New Delhi: Whistle-blowers who alert government agencies about firms and individuals manufacturing and selling fake drugs and cosmetics will be rewarded with cash prizes, the Centre said on Tuesday, as it attempts to curb a flourishing racket in spurious products.

The scheme, spelled out in a statement by the ministry of health, follows the seizure of several consignments of spurious drugs at Chennai port. In October alone, three such consignments were seized and referred by India’s drugs regulator to the health ministry for a probe by the Central Bureau of Investigation (CBI).

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Both informers as well as officials at the Central Drugs Standard Control Organisation (CDSCO) will be eligible for the rewards, which may be as much as 20% of the value of a seized consignment. The reward will not exceed Rs25 lakh.

A quarter of the reward money will be paid to an informer at the time of the filing of a chargesheet. If the informer is a government official, the reward will not exceed Rs5 lakh in one case and Rs30 lakh in the course of his/her entire service.

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“There is no dearth of good intentioned people who may wish to work for the country’s interests as the whistle-blowers in eradicating the menace. People’s participation is imperative in this regard..."

On 10 August, the government notified legislation prescribing minimum imprisonment of 10 years that may be extended to a life term for manufacturers of spurious drugs. It set a minimum fine of Rs10 lakh, or three times the value of confiscated drugs, whichever is higher.

Some policy experts argue that the rewards for whistleblowers—who typically are informants exposing wrongdoing in their own organization—may be too little.

“The current sum is too small," said Chandra M. Gulhati, editor of the Monthly Index of Medical Specialities, a trade journal. “Plus, the government must ensure that the informer does not get only physical protection but his interest like job security, etc., should also be protected, especially if he belongs to the pharmaceutical industry."

Graphics: Yogesh Kumar / Mint

“We recently caught three consignments in Chennai that are worth crores. This takes the total number of confiscated consignments to seven in the last three months," drugs controller general Surinder Singh said last month. “These have been imported from China using fake documents and the government doesn’t know if these drugs are made under approved good manufacturing practices or not," Singh said. He said the traders importing these consignments had businesses worth hundreds of crores.

To protect informers, the government said it will keep their identities secret. They will be known only to zonal and sub-zonal officers of CDSCO, DCGI and the directorate general of health services. One expert said a system of rewards was important in tracking racketeers engaged in spurious drugs trade.

“There are people who make spurious drugs in a clandestine manner and there are ones who make them in an organised manner. It is easier to find the organised ones because there is a trail to track them," said Prafull D. Sheth, professional secretary, SEARPharm Forum, a South-East Asian body.

“But those who just dump the drugs in the markets, thus leaving no trail are difficult to trace," said Sheth, who was involved in a survey on the magnitude of the spurious drugs trade in India.