Quality Audit Challenges in Small-Scale Ayurvedic Manufacturing Units

Abstract

Ayurveda, one of the world’s oldest holistic healthcare systems, has witnessed significant growth in both domestic and global markets. With increasing demand for Ayurvedic formulations, ensuring product quality, safety, and compliance with regulatory standards has become a critical priority. Quality audits serve as an essential tool to assess manufacturing practices, identify deviations, and maintain consistency in product efficacy. However, small-scale Ayurvedic manufacturing units face unique challenges such as limited financial resources, lack of skilled manpower, inadequate infrastructure, and partial awareness of Good Manufacturing Practices (GMP). These constraints often hinder the implementation of robust quality assurance systems. This paper highlights the key challenges identified during quality audits in small-scale units, analyzes their root causes, and provides practical recommendations for improving compliance, enhancing product quality, and fostering sustainable growth in the Ayurvedic sector.

Keywords

Introduction

Ayurveda, one of the world’s oldest systems of traditional medicine, continues to play a crucial role in India’s healthcare landscape and global wellness economy. In recent years, the Ayurvedic manufacturing sector has witnessed significant growth, propelled by increasing domestic demand, international market expansion, and strong governmental support initiatives (1). As per the India Brand Equity Foundation (IBEF), the Ayush industry, which encompasses Ayurveda, yoga, naturopathy, Unani, Siddha, and homeopathy, was valued at over USD 50 billion in FY 2024–25, with the manufacturing segment alone expanding from USD 18 billion in 2020 to USD 24 billion in 2024, reflecting a compound annual growth rate of approximately 17% (2).

Small and medium-sized enterprises (SMEs) form the backbone of Ayurvedic production in India, contributing significantly to regional economies and localized healthcare accessibility. For instance, in Madhya Pradesh, more than 1,000 registered Ayush manufacturing units are operational, with Indore alone hosting nearly 200 units contributing to an estimated market turnover exceeding INR 1,000 crore annually (3). These small-scale manufacturing units often operate with limited resources, which presents unique challenges in meeting modern regulatory compliance and quality assurance benchmarks.

Quality assurance and regular audits are critical for ensuring product safety, maintaining consumer trust, and meeting both domestic and international regulatory requirements. In recent years, India has revised its regulatory framework, including the implementation of the updated Schedule M guidelines, which align with WHO-GMP standards for herbal and traditional medicines (4). Recognizing the operational difficulties faced by SMEs, the Ministry of Health and Family Welfare extended the compliance deadline for the revised Schedule M to December 2025 (5).

Regulatory oversight for Ayurvedic manufacturing is primarily provided by the Ministry of AYUSH, established in 2014, alongside statutory bodies such as the National Commission for Indian System of Medicine (NCISM) (6). These agencies ensure adherence to GMP, facilitate quality audits, and promote the development of infrastructure, testing laboratories, and training programs. Despite these measures, small-scale Ayurvedic manufacturers continue to encounter challenges in implementing comprehensive quality audits, necessitating practical and scalable strategies that address their operational constraints.

2. REGULATORY FRAMEWORK GOVERNING AYURVEDIC MANUFACTURING

The regulatory framework governing Ayurvedic manufacturing in India is primarily established under the Drugs and Cosmetics Act, 1940, which regulates the import, manufacture, and sale of drugs across the country. Chapter IVA of the Act specifically addresses Ayurvedic, Siddha, and Unani (ASU) medicines, laying down provisions related to misbranding, adulteration, licensing, and penalties to ensure the safety, quality, and authenticity of traditional formulations (2). To standardize manufacturing practices, Schedule T was introduced under the Drugs and Cosmetics Rules, 1945 (Rule 157). Schedule T prescribes Good Manufacturing Practices (GMP) for ASU drugs, emphasizing proper facility design, hygiene, sanitation, and waste disposal. It also mandates standardized raw material procurement, thorough documentation and recordkeeping such as Batch Manufacturing Records (BMR) and Batch Packaging Records (BPR), and the use of specified equipment and quality control laboratories for herbal and mineral formulations (4).

Further, manufacturers are required to obtain licenses through AYUSH departments by applying in Form 24-D to the respective State Licensing Authorities. Upon approval, manufacturing units are issued a Form 25-D license, and a GMP certificate (Form 26 E-I) may be granted if the facility complies with Schedule T requirements. This regulatory structure ensures that Ayurvedic medicines are produced in a controlled environment, maintaining quality, safety, and efficacy in accordance with legal provisions (6).

3. SCOPE AND PURPOSE OF QUALITY AUDITS

Quality audits are independent assessments to verify whether units comply with GMP and Schedule T norms. They cover raw material sourcing, facility hygiene, personnel competency, documentation, QC testing, and packaging. Their purpose is to ensure product safety, consistency, and regulatory readiness (7).

Table 1:  Differences in Compliance: Small-Scale vs. Large-Scale Units

Definition and Objectives of a Quality Audit

A quality audit is a systematic, independent examination of a manufacturing unit’s operations, procedures, and documentation to ensure compliance with Good Manufacturing Practices (GMP) and regulatory requirements.

