A loan licence is a pharmaceutical manufacturing arrangement under which a company that does not have its own manufacturing facility obtains a separate licence to use the manufacturing facilities of an existing licensed pharmaceutical manufacturer.

It is useful for companies that want greater regulatory control than ordinary third-party manufacturing but do not want to establish a complete factory immediately.

A loan licence should not be confused with:

• Third-party manufacturing
• Private-label manufacturing
• Renting an entire factory
• Wholesale drug licence
• Marketing authorization
• Product trademark registration

Each of these has a different purpose.

What Is a Loan Licence?

A loan licence permits an applicant that does not have its own complete manufacturing arrangements to use the facilities of another licensed manufacturer.

The existing manufacturer is commonly called:

• Parent manufacturer
• Host manufacturer
• Principal manufacturer
• Manufacturing facility provider

The applicant receiving the loan licence is called:

• Loan licensee
• Loan licence holder

The loan licensee does not take possession of the entire plant. It is permitted to use approved manufacturing and testing facilities for specified products under the supervision and conditions accepted by the Licensing Authority.

Which Authority Issues a Loan Licence?

For most allopathic drug-manufacturing loan licences, the application is made to the concerned State Licensing Authority having jurisdiction over the manufacturing facility.

Therefore, if:

• Your company is registered in Maharashtra, but
• The host manufacturing plant is situated in Himachal Pradesh,

the manufacturing loan-licence application will ordinarily involve the licensing authority having jurisdiction over the Himachal Pradesh manufacturing premises.

Your registered office may be in another state, but the authority must be able to inspect and regulate the actual manufacturing facility.

Certain product categories may also require approval or coordination with the Central Licensing Authority.

Common Loan-Licence Forms

The correct form depends on the product category.

Drugs Other Than Schedules C, C(1) and X

Commonly used forms are:

• Form 24-A: Application for grant of loan licence
• Form 25-A: Loan licence granted by the authority

This category may cover many ordinary pharmaceutical formulations and APIs, subject to the exact regulatory classification.

Schedule C and Schedule C(1) Drugs, Excluding Schedule X

Commonly used forms are:

• Form 27-A: Application for loan licence
• Form 28-A: Loan licence granted by the authority

Schedule C and C(1) contain specified biological and special products. Certain categories may require central approval, specialised facilities or additional documentation.

Schedule X Products

Do not assume that a normal Form 25-A or 28-A arrangement automatically permits Schedule X products.

Schedule X products are subject to stricter licensing, storage, record and control requirements. Obtain product-specific guidance from the State Licensing Authority.

Cosmetics

The old reference to Forms 31-A and 32-A belongs to the earlier cosmetics framework.

Under the Cosmetics Rules, 2020, the current COS forms are used. The commonly relevant forms include:

• Form COS-6: Application for loan licence to manufacture cosmetics
• Form COS-9: Loan licence to manufacture cosmetics

Applicants should confirm the current state portal and latest form requirements before filing.

Ayurvedic, Siddha and Unani Medicines

Ayurvedic, Siddha and Unani loan licensing follows a separate pathway.

Commonly referenced forms include:

• Form 24-E: Application for loan licence
• Form 25-E: Loan licence for manufacture of Ayurvedic, Siddha or Unani medicines

The application is generally handled by the concerned State AYUSH Drug Licensing Authority.

Do not use allopathic loan-licence forms for Ayurvedic products.

Core Documents Required for a Pharma Loan Licence

The precise checklist varies by state, dosage form and product category. Most applications require documents from four areas:

1. Applicant or loan licensee
2. Host manufacturer
3. Manufacturing and quality agreement
4. Product dossiers

A. Documents of the Loan-Licence Applicant

1. Covering Letter

The covering letter should explain:

• Applicant’s legal name
• Registered-office address
• Host manufacturing facility
• Product category
• Dosage forms requested
• Forms under which the application is submitted
• List of enclosed documents

It should be signed by the authorized person.

2. Prescribed Application Form

Submit the applicable form, such as:

• Form 24-A
• Form 27-A
• Form COS-6
• Form 24-E

Use the current state licensing portal and format.

