How to start a cosmetics brand in India: CDSCO and state licences

Structure and business model

Most cosmetics brands operate as private limited companies because they raise funds, sell through marketplaces and sign manufacturing contracts. The bigger decision is the supply model: your own factory, a loan licence at a contract manufacturer's facility, buying finished products from a licensed manufacturer under your brand, or importing.

Each model has different licence holders. If a third-party manufacturer makes and labels the product under its own licence, it carries the manufacturing licence, but your brand still answers for labelling, claims and consumer complaints.

Licences under the Cosmetics Rules 2020

Central and state roles are split. CDSCO, the central regulator, handles import registration. State Licensing Authorities handle manufacturing and loan licences after inspecting the site.

What the application involves

Manufacturing applications in COS-5 include the premises layout, details of the competent technical staff, equipment, testing arrangements and a self-declaration of compliance with good manufacturing practices under the rules. The state authority inspects before granting COS-8. Retention fees fall due before each five-year period ends; late payment attracts a monthly late fee and long default leads to deemed cancellation.

Import registration in COS-1 is filed on SUGAM with product details, ingredient information, labels and authorisation from the foreign manufacturer, and fees are paid through Bharatkosh. Rule 13(5) gives CDSCO a review period of up to 180 working days for complete applications, so plan import launches accordingly.

Labelling, claims and GST

Labels must carry the product name, manufacturer details and licence number, ingredients, net quantity, batch number, manufacturing and expiry or use-before dates, and any warnings. A product that claims to treat or cure a condition may be treated as a drug, not a cosmetic, which needs a different licence. Avoid medical claims in packaging and advertising.

From 22 September 2025, talcum powder, hair oil, shampoo and soap attract 5% GST, down from 18%. Other cosmetics depend on their HSN classification, so check each product. Legal Metrology declarations and MRP inclusive of taxes are mandatory on retail packs.

Ongoing compliance

Pay retention fees on time, keep batch manufacturing and testing records, and notify the authority of changes in premises, technical staff or product list. Importers must keep COS-2 registration current for every brand and product imported.

Run GST, EPR, ROC and income-tax compliance in parallel. Marketplaces and large retailers increasingly ask for licence or registration numbers before listing cosmetics, so keep certificates and label approvals ready.

Should you import or manufacture first?

Importing lets you test demand without building a factory, but every imported product needs COS-2 registration before shipment, and the review period can be long. Customs will not clear cosmetics without valid registration, so stock ordered early can sit in port.

Domestic manufacturing through a licensed contract manufacturer is often faster to launch, since the state licence is already in place. A loan licence gives you more control over formulas and quality while using someone else's plant.

Pitfalls for cosmetics founders

Regulatory delays usually come from incomplete files, so prepare label artwork, ingredient lists, technical staff documents and site layouts before you apply to either authority.

• Selling white-label products without confirming the manufacturer's licence covers them.
• Making therapeutic claims that turn a cosmetic into a drug.
• Importing stock before the COS-2 registration is granted.
• Using an 18% rate on soap or shampoo after the 2025 cut.

Step by step

1. 1Choose the supply model

   Own factory, loan licence, third-party manufacturing or import.

2. 2Incorporate and register for GST

   Set up the company and GST registration.

3. 3Apply for the right licence

   COS-5 or COS-6 to the state authority, or COS-1 to CDSCO for imports.

4. 4Prepare compliant labels

   Include all mandatory declarations and avoid drug-like claims.

5. 5Register for packaging compliance

   Legal Metrology and EPR registrations.

6. 6Protect the brand

   File trademark applications in the relevant classes.

7. 7Calendar retention fees

   Track the five-year retention date for each licence or registration.