Law Updates

Subject

Summary: The Formulation of the Intermediate Regulatory Framework in India India's formulation intermediate licensing framework sits at the intersection of two regulatory pillars: New Drugs and Clinical Trials (NDCT) Rules, 2019, under the Central Drugs Standard Control Organisation ( CDSCO ), which govern the approval of New Drugs, including all modified or sustained-release dosage forms. The Drugs and Cosmetics Act and applicable State Rules, under the State Licensing Authorities (SLAs), govern manufacturing licenses for standard, non-new-drug formulation intermediates. CDSCO's clarification, issued via Circular dated 24 June 2026, sits on top of these two pillars and tells manufacturers exactly which pillar applies to which type of intermediate. The formulation intermediate segment is an important part of India's pharma manufacturing chain: Formulation intermediates such as Directly Compressible (DC) granules, taste-masked granules, and modified-release granules/pellets are produced both by API manufacturers moving downstream and by specialised CDMOs. These intermediates feed directly into tableting and capsule-filling operations across India's domestic and export-facing pharma industry. Confusion between Central and State jurisdiction has, for years, led manufacturers to choose licensing routes based on convenience rather than correct classification. What Has Changed in 2026 - The Full Regulatory Clarification 1. New Drugs Including SR/ER/PR/DR Intermediates Now Require CDSCO Approval CDSCO checks the definition of "New Drug" from time to time and applies it strictly. The rule it relies on is Rule 2(1)(w) of the NDCT Rules, 2019 - this rule says that any modified or sustained release form of a drug is automatically treated as a New Drug, no matter how long that drug has been sold in its ordinary form. Here is the key thing: a granule or pellet that was earlier licensed at the State level might now require Central CDSCO approval, even if its active ingredient is decades old. This happens because the release mechanism itself - not the drug molecule - is what triggers New Drug status. With the 24 June 2026 clarification: All SR, ER, PR, and DR dosage forms - including Gastro-resistant Tablets/Capsules and Delayed Release (Enteric Coated) Tablets/Capsules - are deemed New Drugs. This deeming applies equally to the bulk formulation intermediate (the SR/ER/PR/DR granule or pellet itself), not only to the finished tablet or capsule. Manufacturers must file an application for the finished formulation together with a coordinated application for the formulation intermediate, both with CDSCO. 2. Standard Formulation Intermediates Remain on the SLA Track CDSCO has also clarified the other side of the line: Directly compressible granules and standard taste-masked granules that are not New Drugs continue to be licensed by the concerned State Licensing Authority. Applicants must submit the requisite data - stability, impurity, and blend uniformity information - directly to the SLA. 3. The Novel Excipient Override CDSCO has built in one important exception that applies regardless of release profile: If a formulation intermediate, of any kind, contains a new or novel excipient, CDSCO approval becomes mandatory. This overrides the SLA route entirely, even for an otherwise ordinary, immediate-release granule. 4. Single Point of Submission The circular closes by stating that the applicant must submit the application for the formulation intermediate - whether for import, manufacturing, or marketing - to CDSCO or to the SLA, as the case may be, based on the classification above. Implementation Timeline Summary Regulatory Milestone / Event Effective Date Transition Expectation 68th DCC Meeting recommendation on formulation intermediates 20 March 2026 Transition Expectation Official CDSCO Circular notification (F. No. ND-11012(17)/1/2026-eoffice) 24 June 2026 Treated as an immediate enforcement baseline - no formal grace period notified Recommended internal SKU/portfolio audit by manufacturers Immediate No statutory window; self-rectification is advisable before the next inspection Why CDSCO Issued This Clarification - The Core Need 1. Inconsistent State-Level Interpretation Created a Fragmented Market When formulation intermediates first began moving at scale between CDMOs, API makers, and formulation houses, there was no single, uniform understanding of where the SLA's authority ended and CDSCO's began. Because the underlying rule was open to interpretation, different states reached different conclusions for materially similar products. It was like a national vehicle safety authority allowing one state to certify an engine block while another state insisted the same engine needed national approval. Manufacturers found themselves choosing the state with the most convenient interpretation rather than the legally correct one. So the licensing system lost its consistency. The 2026 clarification fixes this by drawing one national line that every state and zonal office must now follow. 2. Therapeutic Risk Tied to Modified-Release Mechanisms Modified-release granules and pellets work because of a polymer coating or matrix structure that controls how and when the drug is released inside the body. Even a small failure in that mechanism at the bulk intermediate stage - before the product is even compressed or filled - can mean: Dose-dumping, where the full intended dose is released far too quickly, which is especially dangerous for narrow-therapeutic-index drugs Bioavailability variance, where batch-to-batch differences in coating change how much drug actually reaches the bloodstream Coating failure during compression or capsule filling, which can compromise the release mechanism before it even reaches finished-product testing CDSCO's job under the NDCT Rules, 2019, is to ensure that any product carrying this kind of therapeutic risk is evaluated centrally, with full clinical and technical scrutiny, rather than locally. 3. Closing the Gap Between API, Intermediate, and Finished Dose Previous regulatory oversight was confined to only the final tablet or capsule product. The actual intermediate drug substance in its bulk SR/ER/PR/DR form – that is, the process wherein the delivery system is made – had somehow eluded the same extent of oversight. This gap is bridged with the 2026 clarification. 4. Protecting the SLA Track From Misuse The novel excipient override has the same reason behind it; an otherwise conventional granule could turn out to be more risky after the addition of an untested excipient. The absence of the override would have made it possible for manufacturers to submit novel granules for approval under the SLA process due to their conventional release pattern. Impact on Indian Pharma Businesses in 2026 1. Large Formulation Manufacturers and CDMOs Modified-Release Portfolio: The companies that have specific multiparticulate or SR/ER pellet production lines will be directly impacted. Now, such companies will have to: Identify all SR/ER/PR/DR SKUs vis-a-vis the new CDSCO requirement Submit dual applications - one for the formulation and one for the intermediate – to CDSCO Re-align their SLA licensing for modified-release intermediates vis-a-vis the CDSCO requirement Standard Granule Portfolio: In the case of DC granules and taste-masked granules, large-scale manufacturers should: Improve upon stability, impurity, and blend uniformity data for a smooth SLA renewal Screen every excipient used across their portfolio for novelty status under Indian regulatory precedent 2. Specialised Pellet and Granule CDMOs This group sits at the centre of the circular's impact. Many CDMOs built their business specifically around multiparticulate SR/ER pellet manufacturing for client formulators. Impact: A CDMO supplying SR or ER pellets under an SLA-only license is now operating outside the correct regulatory channel. Pellets without the correct CDSCO clearance cannot legally be supplied for use in a finished formulation. To continue operating, these CDMOs must: Identify every pellet/granule SKU that falls under the SR/ER/PR/DR or novel excipient category. File the coordinated CDSCO application alongside their client formulator, since the rule expects parallel filing for the intermediate and the finished product. Update batch records to separate intermediate-stage data clearly from finished-dose data There is no formal grace period attached to this clarification, which makes early realignment important. 