Quick answer: Third party manufacturing of Ayurvedic products means a licensed, GMP-certified factory makes Ayurvedic products for your brand. You own the brand and sell the product. The factory handles herbs, production, testing and packing. The process usually runs in seven stages: brief, formula, samples, licence and label approval, raw material testing, production and dispatch. A ready formula is the fastest route; a new formula takes longer because of trials and stability testing.
Key takeaways
- You do not need your own factory. A licensed manufacturer makes the product, and you sell it under your brand.
- In India, Ayurvedic medicines are made under the Drugs and Cosmetics Act, 1940. A brand that uses another factory may apply for a loan licence on Form 24-E.
- Get everything in writing: formula ownership, MOQ, lead time, testing, label approval and who handles recalls.
- Ayurvedic medicines attract 5% GST from 22 September 2025. Plan your pricing around it.
- New AYUSH drug rules from July 2026 change labels, product codes, shelf life and GMP. Choose a partner who is ready for them.
In this guide
What is third party manufacturing of Ayurvedic products?
Think of a famous bakery that also bakes bread for a small café. The café sells the bread with its own name on the bag. The bakery does the baking, in a clean kitchen, with tested flour. Everyone wins.
Third party manufacturing of Ayurvedic products works the same way. A licensed Ayurvedic factory (the “third party”) makes tablets, capsules, syrups, oils or powders for your brand. You decide what the product is, how it looks and how it is sold. The factory makes it to the right standard, tests it and packs it.
People also call it contract manufacturing or 3rd party manufacturing. The words differ, but the idea is the same: you build the brand, they build the product.
Why do so many brands choose third party manufacturing?
- Lower starting cost: with third party manufacturing there is no land, building, machines or factory staff.
- Faster launch: the factory, licences and systems already exist.
- Expert help: trained pharmacists, Ayurveda experts and quality staff.
- Room to grow: third party manufacturing lets you add products without adding machines.
What are the three ways third party manufacturing can work?
Before you speak to any factory, know which third party manufacturing model you want. Each one changes your cost, speed and control.
Private label
Pick a ready, tested formula from the factory and sell it under your brand. Fastest and simplest.
Contract manufacturing of your formula
You bring your own formula. The factory makes it exactly to your specification.
Custom development
The factory’s R&D team builds a new formula with you. Most unique, but takes the longest.
If the private label route suits you, our private label Ayurvedic products guide covers it in depth.
How does third party manufacturing of Ayurvedic products work, step by step?
Most third party manufacturing projects follow seven stages. Here is what happens at each one, and what you should ask for.
Brief
Share the product idea, format, target buyer, price range and expected quantity.
Formula
Choose a ready formula or develop a new one. Agree on each herb, its plant part and amount.
Samples
Check look, taste, smell and feel. New formulas may also need stability testing.
Licence and label
Product permission is arranged, and label artwork is checked against the rules.
Raw material testing
Every herb lot is checked for identity and purity before use.
Production and QC
The batch is made under GMP, then tested. You receive the Certificate of Analysis.
Packing and dispatch
Stock is packed with batch, dates and product details, then shipped to you.
Tip: Stage 4 is where most delays happen. Send your brand name, label text and artwork early, and ask your manufacturer which approvals your product needs.
Who does what in third party manufacturing?
Confusion about roles causes most third party manufacturing disputes. This table shows the usual split. Always confirm it in your agreement.
| Task | Brand owner (you) | Manufacturer |
|---|---|---|
| Brand name and trademark | Yes | No |
| Formula choice | Approves | Proposes or develops |
| Manufacturing licence and GMP unit | No | Yes |
| Loan licence (if used) | Applies | Provides the factory and support |
| Raw herb sourcing and testing | Reviews reports | Yes |
| Label design | Yes (with your designer) | Checks against the rules |
| Packaging material | Either side, as agreed | Either side, as agreed |
| Batch testing and CoA | Receives and files | Yes |
| Marketing and claims | Yes, and must stay legal | Advises on what is allowed |
| Sales, GST invoicing to buyers | Yes | Invoices you |
| Complaints and recalls | Shared, as agreed | Shared, as agreed |
Which licences and forms are involved in third party manufacturing?
