AYUSH Manufacturing License – Approvals Required for Ayurvedic & Herbal Startups

The Indian wellness market is experiencing an unprecedented boom, with the Ayurvedic and herbal products sector projected to reach over $23 billion by 2027. This incredible growth presents a golden opportunity for entrepreneurs looking to start an Ayurvedic business in India. However, to legally operate, build consumer trust, and tap into this thriving market, obtaining the correct legal approvals is non-negotiable. The primary legal gateway for any entrepreneur wanting to manufacture and sell Ayurvedic, Siddha, or Unani products is the AYUSH manufacturing license. This comprehensive guide will break down the entire Ayurvedic and herbal approval process, making it simple for new business owners to understand the necessary requirements, documentation, and steps involved in launching a compliant and successful venture.

What is an AYUSH Manufacturing License?

The AYUSH manufacturing license is an official legal permit granted by the state drug licensing authorities under the supervision of the Ministry of AYUSH. It certifies that a company is authorized to manufacture and market products falling under the traditional Indian systems of medicine. This license is not merely a piece of paper; it is a testament to your brand’s commitment to quality, safety, and authenticity. Understanding its framework and mandatory nature is the first step toward building a reputable brand in the wellness industry.

Understanding the AYUSH Framework

AYUSH is an acronym that stands for Ayurveda, Yoga & Naturopathy, Unani, Siddha, and Homoeopathy. The Ministry of AYUSH, a dedicated body of the Government of India, is tasked with the crucial role of developing, promoting, and regulating these traditional medicine systems. Its primary objective is to ensure that the products manufactured under these systems adhere to strict quality control standards, are safe for consumption, and are effective. The Ministry sets the guidelines, and the respective State Licensing Authorities (SLAs) are responsible for the on-ground enforcement, including the inspection of manufacturing facilities and the issuance of licenses. This robust framework ensures that the integrity of these ancient sciences is maintained in a modern commercial landscape.

Why This License is Mandatory for Startups

For any startup entering the Ayurvedic or herbal space, securing an AYUSH manufacturing license is an absolute legal prerequisite governed by the Drugs and Cosmetics Act, 1940, and its rules. Operating without this license is illegal and can lead to severe penalties, including fines and imprisonment. Beyond the legal mandate, the license serves three critical business functions:

• Legal Compliance: It ensures your business operates within the legal framework defined by the Drugs and Cosmetics Act, 1940. This compliance is essential for all operations, from manufacturing and packaging to marketing and distribution, protecting your business from legal challenges.
• Quality Assurance: The core requirement for obtaining the license is compliance with Good Manufacturing Practices (GMP) as laid out in Schedule T of the Act. This means your facility, machinery, raw materials, processes, and personnel must meet stringent standards of quality, hygiene, and safety, guaranteeing a high-quality end product.
• Consumer Trust: In a market flooded with wellness products, consumers are increasingly discerning. An AYUSH license number printed on your product label is a powerful symbol of credibility. It assures customers that the product has been manufactured in a government-approved, quality-controlled facility, significantly boosting their confidence and trust in your brand.

Key Types of AYUSH Licenses for Startups in India

When you decide to start an Ayurvedic business in India, you are not limited to a single path. The regulatory framework offers different types of AYUSH licenses for startups in India, each designed to suit varying business models, investment capacities, and operational strategies. Choosing the right license is a critical strategic decision that will shape your startup’s journey, defining your level of investment, control, and responsibility in the manufacturing process.

Full-Fledged Manufacturing License

This is the most comprehensive license, intended for entrepreneurs who plan to establish their own complete manufacturing unit from the ground up. If you envision having full control over every aspect of production, from raw material sourcing and formulation to final packaging, this is the license for your business. It requires a significant capital investment in setting up a GMP-certified facility, which includes acquiring land or a building, installing state-of-the-art machinery, and establishing a fully equipped in-house testing laboratory to ensure product quality. Furthermore, you must appoint qualified technical staff, including production and quality control experts with degrees in Ayurveda (like BAMS) or relevant sciences. While the initial investment is high, this license offers unparalleled control over your intellectual property, production schedules, and quality standards, allowing for greater scalability and brand integrity in the long run.

Loan License

The Loan License is a popular and practical option for startups that have their own product formulations but lack the capital to invest in a full-fledged manufacturing plant. This license allows you to act as the manufacturer of record while utilizing the manufacturing facilities, machinery, and technical staff of an existing GMP-certified manufacturer. In this arrangement, you are “loaning” the facility of another company. While you don’t need to build your own factory, you remain fully responsible for the quality, safety, and efficacy of the products manufactured under your brand name. This model significantly lowers the initial investment and is an excellent way for new businesses to test the market, launch products quickly, and build their brand before committing to a larger capital expenditure. It’s a stepping stone that balances cost-efficiency with brand ownership.