Objectives include:

• To verify that Ayurvedic medicines are manufactured consistently in line with Schedule T/M and WHO-GMP requirements (1).
• To ensure safety, efficacy, and quality of products reaching consumers (2).
• To identify deviations, deficiencies, or non-compliances and recommend Corrective and Preventive Actions (CAPA) (3).
• To improve operational efficiency and strengthen quality assurance (QA) systems.
• To prepare units for regulatory inspections by AYUSH/FDA authorities.

Types of Quality Audits

Internal Audits (First-Party Audits):

• Conducted by the manufacturer’s own QA team.
• Aim: Routine verification of SOPs, documentation, sanitation, and quality control.
• Helps identify issues before an external inspection

External Audits (Second-Party Audits):

• Conducted by clients, collaborators, or certification agencies (e.g., ISO, GMP certifying bodies).
• Aim: To ensure contract manufacturers or suppliers meet agreed quality standards.

Regulatory Audits (Third-Party Audits):

• Conducted by statutory bodies like Ministry of AYUSH, State Licensing Authorities, or Drug Inspectors.
• Aim: To ensure full compliance with Drugs and Cosmetics Act, 1940, Schedule T, and revised Schedule M requirements.

Fig.1. Audit Checklist Parameters in Ayurvedic Manufacturing

During quality audits, inspectors evaluate compliance based on specific parameters:

Raw Materials

• Authentication of herbs through pharmacognostic/chemical analysis.
• Certificates of analysis (CoA) for metals/minerals.
• Storage conditions and supplier qualifications (4).

Process Control

• Presence and adherence to Standard Operating Procedures (SOPs).
• Calibration and maintenance of equipment.
• Validation of critical steps (e.g., extraction, purification, heating).

Documentation

• Availability of Batch Manufacturing Records (BMR) and Batch Packaging Records (BPR).
• Proper logging of deviations and CAPA.
• Training records of staff.

Packaging

• Use of appropriate primary and secondary packaging material.
• Labeling as per AYUSH labelling rules (name, dosage, batch no., expiry, cautionary notes).

Storage

• Segregated areas for raw materials, finished goods, and rejected materials.
• Controlled environment (temperature, humidity).

Personnel

• Availability of qualified technical staff (B.Pharm/Ayurveda graduates).
• Evidence of regular GMP training.
• Use of protective clothing, hygiene practices, and health check-ups.

Unique Challenges Faced by Small-Scale Ayurvedic Units

Infrastructure Limitations

• Many units operate in converted residential or rental buildings, lacking proper segregated areas for raw materials, production, quality control, and packaging.
• Poor ventilation, lighting, and sanitation create hygienic risks
• Lack of clean zones and controlled environments leads to cross-contamination risks.
• Example: A 2023 AYUSH inspection in Maharashtra found that over 30% of units lacked dedicated QC laboratories (3).

Documentation Deficiencies

• Manual and incomplete records are common.
• Missing Batch Manufacturing Records (BMR) and Batch Packaging Records (BPR) hinder traceability.
• Absence of SOPs, deviation logs, and stability testing records leads to non-compliance (4).

Human Resource Challenges

• Workforce is often untrained or semi-skilled, with limited knowledge of GMP and documentation practices.
• High attrition rates and low wages deter skilled professionals (5).

Raw Material Quality Issues

• Herbs sourced from unorganized markets lead to quality variability.
• Adulteration, pesticide contamination, and heavy metal impurities are documented (6).
• Seasonal availability of herbs also affects consistency in supply and standardization.
• Example: A survey published in Journal of Ethnopharmacology (2022) reported that nearly 20% of tested raw herbal samples in India showed substitution or adulteration (7).

Financial Constraints

• Limited capital prevents investment in modern infrastructure, in-house testing labs, or advanced equipment (8).
• Outsourcing testing to NABL-accredited labs is costly, leading to skipped quality checks.
• Compliance costs for revised Schedule M (2024) add financial burden (8).

Case Examples

Examples of Audit Observations in Small-Scale Units

AYUSH/FDA Inspection Reports (Common Deficiencies)

According to AYUSH GMP Audit Reports (2022–2024) and various State FDA inspections (Maharashtra, Gujarat, Kerala): According to AYUSH GMP Audit Reports (2022–2024) and various State FDA inspections (Maharashtra, Gujarat, Kerala):

• Inadequate Premises: 35–40% of inspected small units lacked minimum hygienic infrastructure.
• Improper Storage – Over 25% of units stored raw materials directly on the floor without pallets or segregation.
• Labelling Issues – 15% of samples collected during inspections were found with labeling errors (missing expiry or license).
• Unqualified Personnel – More than 30% of facilities did not employ any pharmacist or trained QA officer.
• Substandard Products – Around 12% of randomly tested samples failed quality tests for microbial contamination or heavy metals.
• Documentation Non-Compliance – About 50% of audit failures were due to poor documentation practices.

