New rules, naming and shaming as cosmetics industry gets a regulatory makeover

cosmetics regulation

India’s drug regulator is looking to tighten grip on a booming but loosely regulated cosmetics market with stricter rules, and, for the first time, publicly naming and shaming brands for failing quality tests.

The need for a harder look at the industry, which has low entry barriers, comes as there has been an explosion of new players, many of them direct-to-consumer (D2C) brands sold online.

The industry is self-regulated and mostly relies on third-party contract manufacturers. The health and family welfare ministry rolled out the Cosmetics (Amendment) Rules, 2025 on July 29.

The cosmetics market, including D2C and over-the-counter (OTC) brands, is estimated to be worth Rs 48,000 crore. The dermatology segment of the market, which is better monitored, is valued at Rs 15,500 crore.

Naming those who fail quality tests

The government's tougher stance was underscored by a "Not of Standard Quality (NSQ) Alert" for March 2025, which, for the first time, included a list of cosmetics.

The report, published by the Central Drugs Standard Control Organisation (CDSCO), found that multiple products contained much higher levels of mercury than specified in the Cosmetics Rules, 2020.

Lipstick from Blue Heaven Cosmetics, beauty creams from brands such as Faiza and Goree and some products from Dabur India were named in the report.

It also flagged microbial contamination and the presence of pathogens in products from various companies.

The market has seen a "huge proliferation" of brands, with over 22,000 new personal care Shopify stores emerging since the pandemic and a single product like sunscreen yielding 30,000 results on Amazon, Saurabh Arora, Managing Director of testing firm Auriga Research, said

"The cosmetic rules came out in 2020. They brought in some more structure but again, even now, there is no requirement for mandatory testing," Arora said. "It really comes down to the brand owners, the manufacturers and their conscience and their systems and processing or how they are complying with quality."

New rules target key gaps

The 2025 amendments aim to plug some of these regulatory gaps. Licensees will now have to maintain detailed records of each cosmetic batch and the raw materials used for three years or six months after the expiry, whichever is later. This also applies to test results for raw materials and final products. An exception is made for soap manufacturers, whose procedures will be as approved by the licensing authority.

A rule 31A empowers the State Licensing Authority to suspend or cancel a licence if a manufacturer fails to comply with regulations, after giving them an opportunity to be heard. Licensees can appeal to the state government within 90 days.

The rules explicitly define "use before" as the first day of the stated month and "date of expiry" as the last day of the month, removing ambiguity for consumers.

For exports, if the buyer requests that the manufacturer's name and address be omitted, the label can instead bear a code number approved by the State Licensing Authority.

The Central Drugs Laboratory has been designated as the Central Cosmetics Laboratory, tasked with analysing samples and functioning as an appellate lab.

Much needed change

Industry veterans have welcomed the move, saying the changes were necessary to build credibility and protect consumers.

"I think it is needed, cosmetics can be very easily... abused," said Nikkhil K Masurkar, CEO of Entod Pharmaceuticals, a research-based company that has entered the dermatology space. "Initially it may cause a bit of panic, it may cause a bit of disruption but there are too many players. I mean every third person wants to launch their cosmetic brand, who has no experience... If it becomes like that, then we will lose that consciousness of quality."

The challenge is significant. Many smaller brands are "purely dependent on their third party manufacturer to give them... the compliance", and at a brand level, "a lot of these products are not tested," Arora said. He recounted a case where a customer brought in a fairness cream for testing, which was found to contain alarming levels of corticosteroid-like hydrocortisone and hydroquinone. Arora, without naming the brand, said a ceramide-based cream didn’t have the active ingredient.