The company, which was majority owned by private equity firm Actis, is a major Indian manufacturer of ointments and flu remedies.
The deal puts Reckitt, whose household products include Cillit Bang and Finish dishwasher detergent, on the acquisition trail again months after it paid £2.5bn for SSL International, best known for Durex condoms and the Scholl footcare range.
Paras has seen sales soar over the last four years, as the growing Indian middle class increases its spend on healthcare products.
Reckitt, whose rivals include Johnson & Johnson and Sanofi, believes that the deal will strengthen its position in emerging markets.
However, some analysts pointed out that Reckitt is paying eight times Paras’ £56m annual sales and more than 30 times its £15m ebitda in the year to March.
Reckitt chief executive Bart Becht said he was paying for the “extremely good growth potential” of the business.
He said: “It creates a material health care business in India, one of the most promising markets in the world, with the addition of a number of strong and leading brands.”
However Evolution Securities analyst Warren Ackerman said: “One potential fly in the ointment to be aware of is that Darshan Patel, one of the brothers that used to run Paras, has set up rival Vini Consumer Products.”
Reckitt, whose shares closed up 1.82 per cent at 3,573p, was advised by JP Morgan. Actis and Paras were advised by Morgan Stanley.