3. Government Fee Receipt

Attach the prescribed:

• Online payment receipt
• Treasury challan
• Government fee receipt

The fee depends on:

• Licence category
• Number of products
• State procedure
• Additional inspection or product fees

Do not rely on an old fee chart.

4. Constitution of the Firm

Depending on business type, submit:

Proprietorship

• Proprietorship declaration
• PAN
• Identity and address proof of proprietor
• Business-registration evidence

Partnership

• Partnership deed
• Registration certificate, where applicable
• List of partners
• Identity and address proofs

LLP

• Certificate of incorporation
• LLP agreement
• Details of designated partners
• Authorization resolution

Private Limited Company

• Certificate of incorporation
• Memorandum of Association
• Articles of Association
• List of directors
• Board resolution
• Authorized-signatory documents

The business objects should permit pharmaceutical manufacturing or related activities.

5. Authorization Letter or Board Resolution

The company should authorize a responsible person to:

• Sign the application
• Communicate with the Licensing Authority
• Submit documents
• Attend inspections
• Receive notices

6. PAN and GST Documents

Common documents include:

• PAN of the applicant
• GST registration
• Billing-address details
• Principal place of business

GST registration is not a substitute for a manufacturing licence.

7. Applicant’s Address Proof

Submit proof for the:

• Registered office
• Corporate office
• Storage or warehouse premises, where applicable

Possible documents include:

• Ownership deed
• Rent agreement
• Utility bill
• Landlord’s NOC
• Local registration

8. Responsible-Person Declaration

The authority may require:

• Affidavit or declaration
• Photograph
• Identity proof
• Residential-address proof
• Contact details
• Details of the person responsible for day-to-day affairs

The prescribed affidavit format varies by state.

9. Details of Existing Licences

Declare whether the applicant already holds:

• Manufacturing licence
• Loan licence
• Wholesale drug licence
• Other state manufacturing approvals

Include licence numbers, sites and product categories.

10. Non-Conviction or Compliance Declaration

The authority may ask for declarations regarding:

• Previous licence cancellation
• Suspension
• Prosecution
• Drug-law conviction
• Blacklisting
• Regulatory action

All disclosures should be accurate.

11. Wholesale Drug Licence, Where Applicable

A manufacturing loan licence permits manufacturing through the approved host facility.

It does not automatically resolve every requirement for:

• Separate storage
• Wholesale sale
• Billing
• Distribution from another premises

If finished products will be stocked and sold from the applicant’s warehouse, appropriate wholesale drug-licence support may also be required.

B. Documents from the Host Manufacturer

1. Consent Letter or No-Objection Certificate

The host manufacturer should provide written consent stating that it agrees to make its facilities available to the applicant.

The letter should mention:

• Name of applicant
• Manufacturing-site address
• Dosage forms
• Sections and facilities available
• Proposed products
• Duration of arrangement
• Responsibility for manufacturing and testing

2. Host Manufacturer’s Licence

Submit a current copy of the host manufacturers:

• Manufacturing licence
• Approved product categories
• Approved dosage-form sections
• Additional product endorsements

The licence address must match the factory being proposed.

3. GMP Compliance Documents

Depending on the category, collect:

• Applicable GMP certificate
• Schedule M compliance documentation
• WHO-GMP certificate, where relevant
• Latest inspection status

A general ISO certificate does not replace a drug manufacturing licence or GMP compliance.

4. Approved Plant Layout

The layout should identify relevant areas, such as:

• Raw-material warehouse
• Dispensing
• Manufacturing sections
• Packing areas
• Quality-control laboratory
• Finished-goods warehouse
• Quarantine and rejected-goods areas
• Utilities
• Change rooms

The applicant should use only sections approved for the required dosage forms.

5. Machinery and Equipment List

Provide details of equipment proposed for manufacturing the loan-licensee’s products.

Examples include:

• Mixing and granulation equipment
• Tablet presses
• Capsule-filling machines
• Liquid-manufacturing vessels
• Filling and sealing machines
• Packing equipment
• Analytical instruments

The authority may assess whether the facility has sufficient capacity for its own products and existing loan licensees.

6. Quality-Control Facilities

Submit details of:

• In-house QC laboratory
• Testing instruments
• Microbiology laboratory, where required
• Approved external testing laboratory, where permitted
• Specifications and test procedures

The agreement should state who will test and release each batch.