3. API Manufacturers Moving Downstream A growing number of API manufacturers have begun producing granulated or pelletised intermediates to capture more value in the supply chain. Impact: The moment an API is converted into an SR/ER/PR/DR granule or pellet, the entity is no longer simply an API producer for regulatory purposes - it becomes a formulation intermediate manufacturer. These manufacturers need to assess each downstream product individually against the CDSCO/SLA matrix rather than assuming their existing API manufacturing license is sufficient. 4. Importers of Formulation Intermediates India imports certain specialised pellets, coated granules, and excipient-based intermediates. Impact: Imported SR/ER/PR/DR intermediates require CDSCO clearance before import, manufacturing, or marketing. Importers need to verify, with their overseas suppliers, the declared release profile and excipient composition of every consignment before filing for clearance with the correct authority. 5. Finished-Dose Formulators Procuring Intermediates Externally Formulation houses that buy granules or pellets from third-party CDMOs rather than manufacturing them in-house must: Confirm that every externally sourced intermediate carries the correct license - SLA or CDSCO - before incorporating it into a finished product. Update vendor qualification and supplier audit checklists to specifically capture this classification Recognise that a finished formulation built on an incorrectly licensed intermediate carries the same compliance exposure as the intermediate itself. How Businesses Will Achieve Compliance Phase 1: Portfolio and SKU Classification Review (Do This Now) For each formulation intermediate, check and record: Whether it carries any SR, ER, PR, or DR release function Whether it is gastro-resistant or enteric-coated Whether its formula includes any excipient not previously used in an approved Indian product Compare each SKU against the CDSCO/SLA matrix to determine the correct licensing track Flag any SKU currently held under an SLA-only license that should be on the CDSCO track Phase 2: CDSCO Dual-Application Preparation (Where Needed) Compile release kinetics, dissolution, and stability data for the bulk intermediate Align this data with the finished-formulation dossier, since both applications are evaluated together Submit the coordinated application to CDSCO's New Drugs Division Phase 3: SLA Dossier Strengthening for Standard Intermediates Upgrade stability data, impurity profiling, and blend uniformity reports for DC and standard taste-masked granules File or renew the application with the concerned State Licensing Authority Phase 4: Excipient Novelty Screening Screen each excipient with respect to Indian regulatory precedent of usage, beyond just its worldwide approval. When novelty is established, prepare a safety package for CDSCO assessment Whenever feasible, screen excipient replacement that would maintain the SLA designation Phase 5: Inspection Readiness Amend batch manufacturing logs to differentiate intermediate stage data from final dose data Perform internal mock audits for the CDSCO/SLA classification prior to the next regular audit Benefits for Businesses After Implementation For Compliant Manufacturers and CDMOs Benefit Details Manufacturing Continuity Correctly licensed intermediates are not exposed to show-cause notices, suspensions, or batch seizures during inspection. Client Confidence Formulators can rely on CDMO-supplied intermediates without inheriting hidden licensing risk. Export Credibility A clean CDSCO/SLA compliance record supports export clearance and CoPP applications. M&A and Valuation Protection A documented, correctly classified intermediate portfolio avoids diligence flags during fundraising or acquisition Reduced Enforcement Exposure Proactive realignment avoids reactive remediation under inspection pressure, which is typically costlier and faster-paced For Patients and the Healthcare System Benefit Details Reduced Dose-Dumping Risk Central evaluation of release mechanisms at the bulk intermediate stage reduces the risk of premature or excessive drug release. More Consistent Bioavailability Centrally reviewed SR/ER/PR/DR intermediates are evaluated for batch-to-batch consistency before reaching patients. Greater Confidence in Modified-Release Products A clearer licensing line reduces the chance of substandard modified-release products entering the supply chain through SLA-only routes. Is This the Right Decision or an Additional Burden? Why It Is the Right Decision Aspect Reason Closes a Genuine Regulatory Gap Bulk SR/ER/PR/DR intermediates carry real therapeutic risk that was not consistently scrutinised at the intermediate stage. Restores National Uniformity A single CDSCO/SLA classification line replaces inconsistent state-by-state interpretation. Strengthens the Novel Excipient Safety Net The override ensures untested excipients cannot bypass central safety review by hiding inside a conventional-looking product. Backed by Statutory Definition The clarification applies an existing rule - Rule 2(1)(w) of the NDCT Rules, 2019 - rather than introducing new, untested obligations. Where It Adds Burden Concern Excipient Re-Screening Effort No Formal Grace Period Because the circular is clarificatory, manufacturers do not have a notified transition window before enforcement applies. Dual-Filing Cost and Complexity Coordinated CDSCO applications for both the intermediate and the finished formulation require more data and more time than a single SLA filing. CDMO Realignment Pressure Specialised pellet/granule CDMOs built around SLA licensing now face an urgent need to refile under CDSCO. Excipient Re-Screening Effort Companies must re-examine excipients across their entire portfolio for Indian novelty status, even where global approval already exists. Business Opportunities Created 1. CDSCO Dual-Application Filing Services (Core Opportunity for Corpseed) Service Target Clients CDSCO New Drug permission for SR/ER/PR/DR formulations and bulk intermediates Formulation manufacturers and CDMOs Coordinated dual-dossier drafting (finished formulation + intermediate) Formulators working with external pellet/granule CDMOs Excipient novelty screening and safety dossier preparation R&D teams and ingredient importers SLA license filing and renewal for standard granules DC granule and taste-masked granule manufacturers Import documentation and CDSCO port office liaison Importers of formulation intermediates Annual compliance monitoring and SKU re-classification All manufacturers holding mixed CDSCO/SLA portfolios 2. SKU