The rules depend on whether your product is an Ayurvedic medicine or a food supplement. Here is the short version.
For Ayurvedic medicines
- Ayurvedic medicines are made under the Drugs and Cosmetics Act, 1940, and licensed by the State Licensing Authority for AYUSH.
- The factory holds a manufacturing licence. The application form is Form 24-D.
- A brand that has its products made at someone else’s licensed factory can apply for a loan licence. The application form is Form 24-E.
- The factory must follow Good Manufacturing Practices under Schedule T.
For herbal food supplements
- These come under the Food Safety and Standards Act, 2006, and need FSSAI licensing. FSSAI keeps a list of permitted plants and parts. For example, from 16 April 2026, FSSAI advised that ashwagandha leaves must not be used in food products.
Your exact needs depend on your product and how it is labelled, so confirm with your state AYUSH office or a regulatory consultant. For the full licence checklist for a new business, read how to start an Ayurvedic business in India.
What is the MOQ, cost and timeline for third party manufacturing?
Minimum order quantity (MOQ)
MOQ is the smallest batch a factory can make in one run. Some industry guides say many Ayurvedic manufacturers start at around 500 to 1,000 units per product, but it varies a lot by format, formula and packaging. Ask for the MOQ of each product in writing.
What decides the cost per unit?
How long does it take?
Third party manufacturing timelines depend on the route you choose. As a rough guide:
| Route | What takes time | Speed |
|---|---|---|
| Ready formula, your label | Label approval, packaging and one production run | Fastest |
| Your own formula | Sample approval, product permission and first batch | Medium |
| New custom formula | Development, trials, stability testing and approvals | Slowest |
Some industry guides quote around 30 to 45 days for a straightforward project, but approvals and packaging can add time. Always ask for a written timeline with each stage.
What should your third party manufacturing agreement include?
This is the section most third party manufacturing guides skip, and it is the one that protects your business. A good agreement should cover:
This is general business information, not legal advice. Have a lawyer review your agreement before you sign.
How is quality checked at each stage of third party manufacturing?
In third party manufacturing, quality is not one test at the end. It is a chain of checks from the farm to the box.
Raw herbs
Identity, moisture, ash, heavy metals and microbes.
In-process
Weights, mixing time and machine settings recorded in batch records.
Finished product
Microbes, heavy metals and, for tablets, how quickly they break down.
Packing
Batch number, dates and seal checked on every pack.
Herb identity is a real risk. One review of Indian studies found that about 21% of raw herbal drugs sampled in markets were not the labelled herb. Our guide to Ayurvedic herbs for supplements explains how to check sourcing and testing.
What changed for third party manufacturing in 2026?
In July 2026, the Ministry of Ayush notified the Drugs (Eleventh Amendment) Rules, 2026. As reported, the changes that matter most for brands are:
- Licences: manufacturing licences no longer need periodic renewal.
- Product codes: a uniform Specific Product Code must appear on labels within two years.
- Labels: long ingredient lists can be shared through a QR code, barcode or GTIN.
- Shelf life: shelf life from accelerated tests is limited to one or two years, unless real-time data supports more.
- GMP: a rewritten Schedule T must be followed by 31 July 2029.
What this means for you: ask your manufacturer how they are preparing for the new product codes and Schedule T, so your labels and stock do not need costly changes later.
A worked example: launching one capsule
From idea to first dispatch
A wellness founder in Chennai wants to launch an ashwagandha root capsule under her brand. Here is how third party manufacturing of Ayurvedic products would work for her:
- She sends a brief: 60 capsules per bottle, root-only ashwagandha, sold online.
- The manufacturer suggests a ready root-extract formula and shares the specification.
- She approves samples, and her designer prepares the label with the botanical name and plant part.