7. Technical Staff Details

Documents may be required for personnel responsible for:

• Production
• Quality Control
• Quality Assurance
• Microbiology
• Analytical testing

Common documents include:

• Qualification certificates
• Experience certificates
• Appointment letters
• Approval letters
• Identity proofs
• Attendance or full-time declarations

The authority will decide whether the existing and proposed technical staffing is adequate.

8. Details of Existing Loan Licences

The host manufacturer may need to declare:

• Number of existing loan licensees
• Dosage forms handled
• Manufacturing commitments
• Available production capacity

A host plant should not accept more loan licences than its premises, equipment and technical staff can properly manage.

9. Site Master File

The authority may request the host facility’s Site Master File or relevant extracts containing information about:

• Premises
• Personnel
• Quality system
• Equipment
• Documentation
• Production
• Quality control
• Complaints and recalls

10. Latest Inspection and Compliance Records

Depending on state procedure, submit or make available:

• Recent inspection report
• Compliance report
• Corrective-action response
• Licence-retention or fee records

C. Agreements Between Applicant and Host Manufacturer

1. Loan-Licence Manufacturing Agreement

The agreement should clearly state:

• Parties involved
• Manufacturing site
• Products and dosage forms
• Commercial terms
• Manufacturing responsibility
• Material ownership
• Packing responsibility
• Delivery terms
• Duration and termination

2. Quality Agreement

A quality agreement is different from the commercial agreement.

It should define:

• Raw-material approval
• Vendor qualification
• Sampling and testing
• Manufacturing controls
• In-process testing
• Finished-product testing
• Batch release
• Deviations
• Out-of-specification results
• Change control
• Stability studies
• Complaints
• Recalls
• Retention samples
• Regulatory inspections
• Document retention

3. Technical-Staff Arrangement

Clarify:

• Who supervises manufacturing?
• Who supervises testing?
• Whether additional technical staff will be appointed
• How availability and responsibility will be recorded

4. Trademark and Brand-Use Agreement

Where the applicant uses its own brands, the agreement should specify:

• Brand ownership
• Permission given to host manufacturer
• Prohibition on unauthorized use
• Artwork ownership
• Responsibility for trademark disputes

5. Confidentiality and Intellectual Property

For custom formulations, specify ownership of:

• Formula
• Manufacturing process
• Technical data
• Artwork
• Stability data
• Regulatory dossier

6. Defective-Product and Indemnity Terms

The agreement should define responsibility for:

• Batch failure
• Manufacturing defect
• Packaging defect
• Regulatory non-compliance
• Market recall
• Replacement
• Destruction
• Financial loss

A private agreement does not eliminate statutory responsibility, but it helps allocate commercial responsibility.

D. Product-Wise Documents

1. Consolidated Product List

Prepare a product list showing:

• Generic name
• Brand name
• Complete composition
• Strength
• Dosage form
• Pack size
• Pharmacopoeial status
• Prescription schedule
• Proposed MRP, where relevant

2. Complete Formula

For each product, provide:

• Active ingredients
• Quantity of each active ingredient
• Excipients
• Overages, where scientifically justified
• Final batch size

3. Manufacturing Procedure

Submit:

• Step-by-step manufacturing method
• Process flow chart
• Critical process parameters
• In-process controls
• Packing process

4. Master Formula Record

The Master Formula Record should include:

• Batch size
• Raw-material quantities
• Equipment
• Manufacturing steps
• In-process specifications
• Yield limits
• Packing details

5. Specifications and Methods of Analysis

Provide specifications for:

• Raw materials
• Packaging materials
• In-process material
• Finished products

Where the ingredient or finished product is not pharmacopoeial, submit a validated or justified method of analysis.

6. Pharmacopoeial Monographs

Attach applicable monographs from:

• Indian Pharmacopoeia
• Other officially accepted pharmacopoeia
• Recognized compendium, where permitted

Do not submit a copied monograph without checking whether the current version applies.

7. Product-Permission Status

Confirm whether the product is:

• An established formulation
• A new drug
• A subsequent new drug
• An approved fixed-dose combination
• A prohibited or restricted combination

Where central approval is required, obtain it before seeking commercial manufacturing permission.