Classification and Portfolio Audit Services Reviewing every formulation intermediate SKU against the CDSCO/SLA matrix Identifying SKUs currently under SLA licenses that should be reclassified to the CDSCO track Corpseed can manage the full classification process for clients, including: Reviewing release-mechanism data for each product Screening excipients against Indian regulatory precedent Flagging high-risk SKUs requiring urgent CDSCO filing 3. Inspection Readiness Audits for CMOs and Formulators CMOs and formulators face show cause notices and batch seizures in case the intermediate licensing does not coincide with the present CDSCO categorization. Corpseed will audit intermediate licensing for: CDSCO authorization for SR/ER/PR/DR pellets & granules SLA authorization for standard DC and taste-masked granules Apply for approval from CDSCO/SLA prior to the next audit cycle 4. Technical and Regulatory Advisory for Smaller CDMOs Not all smaller pellet and granule makers can afford to have an in-house regulatory team. What they need is affordable and targeted assistance for: Evaluating if their current SKUs qualify for the CDSCO or the SLA path Preparing the comprehensive application data package Answering any queries that may arise from CDSCO or SLA during the dossier review Corpseed can provide such assistance through defined advisory packages 5. M&A and Investment Due Diligence Support Pharma companies undergoing fundraising, acquisition, or licensing-out transactions need a clean intermediate licensing record. Corpseed can: Compile a classification report covering every formulation intermediate in the target company's portfolio Identify and quantify any CDSCO/SLA misclassification risk ahead of due diligence Support remediation before disclosure to counterparties Corpseed's Core Message for This Service Given Corpseed's existing work in pharmaceutical regulatory compliance, CDSCO's 2026 formulation intermediate clarification is a direct, time-sensitive opportunity. Because the circular operates as an immediate enforcement baseline rather than a future-dated rule, manufacturers and CDMOs holding SLA-only licenses for SR/ER/PR/DR intermediates are already exposed, with no formal grace period to fall back on. This urgency, combined with a clear and well-defined service scope, makes CDSCO/SLA dual-track compliance a high-demand service for Corpseed.

Subject

Summary: This AYUSH notification brings into force, from 1 July 2026, the AYUSH‑related amendments to the Drugs and Cosmetics Act, 1940, that were already enacted in the Jan Vishwas (Amendment of Provisions) Act, 2026. The real policy change is in Jan Vishwas; this notification is the “start button.” What exactly does this notification do? Issuing authority: Ministry of Ayush, New Delhi. Legal basis: Sub‑section (2) of section 1 of the Jan Vishwas (Amendment of Provisions) Act, 2026 (Act 8 of 2026). Content: It appoints 1 July 2026 as the date from which those provisions of Jan Vishwas 2026 that amend the Drugs and Cosmetics Act, 1940, at serial numbers 8 (H) and (I) will come into force. Effect: From 1 July 2026 onwards, the amended penalty/ compliance framework for AYUSH‑related provisions of the Drugs and Cosmetics Act becomes legally operational. So, the “policy” you are asking about is actually the cluster of D&C Act amendments for AYUSH that Jan Vishwas 2026 introduced; this notification activates them for AYUSH. What Jan Vishwas does to the Drugs and Cosmetics Act? While the notification doesn’t list the clauses, Jan Vishwas 2026 is broadly a “decriminalisation and rationalisation” law. For the Drugs and Cosmetics Act, especially for AYUSH drugs, it typically does things like: Convert certain minor, technical, or procedural offences from criminal offences (with possible imprisonment) into monetary penalties/compounding offences. Rationalise penalty amounts, making them proportionate and escalating with seriousness/repetition. Introduce or clarify adjudication mechanisms (designated officers who can impose penalties), reducing routine police/court involvement. In some cases, increase the maximum fines for serious repeat or fraudulent offences to maintain deterrence while reducing the use of imprisonment for minor lapses. The exact sub‑clauses (8(H) and 8(I)) will be specific amendments to selected sections of the D&C Act dealing with AYUSH products typically around misbranding, labelling, minor licence violations, and record‑keeping. Impact on AYUSH businesses and compliance How businesses will be compliant? For AYUSH manufacturers, marketers, and importers: Substantive quality, safety, GMP, and labelling conditions under the Drugs and Cosmetics Act and its Rules do not get diluted. Those standards remain in place. What changes is the nature of consequences for certain categories of non‑compliance: Many minor lapses will now attract a monetary penalty imposed by a designated authority, rather than prosecution in criminal courts. Some offences may become compoundable, allowing payment of a fixed sum to settle the matter without a prolonged case. Businesses should therefore: Map their existing compliance obligations (licences, GMP, labelling, renewals, reporting). Understand which sections of the D&C Act now have revised penalty structures and plan internal SOPs accordingly. Build internal systems for quick response to show‑cause notices and adjudication proceedings, to avoid higher penalties for non‑cooperation or repeat violations. Overall, day‑to‑day compliance remains the same the rules you have to follow are not relaxed but the enforcement mechanism is more predictable and less criminalised. Who benefits the most? AYUSH MSMEs and mid‑size manufacturers For small and mid‑size Ayurvedic, Siddha, Unani, Homoeopathy, and other AYUSH drug manufacturers, the biggest fear earlier was criminal prosecution (including potential imprisonment) even for relatively minor, first‑time technical lapses. Moving these to monetary penalties and adjudication reduces business risk and personal risk for directors, making the regulatory environment less intimidating and more in line with ease‑of‑doing‑business goals. Start‑ups and new AYUSH brands Entrepreneurs launching new AYUSH formulations, wellness products, and exports will perceive the lower criminal risk when entering a regulated space. Easier resolution of minor issues (labelling mistakes, delays in renewals, non‑material documentation errors) will encourage experimentation and formalisation, instead of staying in the grey market. Regulators and enforcement agencies State Licensing Authorities and AYUSH regulators get clearer powers and processes for adjudicating the minor offences internally, without overloading the criminal courts with routine compliance cases. This can improve consistency and speed of enforcement and allow them to focus criminal prosecution on truly serious offences adulteration, spurious drugs, serious public‑health threats. Who may be negatively impacted or lose out? Businesses relying on low‑compliance, grey‑market practices Firms that benefited from regulatory paralysis or inconsistent prosecution might find the new system more predictable and more strictly enforced because monetary penalties are easier to impose than criminal trials. If Jan Vishwas has increased fines for certain repeat or serious violations, chronic violators could see higher financial exposure than under a weakly enforced criminal system. Very small, informal players who don’t regularise The law expects businesses to be formally licensed, documented, and reachable for adjudication and penalty orders. Informal, unregistered AYUSH manufacturers or packers might face sharper consequences if caught, including higher penalties or escalated action if they fail to engage with the adjudication process. Overall, well‑intentioned, compliant businesses gain; those that depended on informal arrangements and lax enforcement lose ground. Why AYUSH / Government brought this policy? Two main reasons: 1. Jan Vishwas mission: This is part of a cross‑Ministry project to make 30+ central laws more business‑friendly by: Reducing criminalisation of economic and procedural offences. Increasing reliance on civil penalties and administrative adjudication. 