My consultancy involves networking with various Consulates’ Trade services departments and quite recently, I was given to understand that International Beauty & Cosmetics brands have some concerns regarding entering the India market in terms of challenges with respect to doing business in the cosmetics sector.
Brands with deep pockets / global brands have made it big here in India because they could invest handsome amounts not only in brand building and marketing but some of them have invested in the infrastructure too, including manufacturing units to optimize costs. However, SME brands or brands that are niche or brands that are getting to the next level of expansion have multiple concerns, some of which are listed as follows: .
1. Cost and procedure of registering cosmetics and personal care products
2. An ever-moving/changing standards environment
3. Fluctuating packaging requirements
4. Labeling issues
5. High tariffs – from 10-30%
The Beauty market in India is huge and is nearly 6-7b$. The biggest chunk of this market is in the Mass & Masstige segment due to high awareness in Beauty products and services. However, the key to success lies in making informed decisions on the recruitment of distributors and a thorough assessment in terms of competition mapping, price and brand positioning, before entering the market. Tier 1 cities are saturated. The huge hidden potential lies in Tier 2 and Tier 3 cities where international brands are a big aspiration. The right market entry strategy should be the one that is well researched and planned. .
Indeed the import duties for cosmetics & personal care go up to 30%, add to this the cost and freight, distributor’s margin and retailer’s margin. To counter this, the MRPs of cosmetics are raised by 10-20% higher compared to US markets. .
India is in line with global standards of packaging. The standard requirements are, that every product should include the mfg. batch code, date of expiry, ingredients, and manufacturer’s details clearly printed on the packaging. With the Indian Government taking steps to be in line with international standards, yes certain standards are evolving. However, if a Registration Certificate is received for 2 years there is a guarantee of import for 2 years, unless otherwise the manufacturer or brand owner makes some changes in its product composition, label design or shifting of premises. In such cases, the concerned authorities have to be duly notified.
As regards Registration, there are generally two levels in the process:
- Level 1: Ensuring correct documentation by the Drugs & Cosmetics Act authorities that include Power Of Attorney, Free Sale and Labels. If everything is correct in the first attempt then the documents are transferred to Level 2 for Lab Analysis. Level 1 generally takes 2 months from the date of receipt of documents to raise any query or proceed to Level 2. If there is any query then the same has to be rectified by the Brand and the documents are resubmitted.
- Level 2: After crossing Level 1, the composition documents are then forwarded to the lab testing department where the composition of each product is studied. If there is any query or any objectionable composition, then the applicant is informed accordingly. It takes about 2 months at this level for the final verdict on the composition. If a query is raised then the compositions have to be re-submitted after corrections. If no query is raised, then its good news and the brand gets a File number which and the registration certificate takes about 2 months to receive by post. This RC is valid for 2 years.
The whole process takes generally 6-8 months. If all queries are timely
addressed and enough diligence taken in documentation then 6months is all you need.
As regards cost of registration, Govt. Fees applicable is US$ 2000/- per category and US$ 50/- per variant depending on the Brand classification. The Liasoning Agent Fees goes upto US$ 2000 – US$ 2500. The above cost for a Registration Certificate is valid for 2 years. For renewal, it is the same process again.
If a brand is well-informed about the processes and does everything right in terms of compliances, the next big questions is – what are the ground challenges in terms of distribution network and costs of selling? Well I will come back with more on this in my next post. Stay tuned…….
My company www.arguscmpo.com helps International beauty brands enter India with ease. Do leave a comment if you want to know anything specific and I will be more than willing to address it. Alternatively you can contact me on firstname.lastname@example.org