8. Stability Data

Depending on the product, provide:

• Accelerated stability data
• Long-term stability commitments
• Proposed shelf life
• Storage conditions
• Packaging used during the study

9. Process and Cleaning Validation

The authority may require or inspect:

• Process-validation protocol
• Cleaning-validation procedure
• Hold-time studies
• Equipment qualification
• Analytical-method validation

10. Bioavailability or Bioequivalence Documents

BA/BE data may be required for certain products, especially where mandated under applicable new-drug or formulation requirements.

It is not required for every ordinary formulation.

11. Specimen Labels and Cartons

Submit proposed:

• Primary label
• Outer carton
• Blister or foil matter
• Package insert
• Patient-information leaflet, where applicable

Check:

• Composition
• Generic name
• Brand name
• Prescription warning
• Storage instructions
• Batch details
• Manufacturer and loan-licensee particulars
• MRP
• Manufacturing-licence information

The label should follow the particulars approved by the Licensing Authority.

12. Brand-Name Undertaking

The applicant may need to submit an undertaking concerning:

• Ownership or lawful use of the brand
• Similarity with existing drug brands
• Product composition under the trade name
• Responsibility for trademark disputes

Trademark registration does not replace product approval.

13. Packaging Specifications

Submit information on:

• Blister or strip material
• Bottle and closure
• Carton
• Label
• Tube
• Container-closure compatibility
• Pack size

14. Proposed Certificate of Analysis Format

The COA should show:

• Product name
• Batch number
• Specifications
• Results
• Test methods
• Approval status
• Authorized signatures

Additional Documents for Bulk Drugs and APIs

Loan-licence applications for APIs or bulk drugs generally require more technical and environmental information.

1. Detailed Manufacturing Process

Provide:

• Reaction steps
• Process flow
• Solvents and reagents
• Purification
• Drying
• Milling
• Packing

2. Material Balance

Submit:

• Input-output ratio
• Yield
• Process losses
• Solvent recovery
• By-products
• Waste generation

3. Consumption Coefficients

State expected consumption of:

• Raw materials
• Solvents
• Water
• Utilities

for the proposed batch or production quantity.

4. Effluent and Waste Details

Provide details of:

• Liquid effluent
• Solid waste
• Hazardous waste
• Solvent waste
• Emissions
• Treatment and disposal

The host facility should have applicable pollution-control permissions.

5. API Specifications

Include:

• Identification
• Assay
• Related substances
• Residual solvents
• Heavy metals or elemental impurities
• Water content
• Particle size, where relevant
• Microbial limits, where applicable

6. Impurity Profile

Provide impurity information and controls appropriate to the API and process.

7. Safety Documents

These may include:

• Safety Data Sheets
• Occupational exposure precautions
• Containment requirements
• Emergency procedures

Loan-Licence Application Procedure

Step 1: Select the Host Manufacturer

Choose a plant that has:

• Correct dosage-form section
• Valid licence
• Adequate GMP compliance
• Quality-control facilities
• Available capacity
• Suitable technical staff

Step 2: Conduct Due Diligence

Verify:

• Licence status
• Regulatory history
• Product permissions
• Quality systems
• Existing loan licensees
• Complaint history
• Capacity

Step 3: Finalize Products

Do not apply with a random catalogue.

Finalize products after checking:

• Regulatory status
• Market demand
• Host capability
• Testing requirements
• Packaging
• MOQ

Step 4: Execute Consent and Agreements

Sign:

• Host consent
• Loan-licence agreement
• Quality agreement
• Brand-use agreement
• Commercial terms

Step 5: Prepare Application Dossier

Arrange documents section-wise and product-wise.

Use the current portal and checklist of the state where the factory is located.

Step 6: Submit Application and Fee

Upload or submit:

• Prescribed form
• Fees
• Applicant documents
• Host documents
• Product dossiers
• Agreements

Step 7: Scrutiny

The authority may raise queries concerning:

• Product approval
• Staff
• Facility capacity
• Testing
• Labels
• Agreement
• New-drug status

Reply with complete and consistent documents.