2. AYUSH sector-specific needs: The sector has a very large number of small and medium players; heavy criminal provisions deter formalisation and investment. There was a need to separate minor lapses (documentation, small label deficiencies) from serious threats (spurious/adulterated drugs), so that enforcement can be proportional and credible. India wants to promote AYUSH exports and wellness tourism; a rational, transparent penalty regime is important for investor and international buyer confidence. Impact on the Indian economy 1. Positive effects Ease of doing business: Lower criminal risk also reduces the perceived risk premium for operating in the AYUSH pharmaceutical and wellness sector. That can encourage the formalisation and entry of new, better‑capitalised players. Better utilisation of regulatory resources: Courts and inspectors can also focus their limited bandwidth on serious offences and systemic quality lapses, rather than chasing minor paperwork errors. Export potential: A modern, graded enforcement framework makes it easier to demonstrate to international partners that India is serious about quality and also has predictable, rule‑based enforcement. 2. Possible downsides/concerns If penalties are set too low or adjudication is too lenient, there is a theoretical risk of some players treating fines as a “cost of doing business” and not improving quality. Much will depend on how the AYUSH and drug regulators implement the new powers quality of inspections, fairness, and transparency in adjudication. On balance, the likely macro impact is moderately positive: reduced compliance anxiety, better targeting of enforcement, and improved investment climate in AYUSH pharmaceuticals and wellness products. Does this help business conditions, transparency, and product quality? Business Conditions: Yes, there are fewer criminal triggers, more fines are used, and minor cases are closed more quickly. Legal overhead and ambiguity are decreased as a result. Openness: Compared to ad hoc criminal complaints, Jan Vishwas can improve openness to the extent that it mandates specified punishment slabs, designated adjudicating personnel, and prescribed procedures. Product caliber: GMP, standards, and laboratory testing are examples of direct quality criteria that have not changed and are still stringent. Day-to-day compliance can be indirectly increased by making it simpler and quicker to impose sanctions for small transgressions. However, how regulators prioritize and keep an eye on significant quality issues will determine the true quality benefit.  Is this the right decision or an additional burden? Why it’s largely the right decision? It does not add new substantive obligations on AYUSH businesses; it changes how non‑compliance is handled. Moving away from the criminalisation of minor breaches, it aligns with global practice and with India’s own ease‑of‑doing‑business agenda. It should reduce fear among genuine entrepreneurs and attract more formal, compliant capital into AYUSH. Where burdens still exist? AYUSH businesses must still manage complex compliance under the D&C Act and Rules. They now also need to understand the new penalty and adjudication system, respond properly to notices, and manage internal documentation more carefully. If regulators become more active (because penalties are easier to impose), some players may feel more pressure than before, even though the nature of that pressure is civil rather than criminal. Overall, this is not a dark policy; it is a technical, enabling step that activates decriminalisation and rationalisation of penalties from 1 July 2026. Implementation date and business opportunities Implementation date: The notification appoints 1 July 2026 as the date on which the AYUSH‑related amendments to the Drugs and Cosmetics Act under Jan Vishwas 2026 come into force. Opportunities: Compliance and legal advisory: Law firms, consultants, and compliance service providers can help AYUSH companies re‑map risks under the new regime, design SOPs, and train staff. Quality and GMP upgrade services: With the easier enforcement, regulators may push more firmly on quality consultants and labs supporting GMP, validation, and testing gains. Consolidation and investment: A clearer, less criminalised regime can facilitate consolidation of small plants, private equity investment, and joint ventures with global wellness/pharma companies. RegTech tools: Digital tools for tracking licences, inspections, notices, and penalty status can help AYUSH manufacturers stay ahead of compliance.

Subject

Summary: India just passed a very important new law called the Jan Vishwas (Amendment of Provisions) Act, 2026. Even though the name may seem a bit lengthy and intimidating, the underlying principle is rather simple. Think about a situation when you get arrested simply due to a small error that occurred in a shop, such as an incorrectly labelled product. Doesn't it sound a bit unjust? The amendment states, "Just impose a financial penalty instead." The President of India signed this law on 7th April, 2026, and it was published in the Gazette of India on 8th April, 2026. Different parts of the law will start on different dates, as the Central Government announces them. For example, changes related to medicines and AYUSH products begin on 1st July, 2026. What Jan Vishwas 2026 Does and When It Starts This law goes through dozens of old rules and laws that India has had for a long, long time - some from as far back as 1870! It updates all of them by making one key change: instead of sending people to jail for small mistakes, it charges them a monetary fine instead. Here's a simple breakdown of what the law does: What the Law Says What It Means in Simple Words Change old criminal punishments to penalties No jail for small business mistakes - just a money fine Creates "Adjudicating Officers" A special official who decides if someone broke a rule and what fine to pay Creates an "Appeal" system If someone disagrees with the fine, they can go to a higher official within 30 days. Fines go up by 10% every 3 years Fines stay fair and don't become too small over time Saves all old rights and cases Cases already going on in courts won't be affected by this new law. The government can fix problems for 2 years. If something is confusing in the new law, the Government can fix it quickly. The law covers a wide range of old Indian laws, including rules about stamps, cattle, drugs and medicines, pharmacy, banks, coal mines, silk, dock workers, urban development, army, and much more. How It Changes the Regulatory Regime Before this law, if someone broke even a tiny rule - like a label on a medicine bottle being slightly wrong - a police case could be filed, and the person could face jail. That made businesses very scared. Now, the system works more like a staircase of punishments: Step 1 - Warning or a small fine Step 