The move could materially tighten oversight across India's $50 billion pharmaceuticals market, even as industry stakeholders urge caution on the plan.
The proposal by the Drugs Controller General of India (DCGI) involves increasing the imprisonment duration by three-and-a-half times to seven years, and financial penalty by up to 28 times under the Drugs and Cosmetics Act to align it with the stricter Narcotic Drugs and Psychotropic Substances (NDPS) Act.
The Drugs and Cosmetics Act is limited in scope and is often inadequately enforced. Violations under this carry a punishment of two years of imprisonment, a fine of ₹20,000, and the offence is often bailable, said the people cited above.
The new plan seeks to implement a minimum of seven years in prison and a fine of at least ₹5 lakh and make these offences cognizable and non-bailable. With around 2.5 million "dependent users" of pharmaceutical opioids in the country, as per a 2019 government report published by ministry of social justice, the development assumes significance for India’s pharma market.
What are these drugs all about
The segment under lens comprises the highly-regulated schedule H, H1, and X drugs and accounts for 30% of high-value prescription antibiotics, psychotropics and analgesics, as per industry estimates from the Indian Pharmaceutical Alliance (IPA) that represents 23 leading research-based domestic pharmaceutical companies.
Formulations such as codeine-based syrups—Alprazolam, Tramadol and Zolpidem that are categorized under highly-regulated schedules H, H1 and X drugs—being misused as intoxicants with impunity. While Alprazolam and Zolpidem are prescribed for treating acute anxiety and insomnia, respectively, Tramadol is a potent opioid analgesic used for severe pain management that requires careful tapering to avoid withdrawal. Another drug being misused is Diazepam, which is often prescribed for muscle spasms and alcohol withdrawal.
Tightening the noose
The plan includes creating a separate schedule for such drug formulations and a mandatory real-time tracking system for purchase orders to secure the supply chain through a digital trail.
As part of this new playbook, drug manufacturers will be required to furnish formal purchase orders and immediately notify authorities upon dispatch of such medicine batches. This includes emailing dispatch details to drug inspectors at both the source and destination, as well as the superintendent of police in the relevant jurisdictions.
Drugs under schedule H, H1 and X cannot be sold without a doctor's prescription. This categorization, which aims to ensure safe drug dispensing and prevent misuse, requires a duplicate prescription and meticulous record-keeping by pharmacists.
“DCGI is reviewing the proposal to include necessary provisions under Drugs Rules, 1945, to monitor sale of certain drugs that are mentioned under Drugs Rules as well as the NDPS Act, discussed during the 67th Drugs Consultative Committee (DCC) meeting held in November 2025," said one of the two government officials cited above, requesting anonymity.
After reviewing the proposal, the consultative committee has recommended forming a sub-committee to review the matter.
“Drug formulations having dual presence in Drugs & Cosmetics Act as well as the NDPS Act pose a great challenge to the regulators because of their high probability to be misused as intoxicants. It has been observed that there is an increase in the cases of diversion of such drug formulations for illegal use majorly at the distribution level and also probability of such incidents at the manufacturer level can’t be ruled out," said the government document reviewed by Mint.
“At present, such drugs are under Schedule H/Schedule H1/Schedule X and violation of provisions and conditions of manufacturing and sale/ distribution (like diversion of NDPS and Habit forming drugs) of such drugs attract penal provision like other schedule H and OTC drugs," the document said.
Schedule H drugs are prescription-only and are sold against a registered medical practitioners (RMP's) prescription, and marked 'Rx'. Schedule H1 is a stricter subcategory (such as specific antibiotics) requiring a red-boxed warning, special sales registers, and prescription retention for three years. Schedule X drugs are potent narcotics with a high abuse potential, requiring a special licence, locked storage, and are marked ‘XRx'.
“As such, the licensed wholesalers/retailers who indulge in diversion of such drugs for illegal misuse/ intoxication by the young generation are only liable for legal punishment under section 18(a)(vi), in which maximum punishment is of two years. The offence is bailable and non-cognizable and the fine is ₹20,000 only," the document said, mooting changes to the law; an imprisonment of not less than seven years and a fine not below ₹5 lakh.
The seizure of pharmaceutical tablets used as psychotropic substances has risen from 18.4 million units in 2020-21 to over 46.9 million units by the end of the last recorded assessment in FY25, as per the annual report of the Narcotics Control Bureau (NCB) and a press statement of the ministry of home affairs (MHA).
