These landmark provisions are part of the proposed draft Assisted Reproductive Technologies (ART) Bill which the government plans to bring to the Cabinet before introducing in Parliament for passage.
Any contravention of provisions of this bill would attract severe penalties.
The bill, a first in India's history, seeks to monitor the unregulated sector of ART clinics, which offer infertility solutions to couples at huge costs, besides preventing commercial surrogacy and safeguarding the rights of surrogate mothers and children born out of surrogacy arrangements.
The draft ART Bill seeks to fill these gaps and addresses "ethical, legal issues related to gamete donation, surrogacy and nationality of the child born out of ART."
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Top sources in the Health Ministry said the bill had been sent for comments to ministries and replies were expected by August 5, after which the final draft bill will be prepared.
The bill is significant as currently there is no supervisory body in the country under which ART clinics offering services, including surrogacy to infertile couples, can be placed and there is no system to monitor these services and ensure that surrogate mothers are not exploited.
The bill also, for the first time, states conditions for foreign couples seeking to hire surrogates in India.
"Several issues such as ethical, moral, monetary and safety, have been raised in this area by various sectors of the society as there is no law to regulate the issues of surrogacy in India," a Health ministry note states.