2 - A bigger fine if the mistake happens again Step 3 - An even bigger fine for every day the mistake continues Step 4 - Jail only if someone refuses to pay the fine This is much fairer. A new officer, called an Adjudicating Officer, handles all these cases. This officer calls the person, listens to both sides, and then decides the fine. The fine cannot be decided without giving the person a proper chance to explain. After the fine is set, anyone who disagrees can appeal to a higher authority within 30 days, and that appeal must be decided within 60 days. Another big change: every 3 years, the minimum fine amount goes up by 10%. This makes sure fines don't become so small that nobody cares about them. Here is a look at how some specific fines changed: Impact on Businesses and Individuals Who Benefits the Most Small businesses and shops (MSMEs): Earlier, a small shopkeeper or factory owner could get a police case filed against them for a tiny mistake. This was very scary and costly - even if they were innocent, fighting a criminal case in court takes years and a lot of money. Now, most of these mistakes are handled through a fine system, which is faster and less scary. Big companies in key sectors: Companies working in medicines (AYUSH, Drugs & Cosmetics), legal measurements, coal mines, silk, roads, and local government areas now face less risk of criminal cases for technical mistakes. Government officials who enforce rules: Officials now have clear powers. Earlier, they had to send every rule-breaking case to a criminal court. Now, they handle most cases themselves - faster and more fairly. Ordinary citizens: Better enforcement in areas like slum rules, highway safety, animal welfare, and urban development means cleaner, safer cities and towns. Who May Be Worse Off or "In Losses" Businesses that keep breaking rules: The new fines are much higher. A business that used to get away with small fines will now pay a lot more, and the fines go up every 3 years. There is no escaping. Anyone who ignores official notices: If a fine is decided and not paid, it gets recovered like a land tax - the government can take property or money. And if someone is repeatedly ignoring rules, jail is still possible. Large contractors or builders: Some fines have jumped dramatically. For example, mischief on national highways can now attract a fine of up to ₹1 crore. This is a big number even for large companies. Why the Ministry of Law & Justice Introduced Jan Vishwas The Ministry of Law & Justice introduced this law because it cuts across many different rules from many different ministries. The main reasons for bringing this law are: Make India easier to do business in: For years, industry groups have asked for fewer criminal risks in business laws. This law answers that call. Make fines realistic: Old fines - like ₹100 from a law written in 1871 - meant nothing to anyone today. New fines are bigger and go up automatically. Reduce load on courts: Millions of small cases were clogging up criminal courts. Moving them to administrative officers frees up the courts for bigger, more serious cases. Make rules clearer: Many old laws were confusing and outdated. This law standardises how penalties are decided, appealed, and recovered. Law Old Fine New Fine Cattle-Trespass Act ₹100-500 ₹5,000 Court Fees Act (stamp fraud) ₹1,000 ₹10,000 Slum Areas Act violations Low Up to ₹1 Lakh Damage to National Highways Low Up to ₹1 Crore Impact on the Indian Economy and Business Environment Positive Systemic Effects A better place to invest and start a business: When investors know that honest businesses won't face jail for small mistakes, they feel more confident putting money into India. This helps sectors like pharma, infrastructure, mining, logistics, and consumer products grow. More consistent enforcement: Regulators who earlier avoided taking action - because criminal courts were too slow - can now act quickly through the penalty system. This means better drug safety, stronger building norms, and safer highways. Smarter fines that stay meaningful: The automatic 10% increase every 3 years means Parliament doesn't have to keep passing new laws to update fine amounts. Better cities and towns: Many amendments target Delhi-specific laws - the Delhi Municipal Corporation Act, Delhi Development Act, Slum Areas Act, and Cantonments Act - which should make urban management sharper and cleaner. Potential Negatives and Risks Risk Explanation Higher cost of breaking rules While jail risk drops, money risk rises sharply for repeat offenders. The quality of officials matters. If adjudicating officers are not well-trained, fines may be unfair or inconsistent. Small businesses must know their rights. If a business doesn't respond to notices or misses appeal deadlines, the penalty becomes final. Overall, the law is clearly pro-reform and pro-business. The burden falls mainly on those who don't want to follow the rules. Does This Add Burden or Improve Conditions and Transparency? Improvements Clarity on what happens when rules are broken: Now everyone knows the penalty amounts, who decides them, how to appeal, and by when. No more guessing. Rules made in public: Many laws now require that detailed procedures be written as rules that are placed before Parliament - not hidden in internal orders. Fairer punishment steps: Going from a warning to a small fine, then to a bigger fine, and then to limited jail is more balanced than jumping straight to a criminal case. Remaining or New Burdens New knowledge needed: Businesses must now understand a new penalty system across all the laws that apply to them. Rising fines over time: Because fines go up 10% every 3 years, the cost of not improving a compliance system keeps growing. Stronger internal processes needed: Businesses must keep better records, track notices, and be ready to reply to official communications on time. This is, in the end, a net positive for the Indian economy and for honest businesses. It is not primarily an environment law - though some sections (animal welfare funding, slum areas, highways, cantonments) will indirectly protect the environment and public spaces. Opportunities for Corpseed and Similar Compliance Firms For companies like Corpseed that help businesses with regulatory work, licensing, and compliance, this law opens up several new areas of work: Cross-law compliance mapping: Businesses need to know exactly which old rules have changed and what the new fines are. A compliance firm can build ready-made products for sectors like Drugs & Cosmetics, Legal Metrology, Municipal laws, Labour laws, and Coal Mines. Revising internal checklists and processes: Every business that operates in regulated sectors needs updated Standard Operating Procedures (SOPs) that help them avoid first-time violations, respond to notices, and file appeals within the deadline. Technology dashboards (RegTech): A software tool that tracks all the laws a business must follow, shows when fines go up (every 3 years), and alerts the team about any notices or hearings - this is a very useful product for mid-size and large companies. Training and workshops: Compliance officers, factory managers, company secretaries, and legal teams need training on how the new penalty system works across different sectors. Paid workshops and webinars can serve this demand well. Helping in legal replies and appeals: When businesses receive show-cause notices from adjudicating officers, they need help writing replies and representing themselves. Compliance firms can play this role professionally.