Third-Party Manufacturing / Marketing License

This is arguably the most asset-light and common model for new entrants in the Ayurvedic sector. Under a third-party or contract manufacturing arrangement, you essentially function as a marketing and sales company. You own the brand, the product concept, and the marketing rights, but the entire manufacturing process—from sourcing raw materials to production and quality testing—is outsourced to a specialized third-party manufacturer who holds their own full-fledged manufacturing license. Your company’s name appears on the product as the “Marketer,” while the manufacturer’s details are also mentioned. This model requires the lowest initial investment, as there is no need to worry about factory setup, machinery, or regulatory compliance for production. It allows entrepreneurs to focus entirely on brand building, distribution, and sales, making it the fastest and most financially accessible route to enter the market.

Step-by-Step Guide to the Herbal Startup License Process in India

Navigating the herbal startup license process in India can seem daunting, but it becomes manageable when broken down into a clear, sequential process. Securing your AYUSH manufacturing license involves careful preparation, meticulous documentation, and adherence to regulatory standards. Following these steps systematically will ensure a smoother application journey and set a strong legal foundation for your Ayurvedic or herbal business.

Step 1: Fulfill the Foundational Requirements

Before you can even begin the application, you must establish the basic building blocks of your manufacturing enterprise. These foundational elements are non-negotiable and will be closely scrutinized by the authorities.

• Business Registration: Your venture must be a recognized legal entity. You can choose from various structures, such as a Sole Proprietorship, a Partnership Firm, a Limited Liability Partnership (LLP), or a Private Limited Company. Our guide, Comparing Business Structures: Private Limited, LLP, OPC & More, can help you understand the differences. Each structure has its own compliance requirements and legal implications. If you need help choosing the right structure and registering your business, expert guidance can be invaluable. You can explore options with TaxRobo Company Registration Service.
• Premises & GMP Compliance: You must secure a suitable premises, either owned or rented, that can be made compliant with Good Manufacturing Practices (GMP) as detailed in Schedule T of the Drugs & Cosmetics Act. This involves specific requirements for area size, layout (e.g., separate sections for raw materials, production, packaging, and finished goods), ventilation, sanitation, and pest control.
• Appoint Technical Staff: The regulations mandate the appointment of competent technical personnel to oversee production and quality control. For manufacturing Ayurvedic products, you must have at least one expert with a prescribed qualification, typically a degree in Ayurveda (BAMS) from a recognized university, who will be responsible for supervising the manufacturing process.

Step 2: Prepare a Comprehensive Documentation Checklist

Accuracy and completeness of your documentation are critical to avoid delays or rejection of your application. The specific list may vary slightly from state to state, but the core documents required for a manufacturing license are largely standard.

• Application in the prescribed Form 24-D.
• A detailed site plan and layout of the manufacturing premises, approved by a chartered architect, showing all sections and dimensions.
• Proof of ownership (e.g., sale deed) or a valid rent agreement for the premises.
• Constitution of the firm, such as the Partnership Deed, LLP Agreement, or the Certificate of Incorporation along with the Memorandum and Articles of Association (MOA/AOA) for a company.
• Affidavits and consent letters from the proprietor, partners, or directors.
• A comprehensive list of all machinery and lab equipment to be used in the manufacturing and testing processes.
• Appointment letter, experience certificates, and qualification certificates (e.g., degree, registration) of all proposed technical staff.
• A detailed list of the products you intend to manufacture, along with their complete formulation details, including all ingredients and their quantities.

Step 3: Application Submission and Fee Payment

Once your documentation is in order, the next step is to formally submit your application to the appropriate authority. This is typically the State AYUSH Department or the office of the State Drug Controller. Many states have now streamlined this process by introducing online portals, which makes submission and tracking easier. For instance, states like Uttar Pradesh have dedicated portals for AYUSH-related services. An example can be found at the official AYUSH Department, Uttar Pradesh website. You will be required to pay the prescribed government fees, which generally include an application fee, an inspection fee, and a final license fee. These fees vary significantly depending on the state and the scale of your proposed operations.

Step 4: Site Inspection and Grant of License

After your application and documents have been successfully submitted and preliminarily verified, the State Licensing Authority will schedule a physical inspection of your manufacturing premises. An inspector, or a panel of inspectors, will visit your site to verify everything you have claimed in your application. They will meticulously check for GMP compliance, inspect the installed machinery and lab equipment, verify the qualifications of your technical staff, and ensure all safety and hygiene protocols are in place. If the inspectors are satisfied that all conditions and standards have been met, they will submit a positive report. Based on this report, the State Licensing Authority will grant the AYUSH manufacturing license, officially authorizing you to begin production.

Beyond AYUSH: Other Essential Registrations for Your Herbal Business

Obtaining the AYUSH manufacturing license is the most critical step, but it’s not the final one in your compliance journey. To operate a fully functional and legally sound Ayurvedic or herbal business in India, several other registrations are essential. These registrations cover taxation, business identity, and brand protection, ensuring your startup is built on a solid legal and financial foundation.