Strategies to Overcome Audit Challenges

Capacity Building

Government-Sponsored Training:

• Ministry of AYUSH conducts GMP workshops (e.g., AYUSH Suraksha Yojana, 2023).
• Hands-on training modules on documentation practices, raw material authentication, and quality testing can help bridge workforce skill gaps.

Academic-Industry Collaborations:

• Pharmacy colleges and AYUSH research councils can collaborate with small industries to provide short-term certificate courses and skill training.
• Student projects and faculty consultancy can be leveraged for low-cost quality research support.

Financial and Technical Support

AYUSH Industry Schemes:

• AYUSH OUSHadhi Scheme (2022): Provides financial assistance for GMP upgrades.
• National AYUSH Mission (NAM): Funds infrastructure, QC labs, and herbal gardens (2022).

Low-Cost Tools:

• Introduction of portable HPTLC kits, simple microbial test kits, and barcode-based raw material traceability can be adopted even in small-scale settings.

Simplified E-Record Systems:

• Adoption of cloud-based GMP compliance software for BMRs, deviation reports, and QC logs reduces manual errors and improves audit readiness.
• Mobile-based apps developed by AYUSH startups are increasingly being used for batch record management.

SOP Templates and Checklists:

• Regulatory bodies and academic groups can circulate ready-to-use SOPs and digital audit checklists, ensuring uniform compliance standards across small units.

External Quality Advisors

• Small units can engage freelance QA/QC experts or third-party GMP consultants for periodic internal audits.
• This minimizes regulatory penalties and ensures early detection of compliance gaps.

Role of NGOs and Pharma Institutes

• NGOs working in traditional medicine (e.g., FRLHT – Foundation for Revitalization of Local Health Traditions) can mentor local industries.
• Pharmacy institutions can run extension programs, guiding MSMEs (Micro, Small & Medium Enterprises) in quality management.

Policy Recommendations Policy Recommendations

Need for Scalable GMP Guidelines

Current Schedule T under the Drugs and Cosmetics Act, 1940 provides uniform GMP requirements for all Ayurvedic, Siddha, and Unani (ASU) drug manufacturers.

However, small-scale units struggle to comply due to infrastructure, financial, and technical constraints, hence, there is a need for “scalable GMP guidelines”, where basic mandatory GMP standards (hygiene, raw material authentication, documentation) are enforced across all units, while advanced compliance (automation, in-house testing labs, digital record systems) can be made progressively mandatory for larger units.

Such graduated compliance models exist in WHO-GMP recommendations for developing countries and can be adapted for AYUSH industries.

Tiered Audit Approach for Small vs. Large Units

Presently, AYUSH/FDA inspections apply a largely uniform audit checklist, leading to disproportionate non-compliance reports for micro and small units.

A tiered audit framework is recommended:

• Tier 1 – Micro/Small Enterprises: Focus on essential GMP (clean premises, basic documentation, raw material quality, trained personnel).
• Tier 2 – Medium Enterprises: Additional compliance such as in-house QC testing, digital records, periodic third-party audits.
• Tier 3 – Large Enterprises: Full compliance with Schedule T + WHO-GMP, including advanced facilities, validated processes, and R&D-backed quality systems.

This approach will encourage progressive compliance instead of penalizing smaller players disproportionately.

AYUSH Department’s Role in Handholding

The Ministry of AYUSH can take a proactive role in capacity building and compliance facilitation, rather than only regulatory enforcement.

Suggested policy measures:

• Handholding Cells: Establish GMP helpdesks at state AYUSH directorates for technical guidance.
• Cluster-Based Support: Encourage common testing facilities and shared GMP-compliant infrastructure for groups of small manufacturers.
• Training & Certification: AYUSH-funded short-term courses for QA/QC staff, supervisors, and auditors.
• Public–Private Partnerships: Collaborations between AYUSH, pharma institutes, and NGOs to mentor MSMEs in regulatory compliance.

CONCLUSION

The Ayurvedic manufacturing sector in India is at a crucial juncture where traditional knowledge must align with modern regulatory standards to ensure product quality, safety, and global credibility. The review of regulatory frameworks under the Drugs and Cosmetics Act, 1940, and Schedule T guidelines reveals that while robust policies exist, small-scale units continue to face disproportionate challenges in infrastructure, documentation, skilled manpower, and financial resources.

The analysis highlights that quality audits serve as essential tools not only for regulatory compliance but also for continuous improvement, risk minimization, and consumer trust building. However, recurring deficiencies such as poor record-keeping, inconsistent raw material sourcing, and lack of trained personnel underscore the urgent need for capacity building and systemic support mechanisms.

Moving forward, building sustainable quality systems requires a multi-pronged strategy:

• Policy-level support through scalable GMP guidelines and tiered audit frameworks that differentiate between micro, small, and large enterprises.
• Capacity enhancement via AYUSH-led training, academic-industry collaboration, and cluster-based infrastructure sharing.
• Technology adoption in the form of simplified digital documentation and low-cost quality tools for MSMEs.
• Handholding mechanisms with AYUSH departments, NGOs, and third-party consultants to guide small units toward compliance.

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