Subject

Summary: In order to protect the investors and minimize regulatory clutter, SEBI's June 2026 framework on AIF winding-up, inoperative fund status, and retention of proceeds aims to cleanly close the legacy funds. It is a structured "end-of-life" regime for funds that are essentially over, not a closure of AIFs.  What this 2026 policy does? SEBI amended the AIF Regulations in April 2026 and, through the circular dated 16 June 2026, has now laid down detailed rules for: 1. Retention of liquidation proceeds beyond fund life AIFs can keep back money after the normal liquidation/dissolution period (“permissible fund life”) only in three situations: A real or potential legal / tax / regulatory liability where there is a written notice or communication (including show‑cause, reassessment, investigation summons, or investor/counterparty litigation notice). A probable/possible litigation or tax demand where at least 75% of investors by value consent to retention. Residual winding‑up operational expenses, supported by invoices or comparable past expenses, and only for up to three years after fund life. 2. Investment of retained monies Any retained amount must be parked only in instruments permitted under Regulation 15(1)(f) -i.e., safe, liquid instruments like liquid mutual funds, T‑bills, bank deposits, etc., not in new high‑risk investments. 3. ‘Inoperative Fund’ status An AIF can apply to SEBI to be tagged as an Inoperative Fund if: It has one or more schemes with retained monies for the reasons above, and wants to surrender its registration eventually or It has no retained money but is keeping the registration alive only in anticipation of a favourable litigation outcome. 4. Once SEBI approves, the AIF is tagged as inoperative and: Cannot launch new schemes. Cannot charge management fees on any scheme. Must keep retained funds only in permitted liquid instruments. Must eventually apply to surrender registration once liabilities are settled and all retained money is distributed. 5. Regulatory easing for Inoperative Funds Inoperative Funds are also exempt from the most ongoing compliances: No quarterly or annual activity report, PPM audits, CTR, benchmarking‑data reporting, NISM certification, custodian requirement, or the regular investor disclosures, except: An annual retention status report, both to SEBI and investors, showing retained amounts, reasons, status of litigation/liabilities, investments of retained money, and expected resolution timeline. Updated NAV must still be reported annually where there are retained investments. 6. Coverage of erstwhile Venture Capital Funds Old VCFs registered under the 1996 regulations can also use the same retention and Inoperative Fund mechanism. The circular is effective immediately (16 June 2026). Why SEBI brought this winding‑up and inoperative‑fund framework? Several long‑dated AIFs/VCFs had technically reached the end of their life but remained “alive” only because: Some assets were stuck in disputes, tax matters, or enforcement actions, so a portion of the money had to be held back. Funds are needed to keep registration active, just in case a favourable court or tax order brings in additional recoveries. Managers were still charging fees on largely dormant funds with only cash and claims remaining. SEBI had no explicit way to tag such funds as non‑operational, while investors were trapped in half‑wound‑up vehicles. This created four problems: Regulatory overhang- A large tail of “zombie” AIFs with minimal activity but full compliance overhead and opaque status. Investor uncertainty- Investors didn’t know if delays were genuine (litigation) or just manager inertia. Scope for misuse- Managers could keep funds alive and charge fees on residual cash or contingent assets. Data clutter- SEBI’s AIF universe included many economically dead funds, distorting stats and supervision. The new regime is designed to: Allow legitimate retention for real or probable liabilities, but Force clarity: either properly wind down with a clear retention plan, or become Inoperative and stop behaving like an active fund. Compliance: what AIFs and investors must actually do For AIF managers To comply, managers must: Identify reasons for retention:  Map each scheme that needs to retain money and classify the reason: pending/anticipated litigation, tax, or residual expenses. Maintain documentary proof (notices, investor consent, invoices). Obtain investor consent where required:  For anticipated liabilities without a formal notice, secure consent from ≥75% investors by value and disclose the amount to be retained and the expected retention period. Cap and justify operational retention:  Compute and document residual expense estimates based on past years; cannot retain for more than three years post fund life. Invest retained monies only in permitted instruments:  Set up or modify treasury policies so retained amounts are invested strictly as per Regulation 15(1)(f). Apply for Inoperative Fund status (if applicable):  Fill Annexure A (detailed scheme‑wise data), provide undertakings from Manager and Trustee/Board/Partners, and email SEBI (inoperativeaif@sebi.gov.in). Fulfil reduced but continuing obligations:  Within 30 days of each March end, submit the annual retention status report (Annexure C) to all investors and SEBI's intermediary portal. Apply for surrender registration once all obligations have been settled and the bank balance is zero. For investors (LPs) Investors should: Monitor retention communications – reason, amount, and expected timeline must be disclosed. Decide whether to consent to retention in “anticipated liability” cases. Review the annual retention status report to track progress and question managers on delays. Who benefits the most 1. Legacy AIFs and VCFs nearing end of life Funds that are fundamentally over but stuck with: Pending tax/show‑cause/reassessment notices. Ongoing investor/commercial litigation. Enforcement cases affecting portfolio companies. They now get a clean way to: Retain only what is justified. Shed the full compliance load once tagged Inoperative. Eventually, surrender registration without legal risk. 2. Investors in such funds Investors gain: Greater visibility into why money is held back and for how long. Assurance that managers cannot charge management fees once the fund turns Inoperative. Confidence that retained money is parked only in low‑risk instruments. Regular annual reporting on the status and NAV of the retained pool. 3. SEBI and the broader regulatory system SEBI benefits from: A reduced universe of truly active funds to supervise. Standardised templates (Annexures A, B, C) for data on winding‑up, retained proceeds, and litigation overhang. Ability to quickly distinguish between operating AIFs and those that only exist for residual issues. Impact on businesses in India and the economy On AIF managers and the PE/VC ecosystem Short‑term operational work: Managers must strengthen the compliance, documentation, and investor communications around winding up. This is the extra work, but mostly one‑time per scheme. No more “perpetual tail” fees: Fee economics change – you can’t rely on extended wind‑up tails for recurring management fees; revenue must come from active deployment/management stages. Greater discipline in drafting fund documents: Managers will need to think about litigation/contingent liability scenarios upfront (waterfall, reserves, tail risk coverage) to avoid last‑minute retention disputes. For serious institutional managers, this is positive: it aligns India with global best practice where funds have clear tail‑provision and wind‑down protocols. On portfolio companies and businesses funded by AIFs The circular doesn’t restrict new investments it affects only funds at the end of life. But it has indirect effects: Managers may become more conservative about controversial structures or aggressive tax positions that could create long‑tail liabilities and force retention. That in turn may nudge portfolio structuring toward cleaner, simpler structures, improving predictability for businesses and reducing future disputes. On the Indian financial system and capital formation Data and transparency: AIF information will make it easier to distinguish between funds that are wound up and those that remain active. A clearer picture of actual AIF activity is provided to policymakers. Investor confidence: AIFs are a more credible asset class for domestic institutions and HNIs because of clear regulations on tail liabilities and retention, which lessen the concern of funds going missing or continuing forever with unclear communication.  