India has suspended a drugmaker's manufacturing licence after the World Health Organization flagged contamination in its cough syrups found in the Mashall Islands and Micronesia in April, the government told the parliament on Tuesday.

Indian regulators are inspecting drugmakers after cough syrups made in the country were linked to at least 89 child deaths in Gambia and Uzbekistan last year, which has damaged India's image as the "pharmacy of the world" providing affordable drugs globally.

The WHO flagged contamination with unacceptable amounts of diethylene glycol and ethylene glycol, which are toxic to humans when consumed and can prove fatal, in samples taken from a batch of cough syrup made by QP Pharmachem Ltd, based in the northern Punjab state. The company has denied any wrongdoing and told Reuters it planned to appeal against the suspension.

"Drug samples drawn from the manufacturing premises ... were declared as 'not of standard quality'," Deputy Health Minister Bharati Pravin Pawar told the parliament.

The manufacturing licences of QP Pharmachem Ltd and two other companies, whose products were linked to the child deaths - Maiden Pharmaceuticals and Marion Biotech Pvt. Ltd - have been suspended and their exports halted, Pawar added.

Maiden Pharmaceuticals and Marion Biotech have also denied any wrongdoing.

Sudhir Pathak, managing director of QP Pharmachem, who told Reuters the company has planned to appeal against the suspension order with the government, said production had been halted.

Pathak said he had tested the ingredients used in the cough syrup, named Guaifenesin TG, before starting its production. He also said he only exported the product to Cambodia and was unsure how it could have reached the Mashall Islands and Micronesia.

India has tightened its testing of cough syrup exports since June, making it mandatory for companies to obtain a certificate of analysis from a government laboratory before exporting products.