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Pankaj Tyagi
| Updated: 05 Apr, 2022 | Category: AYUSH License

AYUSH Loan License: Meaning, Documents, and Benefits

Ayush loan license
Reading Time: 4 minutes

The Ayush loan license serves as legal authorization for those lacking a manufacturing unit but aims to engage with production via a third party having an AYUSH manufacturing license. In general, loan licensing allows businesses (lacking manufacturing units) to get access to third-party production units on a loan licensing basis.

Who can apply for AYUSH Loan License in India?

AYUSH Loan License is accessible to businesses via loan licensing on the following conditions;

  • The proposed Auyush Manufacturer has adequate staff;
  • The Manufacturer has ample equipment;
  • The Manufacturer has the potential to cater to production demand with available resources.

In general, the Manufacturer must have ample facilities to produce manufacture Ayush products on the client’s behalf.

AYUSH Loan License: Mandatory Documentations

  • Letter requesting the operation facility to produce the medicine
  • Consent letter for manufacturing facility
  • Demand draft Rs.600/- toward Ayush loan license along with GMP fees in favour of Directorate of Ayush of the respective state.
  • Premises related documents such as a rental agreement /sale deed or tax paid receipt
  • Master Formula in duplicate, clinical trial reports, book references, for proprietary medicine, testing methods and report relating to Specifications Safety study (for schedule E1 drugs)
  • Owner’s photographs (2)
  • In case of Partnership firm- copies of Partnership deed (attested) along with 2 passport size photographs of all the partners.
  • In case of company –MOA, AOA, 2 passport size photographs of all serving directors.
  • In case of Trust: copy of Trust Deed along with 2 passport size Photos of the trustees
  • In case of Proprietor-2 passport size photos, identity proof, notarized copy of sole proprietorship
  • key plan(blue print) and Site plan prepared in accordance with the schedule T of Drugs & Cosmetics Act 1940
  • Consent letter from AYUSH certified laboratory for product’s testing  
  • Affidavit declaring Non conviction of Director/ proprietor/ partner under the Drugs & Magic Remedies (Objectionable Advertisement) 1954 and Drugs & cosmetics Act 1940 on Rs 100/- stamp paper
  • in case of P&P, Stability study reports in accordance with Ayurvedic Pharmacopeia of India and Rule 161B of Drugs & Cosmetics Rules.

Procedure for securing AYUSH Loan License in India

The process of securing the Ayush Loan License is mentioned below:

  • First, a file has to be created enclosing the mandatory documentation.
  • Then, an application form for a loan license shall be filed.
  • The application shall then be furnished to the AYUSH ministry’s respective state office along with applicable fees.

How does the Ayush Loan license work in general?

Upon grant of loan license, the actual Manufacturer becomes liable to open access to the working area, office, document department, and other facilities to the loan licensee. A

Ayush department of the respective state is responsible for granting new license numbers to an eligible applicant.

The loan licensee pays out charges/rent/profit/commission as per mutual agreement to the Ayush license holder. After receiving license no, the loan license holder can initiate production undertakings in the agreed area.

Underlying legal conditions around loan license

A loan license can be granted to the applicant concerned, provided the third-party Manufacturer has;

  • Production facility located in an industrial area
  • The minimum size of the production facility should be 1200sqft.
  • Ample space for handling increased production volume
  • GMP certification*
  • The testing facility in place
  • 2 Ayurvedic experts and two pharmacies
  • Agreed to provide access to all the manufacturing and packaging machinery
  • Fulfilled underlying inspection norms

What is GMP certificate*?

GMP[1] is an abbreviation for Good Manufacturing Practice. It is a globally acknowledged term used for managing the control, testing, and quality of pharma-based products. It underpins extensive guidelines around quality control, which the pharma industry can implement with ease. GMP certification ensures that the end products are of supreme quality with no compromise whatsoever. 

is an abbreviation for Good Manufacturing Practice. It is a globally acknowledged term used for managing the control, testing, and quality of pharma-based products. It underpins extensive guidelines around quality control, which the pharma industry can implement with ease. GMP certification ensures that the end products are of supreme quality with no compromise whatsoever. 

Joint Commissioner, authorized by Food & Drug Administration’s commissioner, has the power to sign and grant the certificate under the scheme known as WHO-GMP certification. GMP certification standardizes and simplifies pressing issues like record keeping, paperwork handling, sanitation, grievance handling, process validation, etc. 

Typical benefits and pitfalls of loan licensing

A loan license offers plenty of benefits to the license holders. But it has some downsides as well. The section below discusses the same.

Advantages

  • A loan license enables the licensee to ensure minimal production cost for their products.
  • It allows the licensee to eliminate overhead expenses that otherwise are more prominent in in-house production units.
  • Labour management is not an issue with this license.
  • Licensees can skip maintenance costs and repair expenses, which is a significant issue in the in-house production.
  • The absence of in-house production means nil overhead costs and increased profit margins.

Disadvantages

  • A trade secret may get exposed, but it can be fixed via a non-disclosure agreement.
  • Complete control over the production line remains inaccessible to the licensee as it entirely depends on the contract terms.
  • There is no way the licensee can upgrade the production line, either by augmenting the present system or adding new equipment without permission.

Conclusion

Ayush loan license empowers businesses to access the production capabilities of another firm. With this license at disposal, companies with nil production infrastructures can enter into an arrangement with another certified firm to meet their production goals.

Read our Article:Ayush Manufacturing License for Herbal Products in India

Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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