NEW DELHI, Aug. 21 -- The Food Safety and Standards Authority of India (FSSAI) is overhauling the way bottled water is regulated, directing states and union territories for the first time to conduct mandatory inspections of packaging facilities before granting new licences, according to two people familiar with the matter and documents reviewed by Mint.

Companies already holding licences must now undergo annual audits and risk-based inspections to ensure continued compliance with stricter safety and quality standards, they said.

The shift follows FSSAI's decision to classify packaged drinking water as a "high-risk" food category. Under the regulator's revised Risk Based Inspection Scheme, companies must now meet hygiene and safety stand...