No real negative for credit/ “landing system”: The framework doesn’t constrain capital raising or lending; it governs what happens after the fund has run its course. Alternate credit AIFs still operate normally during their life. Overall macro impact is modest but directionally positive: cleaner closures, clearer data, slightly higher legal and governance standards. Is this the right decision or a “dark face” for AIFs? Why is it broadly a good move? It does not cap or discourage new AIF formation or investment it targets winding‑up hygiene. It curbs potential abuse where managers sit on residual capital and continue charging fees under the pretext of unresolved issues. It forces formal investor consent for retention where liability is only anticipated, giving LPs a direct say. It recognises commercial reality: genuine litigations/tax issues can take years, and you can’t always distribute everything and then claw back later. What could worry some stakeholders? Very small or first‑time managers might find the paperwork and process around retention and Inactive status heavy. Some LPs might perceive long‑tail litigations + Inoperative status as “money stuck forever”, especially where timelines are uncertain. There is a risk that managers use “anticipated litigation” plus 75% consent as a broad excuse to over‑retain unless LPs push back vigorously. However, these concerns can be mitigated: Investors can refuse consent for vague retention proposals. Annual status reports and SEBI’s oversight discourage unjustified long tails. The fact that no management fees are allowed post‑Inoperative status reduces the incentive to prolong closure. On balance, this is not a dark face for AIFs; it’s a long‑needed clean‑up of the last mile of the fund life cycle. It actually strengthens the credibility of the Indian AIF regime by ensuring that closure is as regulated as fundraising and deployment. Business opportunities arising from the policy Specialised compliance and fund‑closure advisory: Law firms and consultants can build offerings around AIF winding‑up, litigation mapping, retention modelling, and Inoperative Fund applications. Technology platforms: Tools to track fund‑life timelines, retention pools, investor consents, and automated reporting (Annexure C format) will be in demand with mid‑size managers. Secondary / tail‑risk solutions: Niche players may emerge to buy out or insure litigation‑linked residual interests, enabling faster investor exits. LP education and governance: Investor associations and wealth platforms can run programmes to help LPs understand their rights around retention and Inactive tagging.

Subject

Summary: What These Migration Rules Do and From When Think of it like this. Imagine a school that used to give different kinds of hall passes - one for the library, one for the bathroom, one for the nurse's office. Now, the school wants just one simple pass that covers everything. That is exactly what India's government is doing with telecom licences. The Telecommunications (Terms and Conditions for Migration) Rules, 2026 came into force on 23 June 2026. The Department of Telecommunications (DoT) made these rules under Section 56 of the Telecommunications Act, 2023. These rules create a clear path for telecom companies that hold old-style licences to move into a new, cleaner system called "authorisations." There are four types of new authorisations: Principal Telecommunication Services Miscellaneous Telecommunication Services Captive Telecommunication Services Telecommunication Network The old licences - such as UASL, NLD, ILD, ISP, VNO, PMRTS, and MNP licences - do not simply disappear. Their rights and responsibilities move forward into the new system. That is what "migration" means here. Why DoT Brought This Policy and What Was Required Need for Migration India has been using telecom rules from all the way back in 1885, under the old Telegraph Act. Over the past 25-plus years, the government handed out many different types of licences - each with its own rules, fees, and paperwork. Having so many different licence types caused big problems: Overlapping rules that created confusion Duplicate paperwork for companies and the government Complicated legal fights over spectrum, phone numbers, and network coverage The Telecommunications Act, 2023, changed the entire system. But the government still needed a proper, fair way to bring all the old license holders into the new system. That is why these Migration Rules exist. Objectives The goals are simple and sensible: Sort out the clutter by organizing everything under four categories of authorisation. Align existing licenses with the criteria and conditions in the new legislation. Ensure that no stone is left unturned – outstanding payments, penalties, and rollout requirements are not overlooked during migration. Establish clear deadlines for each company. How Migration Works and How Businesses Comply Who Is Eligible Any telecom company that still meets the eligibility conditions under the new authorisation rules can apply. This covers: Network Service Operator licensees - companies running phone networks, national or international long-distance services Virtual Network Operator licensees - companies that use another operator's network to provide services (like MVNOs) PMRTS and MNP licensees - companies offering radio trunking and mobile number portability Key Conditions for Applying Apply on the DoT Portal Website: The application must always be made online via the official website, together with all necessary paperwork and an application fee. Scope Should Match: The scope of the new authorization should match exactly that of the former license. It is impossible to reduce the scope of the license. Right Licence Type Must Be Chosen: Network service operators must migrate to network service operator authorisation terms. Virtual network operators must migrate to virtual network operator terms. PMRTS holders follow the Miscellaneous Services rules. Overlapping Authorisations Must Be Given Up: If a company holds a licence whose area is already fully covered by the new authorisation, that old licence must be surrendered as part of the process. Timelines Must Be Followed Situation Deadline Licence with a fixed expiry date Apply at least 12 months before expiry. Remaining validity less than 12 months on the notification date Apply within 90 days of notification OR before expiry, whichever comes first. Licence with no fixed expiry (perpetual) Apply at least 12 months before 5 years from the Act's appointed day. Late application Allowed only with a written request, payment of the late fee, and before the licence expiry. Letter of Intent and Approval Once DoT reviews an application, eligible companies receive a Letter of Intent (LoI). This letter spells out all the conditions, including: Which licences are being migrated An unconditional promise to pay any pending dues from before the migration Payment of the difference between the old entry fees already paid and the entry fee for the new authorisation Extra bank guarantee if the existing guarantee is lower than what the new authorisation requires A firm written promise to give up overlapping authorisations from the migration date Once the company accepts and fulfils all LoI conditions, DoT officially approves the migration. The approval document states: The effective migration dates The name of the service or network The service or network area The duration of the new authorisation Rights and Liabilities After Migration Migration does not erase the past. Old responsibilities stay firmly in place: Roll-out obligations:  if a company promised to set up towers or cover certain areas, that promise still stands after migration. Financial dues and penalties:  any unpaid amounts or fines from