Roundtable Discussion: Industry Outlook on Policy Frameworks for the Cosmetics Sector

1. Introduction

On 12th March 2025, the Indian Beauty & Hygiene Association participated in a roundtable on the policy framework for the cosmetics sector, bringing together key industry leaders and regulatory experts to discuss the challenges and opportunities within the sector. The discussion aimed to address regulatory bottlenecks, industry concerns, and pathways to a progressive legal framework that facilitates growth in the burgeoning cosmetics industry of India while ensuring consumer safety and compliance.

The following section links together some of the key pointers discussed by the individuals during the session into major focus areas.

2. Key Highlights of the Roundtable:

2.1 Legacy Issues and the Need for Regulatory Separation

The Indian cosmetics industry is currently governed under pre-independence regulations, clubbed with drugs under the Drugs and Cosmetics Act, 1940 due to historical circumstances. While this framework was originally intended to address health-related concerns, it has since become a bottleneck to industry growth. The absence of a separate regulatory structure for cosmetics has resulted in excessive compliance requirements, impeding innovation and market responsiveness.

A key argument presented was the fundamental difference between drugs and cosmetics. Drugs serve a medicinal and therapeutic purpose, while cosmetics are preventive and promote personal well-being. Many jurisdictions worldwide, such as South Korea and Australia, have moved towards a post-market surveillance regime, which allows greater flexibility while maintaining safety standards. Cosmetic products do not go through pre-market product approvals due to the low level of risk they carry, allowing them to innovate rapidly and mirror market trends. In contrast, India’s current pre-market approval process delays product launches and stifles competitiveness.

Further, state and central fragmentation has further compounded challenges, requiring approvals from multiple regulatory bodies, leading to inefficiencies in launching new products. The roundtable highlighted the importance of a single-window clearance system and the need for a separate cosmetics regulatory authority, mirroring best practices from developed markets.

2.2 Innovation, MSMEs, and Market Growth

The cosmetics industry in India is a rapidly expanding market, currently valued at over INR 2 lakh crore, with expectations of reaching INR 3 lakh crore in the next five years. E-commerce and digital platforms have democratised access to cosmetic products, fueling rapid industry growth. It was argued that the cosmetics industry is a fast-paced, progressive industry which is driven by the trends and aspirations of the younger population. This requires cosmetic companies to be agile and keep up pace with shifts in market trends. However, regulatory constraints have placed MSMEs and startups at a significant disadvantage.

Unlike larger corporations, smaller players struggle with licensing costs, complex approval procedures, and stringent compliance requirements that do not differentiate based on scale. Many MSMEs face difficulties in packaging, labelling, and product testing, with excessive bureaucracy slowing their ability to compete. It was noted that cosmetic startups must adhere to the same regulatory requirements as established brands, creating an uneven playing field. Suggestions to manifest this included a graded compliance system that accommodates different sizes of enterprises and streamlined licensing procedures that reduce operational costs for MSMEs.

The roundtable also discussed employment generation within the sector. The cosmetics industry has a high representation of women entrepreneurs and employees, contributing significantly to economic empowerment. Regulatory reforms that facilitate easier market entry and expansion could further boost employment and entrepreneurship, particularly in rural and semi-urban areas.

2.3 Strengthening Consumer Safety While Enabling Growth

The discussion focused on balancing safety and innovation in the cosmetics industry. While stakeholders supported strict safety standards, they emphasised the need for a more agile regulatory framework. Australia’s risk-based classification system was cited as a model for streamlining regulation while maintaining safety. The conversation also addressed the rising issue of counterfeiting, with nearly 20% of the market affected. Stronger enforcement, brand authentication, and industry-regulator collaboration were suggested to tackle this challenge.