- The product permission and label check are completed.
- The factory tests the ashwagandha root lot for identity and heavy metals.
- The first batch is made and tested, and she receives the CoA.
- Stock is dispatched to her warehouse, and she plans her reorder.
Common third party manufacturing mistakes to avoid
- No written specification. If it is not on paper, it can change.
- Choosing on price alone. Cheap herbs and skipped tests cost more later.
- Late label work. Artwork delays hold up the whole launch.
- Unclear formula ownership. You may lose rights to a formula you paid for.
- Big health claims. India’s Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954, restricts many claims. Sensitive categories need extra care, as our sexual wellness product manufacturing guide explains.
- Ignoring the 2026 rules. Plan now for product codes and the new Schedule T.
How Vasishta Pharma handles third party manufacturing
Vasishta Pharma runs a GMP-certified Ayurvedic unit in Bengaluru, with our own R&D team. We make tablets, capsules, syrups, granules, powders, oils and creams. We share specifications and test reports, help with label checks and plan your reorders with you.
To start a project, visit our Ayurvedic third party manufacturer in Bangalore page. If you prefer ready formulas, see our private labelling service, or learn more about us.
Frequently asked questions
What is third party manufacturing of Ayurvedic products?
It is when a licensed, GMP-certified Ayurvedic factory makes products for your brand. You own the brand and sell the product. The factory handles herbs, production, testing and packing.
Do I need my own licence for third party manufacturing?
The factory holds the manufacturing licence. Depending on your product and label, you may need a loan licence (applied on Form 24-E) or other registrations. Check your exact case with your state AYUSH office.
What is the difference between third party manufacturing and private labelling?
In private labelling, you pick a ready formula from the factory and add your brand. In third party or contract manufacturing, the factory makes your own formula to your specification. Private labelling is faster; your own formula gives more control.
What is the minimum order quantity for Ayurvedic third party manufacturing?
It depends on the format, formula and packaging. Some industry guides say many manufacturers start around 500 to 1,000 units per product. Always get the MOQ in writing.
How long does third party manufacturing take?
A ready formula with your label is fastest. Your own formula takes longer, and a new custom formula takes the longest because of trials and stability testing. Ask for a written timeline for each stage.
Who owns the formula in third party manufacturing?
It depends on your agreement. If you bring or pay to develop a formula, make sure the agreement clearly says you own it and that the factory will keep it confidential.
What GST applies to Ayurvedic medicines?
From 22 September 2025, manufactured Ayurvedic, Unani, Siddha and Homoeopathic medicines attract 5% GST, down from 12%. Confirm the HSN code and rate for each product.
How do I start third party manufacturing with Vasishta Pharma?
Send us a short brief with your product idea, format and expected quantity through our contact page. Our team in Bengaluru will suggest a formula, share samples and explain the next steps.
Ready to plan your first product?
Send us your brief. Our team in Bengaluru will suggest the right format, formula and next steps.
Sources and further reading
- Drugs and Cosmetics Act, 1940, and Drugs and Cosmetics Rules, 1945 (Schedule T).
- Department of Ayush, Government of NCT of Delhi: application forms 24-D (manufacturing licence) and 24-E (loan licence).
- Drugs (Eleventh Amendment) Rules, 2026, notified by the Ministry of Ayush on 24 July 2026.
- FSSAI advisory on non-use of ashwagandha leaves in food products, 16 April 2026.
- 56th GST Council decisions: 5% GST on Ayurvedic, Unani, Siddha and Homoeopathic medicines from 22 September 2025.
- Seethapathy G.S. et al., Frontiers in Plant Science, 2019, reviewing Indian studies on herbal raw drug authenticity.
About this guide: This guide to third party manufacturing of Ayurvedic products was written by the production and regulatory team at Vasishta Pharmaceuticals, Bengaluru. It gives general business information, not legal, tax or medical advice. Rules change over time, so please confirm current requirements with your state AYUSH office, FSSAI or a qualified professional before you act.