violations under the old licence remain payable. Spectrum and phone numbers:  spectrum held and telecom identifiers already allocated continue under the same original terms. Permissions and clearances:  coverage certificates, security approvals, remote access permissions, and foreign-national deployment approvals all stay valid, unless DoT changes them in the public interest. In simple terms, a company that migrates keeps running its business almost exactly as before - just under a more organised, modern licence framework. Impact on Different Types of Businesses Businesses That Benefit the Most Integrated telecom providers (access, NLD, ILD): Big telecom companies that currently hold multiple licences for different services gain the most. Instead of managing five or six different licences with different rules and fee structures, they get one clean authorisation that covers everything: less paperwork, fewer disputes, lower administrative costs. Virtual Network Operators (VNOs and MVNOs): Their status becomes clearer under the new rules. A single, unified authorisation may even make it easier to expand to new areas or offer new services without applying for a brand-new licence. PMRTS and MNP providers: These companies now get dedicated authorisation categories with defined validity periods and fees. This makes their business easier to understand for investors and banks, which can help them raise money. Operators with overlapping licences: Companies that hold redundant, overlapping licences can clean up their licence portfolios by surrendering the extras and migrating into one consolidated authorisation: less admin work, fewer filings, lower guarantee requirements. DoT and the overall regulatory system: It is far easier for the government to supervise a small set of clear, standardised authorisations than a large pile of different legacy licences. Enforcement becomes simpler and more consistent. Businesses That Are Most Impacted or Potentially Under Pressure Smaller licensees with limited compliance capacity: The Small ISPs, regional radio trunking operators, and niche VNOs may find the migration process harder to handle. The new authorisation conditions may demand higher bank guarantees, stricter reporting, and more detailed documentation. They may need to hire legal or financial advisors - an extra cost. Entities with unpaid dues or compliance issues: The unconditional undertaking to pay all pending dues is a serious requirement. Companies that have disputes over Adjusted Gross Revenue, licence fees, spectrum usage charges, or penalties cannot use migration as an escape route. Old problems follow them into the new system. Licensees with strategically held overlapping authorisations: Some companies held overlapping licences on purpose - as a backup or for business flexibility. The rules require surrendering these, which may mean redesigning corporate structures, network setups, or contracts. Overall, honest and compliant operators benefit. Companies that relied on regulatory ambiguity or multiple overlapping licences for flexibility lose that advantage. Impact on the Indian Economy and Sector Positive Structural Impact Regulatory simplification: Moving to a unified authorisation system reduces the administrative cost of running a telecom business in India. Cleaner rules mean easier investment decisions and a better environment for doing business. Better sector governance: With standardised authorisations, TRAI and DoT can design better rules on pricing, quality of service, and competition - improving the long-term health of the entire sector. Investor confidence: Explicit continuity of spectrum holdings, phone number allocations, and government permissions reduces legal risk for investors, banks, and companies involved in mergers and acquisitions. Facilitating new technologies: Once all operators are within the new framework, the government can more easily adapt the rules to accommodate 5G, 6G, satellite internet, IoT, and future technologies without creating a separate pile of new licence types. Short-Term Costs and Friction This migration will need some actual effort on the part of all telecom companies in mapping out their old licenses to new authorizations, readjusting their bank guarantees, reconfiguring their entry fees, and rewriting their compliance procedures. It is possible that some of the marginal operators in the industry might opt to withdraw from the scene. The net economic impact is positive: a simpler, stronger regulatory base for digital infrastructure and services. Is This the Right Decision or Just an Added Burden? Why It Is Broadly the Right Decision These rules are a necessary companion to the Telecommunications Act, 2023. Without migration rules, India would have been stuck running two systems at once - a new Act sitting alongside a zoo of old licences. That would have created endless confusion. No additional service requirements are placed in addition to the existing ones on the operators. Existing service requirements are simply carried over to the new framework. There is predictability about the time limits, conditions, and processes of the portals used. The explicit carry-forward of roll-out obligations and dues protects government revenue and consumer interests at the same time as it enables modernisation. Where It Feels Like an Additional Burden Companies must pay processing fees, and sometimes extra entry fees and higher bank guarantees to match the new authorisation requirements. They must plan and apply well before their licences expire. Overlapping authorisations have to be surrendered even if some business teams valued them as a safety net. These are real transitional costs. But in regulatory terms, they are reasonable. The benefits of a unified, modern authorisation system clearly outweigh these one-time transitional challenges. There is no direct environmental burden in these rules. They do not change spectrum power limits, tower norms, radiation standards, or environmental clearances - separate regulations cover those. How This Improves Business Conditions, Transparency, and "Product Quality" Business Conditions: Standard authorisation templates for principal services, miscellaneous services, captive services, and networks make long-term investment planning simpler. Telecom companies and VNOs can bundle services, restructure corporate groups, and expand coverage areas within a clearer and more predictable framework. Transparency: Eligibility criteria published, fee structures explained, time frames outlined, and procedures for the online portal are not open to interpretation or negotiation. The Letters of Intent and migration approvals are based on policies available to everyone. Service Quality (Indirectly): By carrying forward roll-out obligations and compliance certificates, the rules ensure that quality-of-service commitments do not quietly disappear during the migration process. A more organised regulatory base also allows TRAI and DoT to set consistent quality-of-service standards across all authorisation holders. Business Opportunities Created The Migration Rules, 2026, open real commercial opportunities for certain businesses: Regulatory and Legal Advisory: There is already an increasing demand for people who can match up old licences with new ones, determine any fee and difference liabilities, draft applications and undertakings, and manage migration deadlines. This is specialized work that telecommunications companies will be willing to pay for. Corporate Restructuring and M&A: Telecom groups with many entities and licences may use migration as an opportunity to reorganise. Cleaner authorisation portfolios make it easier to sell, merge, or spin off parts of a business. RegTech and Compliance Platforms: Software tools that track licences, authorisations, validity timelines, pending dues, bank guarantees, and roll-out obligations across multiple group entities will find ready buyers among large telecom groups. Specialist Telecom Consultancies: Smaller ISPs, VNOs, PMRTS operators, and niche licence holders need guidance on whether to migrate, consolidate operations, or exit the market. That creates steady work for specialist advisors across the country.