Step 8: Inspection

The authority may inspect the host facility and verify:

• Available space
• Equipment
• Technical staff
• Documentation
• QC laboratory
• Capacity
• Product controls
• Loan-licensee arrangements

Step 9: Product Approval and Grant

After satisfactory review, the authority may grant the loan licence with approved products or categories.

Do not manufacture unapproved products merely because the main licence has been issued.

Step 10: Commercial Manufacturing

Manufacture should begin only after:

• Licence grant
• Product endorsement
• Artwork approval
• Batch documents
• Quality system readiness

Validity and Retention

Drug-manufacturing licences operate under the applicable current validity and retention-fee framework.

Many drug licences now continue subject to:

• Payment of retention fee at the prescribed interval
• Continued compliance
• Inspection
• No suspension or cancellation

Confirm the exact retention date, fee and process with the State Licensing Authority. Do not assume that no action is needed merely because the licence is described as perpetual.

Common Mistakes in Loan Licensing

Avoid:

• Treating loan licence as ordinary third-party manufacturing
• Selecting a factory without checking capacity
• Applying under the wrong form
• Using old Form 32-A for cosmetics
• Submitting only a commercial agreement
• Ignoring the quality agreement
• Launching a new drug without central approval
• Using unsearched brand names
• Printing packaging before approval
• Manufacturing products not endorsed on the licence
• Assuming the host manufacturer carries all responsibility
• Ignoring wholesale licensing for separate storage and sale
• Following old excise-duty calculations
• Using outdated state checklists

Practical Document Checklist

Before submitting, confirm that you have:

• Covering letter
• Applicable application form
• Government fee receipt
• Applicant constitution documents
• Board resolution or authorization
• PAN and GST
• Address proof
• Responsible-person affidavit
• Host consent letter
• Host manufacturing licence
• GMP documents
• Plant layout
• Machinery list
• QC laboratory details
• Technical-staff documents
• Existing loan-licence declaration
• Loan-licence agreement
• Quality agreement
• Product list
• Formula and manufacturing procedure
• Specifications and test methods
• Product-permission documents
• Stability documents
• Proposed labels and cartons
• Brand-name undertaking
• Packaging specifications
• Complaint and recall procedure

Frequently Asked Questions

1. What is a loan licence?

It is a manufacturing licence issued to an applicant that intends to use the facilities of another licensed manufacturer.

2. Is a loan licence the same as third-party manufacturing?

No. Under a loan licence, the applicant obtains a separate manufacturing licence and assumes greater regulatory responsibility.

3. Which form is used for an ordinary allopathic loan licence?

Form 24-A is commonly used for application and Form 25-A for the licence for drugs other than specified Schedule C, C(1) and X categories.

4. Which forms apply to Schedule C and C(1) products?

Form 27-A and Form 28-A are commonly relevant, excluding Schedule X and subject to product-specific requirements.

5. Is Form 32-A still used for cosmetics?

The old Form 32-A reference is outdated. Cosmetics are now governed under the Cosmetics Rules, 2020 and use COS forms.

6. Does the applicant need its own manufacturing premises?

The purpose of a loan licence is to use an approved host manufacturer’s facilities. The applicant does not need to establish a complete separate manufacturing plant for that licence.

7. Does the applicant need technical staff?

The authority will examine the technical personnel responsible for manufacturing and testing. The exact staffing arrangement must be declared and approved.

8. Can APIs be manufactured under a loan licence?

Potentially yes, provided the host facility is licensed and suitable and the applicable product, process, environmental and technical documentation is approved.

9. Is excise duty calculated on the MRP of an API?

No. The old excise explanation is obsolete. APIs and finished drugs generally follow the applicable GST and customs framework.

10. Where should the application be filed?

It is generally filed with the Licensing Authority having jurisdiction over the host manufacturing premises.

Final Thoughts

A loan licence is suitable for companies that want to manufacture through another factory while holding a separate regulatory manufacturing licence.

The correct sequence is:

Select host plant → Verify licence and capacity → Finalize products → Sign technical and quality agreements → Submit application → Complete inspection → Obtain product permissions → Begin manufacturing

The document list is not identical in every state. Forms, fees, affidavits and portal requirements should always be confirmed with the State Licensing Authority where the manufacturing facility is located.

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