The government has moved a bill to form a central drug authority and it has been referred to the standing committee, Naresh Dayal, secretary, department of health, said.

The new body will be autonomous and function on the lines of the US Food and Drug Administration (FDA). It will have 10 sections like a clinical trial division, biotech division and pharmaco vigilance division, the official said.

"Currently, both the centre and the state governments are empowered to issue licences for manufacturing drugs. But this will change in the near future," Goyal said

"The control mechanism of state regulating bodies is not efficient. And their inefficiency is one of the key factors why spurious drugs are flourishing in the country. We will withdraw the drug-licensing power from them and start a centralised licensing system," Dayal said.

"We are quite hopeful that by the coming budget session we will have the power to do so. The process of withdrawing licensing powers from states will start thereafter," he said.

"The central drug authority will follow the good manufacturing practice (GMP) norms set by the World Health Organisation (WHO) and thus give India a better name in the field of drug export," he said.

Citing the recent agreement signed with the Philippines, he said, "Our drug market is growing and the Philippines on Friday signed an agreement with us to make India a source for importing medicines."

"Medicine costs there are too high and nearly 40 per cent of the population is below the poverty line. They want to take advantage of our low-cost medicine. When the global community is looking towards us, we should make our vigilance mechanism stronger," Dayal added.

He said the ministry is going to strengthen surveillance by filling up vacancies of drug inspectors. The Drugs and Cosmetics Act will also be amended to put a high penalty on spurious drug manufacturers and those involved in their marketing, he added.

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