GST Registration

Goods and Services Tax (GST) is a mandatory indirect tax for businesses in India. If your company’s annual turnover from the sale of goods is expected to exceed ₹40 lakhs (or ₹20 lakhs in certain states), you must obtain a GST Registration. For more details, refer to our Ultimate Guide to GST Registration for Small Businesses. This allows you to legally collect GST from your customers and claim input tax credits on your business purchases. Understanding the basics of CGST (Central GST), SGST (State GST), and IGST (Integrated GST) is crucial for correct invoicing and filing of returns. You can register and manage your filings on the official GST Portal. For hassle-free registration and compliance, consider using professional services like TaxRobo’s GST Registration service.

Udyam (MSME) Registration

Registering your startup as a Micro, Small, or Medium Enterprise (MSME) through the Udyam Registration portal is highly recommended. You can find the complete process in our article on MSME UDYAM REGISTRATION. This free-of-cost registration opens the door to a wide array of benefits offered by the government to support small businesses. These advantages include eligibility for priority sector lending from banks at lower interest rates, access to various government schemes and subsidies, benefits in government tenders, and protection against delayed payments from buyers. It provides your business with a recognized identity and helps you leverage government support for growth.

Trademark Registration

In the highly competitive wellness market, your brand name and logo are your most valuable assets. They differentiate your products from hundreds of others on the shelf. Trademark Registration provides you with the exclusive legal right to use your brand name, logo, or tagline, preventing competitors from using a similar or identical mark. This protects your brand’s identity, builds customer loyalty, and provides a legal remedy against infringement or counterfeiting. Securing your brand’s intellectual property is a crucial long-term investment. To protect your unique brand identity, explore services like TaxRobo’s Trademark Registration service.

Conclusion

The path to launching a successful Ayurvedic or herbal brand in India is paved with immense opportunity, but it begins with a foundation of legal compliance. Choosing the right license type—be it a full manufacturing license, a loan license, or a third-party model—is the first strategic decision. This is followed by a meticulous process of preparing documents, ensuring your facility meets stringent GMP standards, and navigating the application process with the state authorities. Reinforcing this core license with other essential registrations like GST, Udyam, and Trademark will build a resilient and legally sound business. Obtaining a valid AYUSH manufacturing license is not just a regulatory hurdle; it is the most critical step toward earning consumer trust and establishing a reputable and enduring brand in the Indian wellness industry.

The AYUSH manufacturing license approvals India process can seem complex, with its detailed requirements and procedural steps. Don’t let paperwork and regulatory uncertainty delay your entrepreneurial dream. Contact TaxRobo’s experts today for seamless guidance on company registration, licensing, and compliance, and launch your business with confidence!

Frequently Asked Questions (FAQs)

1. What is the validity of an AYUSH manufacturing license in India?

An AYUSH manufacturing license is generally granted for a period of five years from the date it is issued. To continue manufacturing operations legally, the license must be renewed before its expiry by submitting a renewal application along with the requisite fees to the State Licensing Authority.

2. How much does it cost to get an AYUSH license?

The cost varies significantly and depends on several factors, including the state where you are applying, the type of license (a full manufacturing license is more expensive than a loan license), and the scale of your operations. The total cost includes government fees (application fee, inspection fee, license fee) and may also include professional fees if you hire a consultant to manage the process. The government fees can range from a few thousand to several lakhs of rupees.

3. Can I manufacture Ayurvedic products from my home?

No, you absolutely cannot. The manufacturing of Ayurvedic, Siddha, or Unani drugs is a strictly regulated activity. It requires a dedicated commercial or industrial premises that is fully compliant with the Good Manufacturing Practices (GMP) as defined in Schedule T of the Drugs and Cosmetics Act. This includes specific requirements for space, hygiene, equipment, and infrastructure that a residential property cannot meet.

4. Do I need a separate license for each Ayurvedic product I want to sell?

You do not need a separate manufacturing license for each product. Your AYUSH manufacturing license authorizes your facility to produce Ayurvedic drugs. However, before you can manufacture and sell any new product, its formulation must be submitted to and approved by the State Licensing Authority. This is often referred to as a “product approval” or “formulation approval,” which is an endorsement under your existing manufacturing license.

5. What is the main difference between a Loan License and Third-Party Manufacturing?

While both models allow you to manufacture products without owning a factory, there is a fundamental legal and operational difference between a Loan License and Third-Party Manufacturing. The key distinctions lie in legal responsibility and the nature of the business relationship.

Feature	Loan License	Third-Party Manufacturing / Marketing
Legal Responsibility	You are the manufacturer of record. You are legally responsible for the product’s quality, safety, and any defects.	The third-party company is the manufacturer of record. They are legally responsible for production quality.
License Holder	You hold the “Loan License” in your company’s name.	The manufacturing company holds its own “Full-Fledged Manufacturing License.” You hold no manufacturing license.
Role of Your Company	Manufacturer	Marketer / Brand Owner
Product Labeling	Your company is listed as “Manufactured by.”	Your company is listed as “Marketed by,” and the manufacturer’s name is also mentioned.
Best For	Startups who want control over the product’s quality and legal ownership but lack capital for a factory.	Startups who want to focus purely on branding, marketing, and sales with minimal manufacturing liability.