India’s pharmaceutical sector manufactures a wide range of medications, including thee several "habit-forming" substances cited above. These drugs are strictly regulated due to their potential for misuse and physical or psychological dependence.
“This change is intended to tighten the noose around wholesalers and retailers who exploit the current system to supply drugs to the younger generation," said the second government official cited above.
Queries emailed to the spokespersons of the health and family ministry and the DCGI on 27 January remained unanswered until press time. Emailed queries to leading drugmakers Sun Pharma, Dr Reddy’s Laboratories, Abbott, Aurobindo Pharma and Glenmark on Friday also remained unanswered.
The flip side—call for caution
Public health experts also said the government must be cautious on the regulations, given the concerns over the legal liability to be borne by chemists.
Dr. Atul Ambekar, professor of psychiatry at the National Drug Dependence Treatment Centre at All India Institute of Medical Sciences in Delhi, said, “We must be cautious with these regulations. If the bar is set too high, chemists may stop stocking essential medications due to the perceived legal liability and low profit margins; ultimately depriving genuine patients of the treatment they need."
While pharmaceutical misuse is indeed a concern, the primary substance abuse crisis in north India remains centered on illegal drugs such as heroin, said Dr. Ambedkar. "Our regulatory response must balance the need for control with the necessity of patient access," he added.
The pharmaceutical industry is also opposed to the regulator's plan to tighten regulations.
Devesh Malladi, chairman, NDPS Committee at Indian Drugs Manufacturing Association (IDMA), representing 1,200 companies, said the proposal to introduce additional monitoring provisions under the Drugs Rules, 1945 for substances already governed by the NDPS Act, 1985 is unnecessary, duplicative, and impractical.
“The NDPS Act is a comprehensive and special legislation that already mandates stringent controls on the manufacture, sale, purchase, possession, record-keeping, and reporting of notified substances. It is backed by severe penal provisions, including mandatory imprisonment, fines, and strict enforcement mechanisms. There is no regulatory vacuum that warrants parallel oversight under the Drugs Rules," Malladi said.
Introducing overlapping compliance requirements risks regulatory confusion, multiple inspections and duplicative reporting without improving enforcement outcomes, he said.
“Such duplication also contradicts the principle that a special law should prevail over a general law. From an implementation standpoint, the proposal is unworkable, as NDPS compliance is administered through designated authorities with specialized enforcement powers, not through routine Drugs Control machinery," said Malladi. "Extending NDPS-type monitoring under the Drugs Rules would strain already overburdened State Drug Authorities."
An over-regulation of legitimately-manufactured controlled substances will have a dampening effect on pharmaceutical manufacturing and exports, discouraging compliant operators, while doing little to curb illegal diversion.
“If any gaps are perceived, they should be addressed within the NDPS framework itself, rather than by creating a parallel regulatory regime. The proposal needs to be reconsidered in the interest of regulatory clarity, ease of doing business, and effective enforcement," he said.
India has 10,500 pharmaceutical manufacturing units, with the market expected to grow to $130 billion by 2030 and to $450 billion by 2047, as per the Department of Pharmaceutical and Vision Viksit Bharat statement for 2047.
“Distributors and retailers often respond cautiously to unclear or punitive compliance requirements, potentially reducing stock. In the short-term, this may affect availability," said Arpit Bhatia, director, Laborate Pharmaceuticals that manufactures a range of prescription medicines for the domestic and export markets. “Success depends on the implementation: clear definitions, predictable processes, and a phased transition are essential to ensure tighter controls don't unintentionally disrupt medicine access."
Execution across a fragmented ecosystem with varying digital readiness is the primary challenge. Maintaining accurate, real-time reporting beyond urban centers requires sustained investment, Bhatia said. "Companies must upgrade technology and retrain teams without slowing supply. Realistic timelines and continuous engagement between regulators and industry are critical for a workable system," he added.
Legal experts say the enforcement of such laws should not be arbitrary or asymmetric. “As with all laws that have wide discretionary penal powers, the enforcement of such laws should not be arbitrary or asymmetric. This could have the effect of slowing down supply chains of pain management and psychotropic drugs, which is certainly a side-effect of a well-intentioned legislative move," said Akash Karmakar, partner Law Offices of Panag & Babu and senior advisor a Flint Global.
