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Drug License & Record-Keeping Rules for an Indian Retail Pharmacy

Updated 14 July 2026 · 9 min read

Opening a chemist shop in India isn't just about a good location and stock on the shelf. Before your first sale you need the right drug licence, a qualified pharmacist, and a habit of keeping the registers an inspector can ask for at any time. Here's the plain-English version of what's required and why.

This is a practical overview, not legal advice. Rules under the Drugs and Cosmetics Act & Rules are applied by state drug control authorities and change over time — confirm the current requirements with your State Drugs Control Department before you act.

Which drug licence do you need?

A pharmacy that sells medicines to the public holds a Retail Drug License, issued under the Drugs and Cosmetics Rules by your State Drugs Control authority. The two forms you'll hear about:

• Form 20 — to sell, stock or distribute medicines other than those in Schedule C and C1 (broadly, general drugs).
• Form 21 — to sell, stock or distribute Schedule C and C1 drugs (broadly, biological and special products).

Most retail chemists need both, obtained together. If you also plan to sell to other shops or institutions, that's a wholesale licence (Forms 20B / 21B) — a separate application with its own conditions.

The registered pharmacist requirement

A retail pharmacy must operate under a registered pharmacist — a person registered with a State Pharmacy Council — present at the premises during business hours. Their registration details are tied to your licence. This is not a formality inspectors overlook: dispensing without a pharmacist on the premises is one of the most common causes of licence trouble.

Premises and storage conditions

Licensing rules set minimums for the shop itself — a defined floor area, and adequate storage including refrigeration for products that need it (vaccines, insulin, and other cold-chain items). Keep the fridge working and, ideally, log its temperature; a dead fridge full of spoiled cold-chain stock is both a compliance failure and a direct loss.

The registers you must keep

Record-keeping is where day-to-day compliance actually lives. Depending on what you stock, expect to maintain:

1. Purchase records / bills — every inward invoice, showing supplier, product, batch, and quantity. This is your first line of proof for genuine sourcing.
2. Sales records — bills issued, in sequence.
3. Prescription (Schedule H1) register — for the H1 drugs that require it: patient and prescriber details, drug, quantity, and date, retained for the required period.
4. Schedule H / X handling — prescription-only and narcotic/psychotropic items carry stricter dispensing and record rules; Schedule X in particular requires careful register maintenance and retention.
5. Batch & expiry visibility — not a single statutory "register" everywhere, but you must be able to trace a batch (for recalls) and prove you're not holding expired stock for sale.

The common thread: an inspector can ask "show me the record" for a purchase, a sale, or an H1 dispense — and you should be able to produce it quickly and legibly.

Retention: how long to keep records

Retention periods vary by record type and state; several key registers must be kept for a number of years, not months. The safe rule of thumb: never discard bills or registers on your own schedule — keep them well past what you think is required, because they cost almost nothing to store and everything to be missing during an inspection.

Renewals and displays

Your drug licence has a validity and must be renewed before it lapses — a lapsed licence can mean you're trading illegally without realising it. Display the licence at the premises, keep the pharmacist's registration current, and diarise the renewal date well in advance.

Where software helps (and where it doesn't)

Software can't get you a licence or replace a pharmacist. What it can do is make the record side effortless: sequential, GST-compliant bills; a searchable purchase history with supplier and batch; an H1 register populated at billing time instead of copied out by hand; and batch-and-expiry tracking so recalls and near-expiry stock surface on their own. When the records keep themselves, an inspection stops being a scramble.

How DravyaOS supports compliance

DravyaOS keeps sequential GST invoices, a full purchase history with batch and supplier, batch-and-expiry tracking, and captures the Schedule H1 details at the point of sale — all offline, on your own machine, so the records are yours and always to hand. It's free, with no invoice cap.

Next: go deeper on the Schedule H1 prescription register, or get your invoices right with the GST-compliant medical bill guide.