ‘brand’ of cosmetic product).
4. Power of attorney (if the application is being submitted by an authorised agent of the manufacturer, this document must be notarised and apostilled or legalised by the Indian embassy in the country at issue).
5. Schedule D III (details of the cosmetic products to be imported, including the chemical and safety data).
6. Original or copy of the label and artwork (this must contain the details of the actual manufacturer; in cases where the manufacturer is not the brand name owner, the label must at least state "manufactured in XYZ country").
7. Free sale certificate/marketing authorisation.
8. Manufacturing licence (and attested English translation, when appropriate), if any. If there are multiple manufacturers for a single product, all manufacturers must provide this document.
9. Product specifications and testing protocols (eg, details of the ingredients used and quality data).
10. List of countries where a market authorisation, import permission or registration has been granted.
11. Package inserts, if any (copies of any leaflets or product specification data that go inside the packaging must be provided; no specific requirement has been listed, so it is suggested to provide information about the potential side effects/allergic reactions and other safety concerns).
12. Copies of the information about the brands, products and manufacturer(s).

It has been indicated that the time period for the issuance of a registration certificate will be six months from the date of submission of the application form and necessary documents (especially those required in schedule D III). Feedback suggests that the department is processing and granting registration certificates within two to three months of the application being filed.

The duration of a registration certificate - which is provided under certain conditions and in a specified format (Form 43) - is valid for a period of three years from the date of its issuance.

Ranjan Narula, Ranjan Narula Associates, New Delhi