ELP Podcast Series- Food processing and Food Supply Industry

“We are what we eat.” With food governing most aspects of our lives ( both happy and sad moments too!), the food industry is expected to grow annually by 8%.

In our latest podcast Sweta Rajan, Partner, and Samyuktha Srinivasan, Senior Associate, Economic Laws Practice discuss several compliance issues which the food industry is grappling with. The episode titled “Food Processing and Food Supply Industry” delves into the criteria for registration, regulations for advertising and packaging, and the consequences of non-compliance.  They also discuss how the authorities are quite receptive and open to discussions with FBOs to address any concerns companies may have.  The panelists further discuss the efficacy of filing representations before the authorities.

Transcript

Food law series – Episode 9

Introduction
| Samyuktha | Hello everyone. I welcome you ELP’s first podcast on Food Law.
The Indian food processing and supply industry is booming in light of various technological developments. Changing global trends, consumer health consciousness, new business models like cloud kitchens and sheer widespread availability, have garnered a conducive environment for this boom.

In today’s podcast, we discuss the regulatory framework built around Food law – who is India’s food regulator, who is regulated by these laws, what are the subjects regulated – is it limited to food adulteration or does it extend to more – simply, put, today’s podcast is intended to provide an introduction to Food law, to impress upon listeners the wide scope and impact that this consumer-oriented legislation has on the food industry.  With me today is Sweta Rajan from Economic Laws Practice, who will throw some light on the subject based on her experience.  Hi Sweta!

|  Sweta | Hi Samyuktha! Thank you for the introduction. Today’s subject is certainly relevant in the present times and is only going to gain more and more traction given the current trends. We are seeing the Food Regulator acting robustly, introducing new rules, amendments and clarifications almost on a weekly basis. Let’s start.
 
  | Q1 | Samyuktha | Sure, Sweta. To start with, can you provide an overview of the governing laws and authorities in the food industry in India?
 
   | A1 | Sweta | Sure. In India, the Food Safety and Standards Authority of India is the nodal agency responsible for formulating and implementing various regulations, standards and guidelines applicable to food business operators. A ‘food business operator’ includes importers, manufacturers or processors, packagers, or other middlemen handling storage, transportation or distribution of food.

 The FSSAI strives to facilitate compliance through licensing, registration, inspection and an improved laboratory network. It is also responsible for driving public health initiatives through regulations. The Regulations, Standards and Guidelines are constantly evolving.

 Till 2006, India’s food governance was limited to food safety related aspects under the Prevention of Food Adulteration Act, 1954 and certain product specific orders for milk, meat products, etc. However, since the enactment of the FSS Act 2006 and introduction of the FSSAI, their scope has widened considerably.
 
  | Q2 | Samyuktha | Thank you for that. My next question is, who is regulated by the FSSAI – in other words, who is liable to be registered or licensed by the FSSAI?

 | A2 | Sweta | So, there are two concepts under the FSS Act - licensing and registration. I will take these up one by one.

 Registration is required for petty businesses, i.e., food businesses whose annual turnover does not exceed Rs. 12 lakhs. The entities would be required to comply only with certain basic hygiene and safety requirements once registered.

 Other food business operators are required to be licensed with the Central or the State licensing authority, depending on the nature and the scale of their business. For example, large scale manufacturers or handlers, importers or Export-oriented units are required to be licensed with the central authority.

 Typically, licensing requires a higher fee and more extensive level of application procedures and compliances, as compared to registration.

   | Q3 | Samyuktha | Understood. What are the key areas of food law that the FSSAI regulates?

  | A3 | Sweta | The FSSAI’s regulations extend to various areas from the point of manufacture or import of foods, to wholesale and retail distribution, including related logistics. The regulations are aimed towards protecting consumer interest and hence also extend to aspects such as packaging, labelling and advertising foods.  I will touch upon some of these areas in further detail.

 (firstly,) i) Standards and Additives Regulations – These Regulations, are amongst the most important, and lay out detailed standards for food products, food ingredients and permissible food additives for each food category. These guidelines are used as a base code to analyse the ingredients and additives that may or may not be added to a particular food product, including colours, flavours, preservatives, etc. Where a specific category has not been carved out, the food may be classified as a ‘proprietary food’ and any standardised ingredients may be used along with additives permitted for the closest category. The Good Manufacturing Practices list (“GMP”) provides a list of additives that may be added to any food while complying with certain conditions. It is pertinent to note that the food categorisation and standards are largely based on CODEX. CODEX in an international food code, prepared with the support of FAO (Food and Agriculture Organisation of the UN) and WHO (World Health Organisation of the UN), and recognised in the WTO Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures as the international reference point for food safety. 

   | (secondly,) ii) Imports Regulations – FSSAI authorities are present at most ports to check and clear imported food products. Their role includes ensuring that importers are licensed, compliance with labelling requirements, inspection and sampling of imports to check conformity with standards and other provisions, etc. Interesting to note that in case of labelling of food products, the FSSAI authorities permit certain declarations to be affixed at the customs bonded warehouse prior to clearance for home consumption – these are referred to as rectifiable declarations.

  | (thirdly,) iii) Advertising and claims Regulations - The aim of these regulations is to establish fairness in claims and advertisements of food products and make food businesses accountable for such claims /advertisements, to protect consumer interests. These regulations contain general principles for claims and advertisements; criteria for nutrition claims, health or dietary claims etc. Further, the Regulations also provide a procedure for approval of claims and grievance redressal in case of non-compliance.                                                                                                     

  | (fourthly,) iv) Labelling and display Regulations - These prescribe mandatory declarations on labels of food products including trade name, veg and non veg logo, list of ingredients and food additives, name and address of manufacturer and /or importer, FSSAI logo and license number, etc. These are also important since non-compliance of labelling requirements may attract penalties.

   | (fifthly,) v) Packaging Regulations - These seek to regulate packaging which will protect food content from microbiological, chemical, physical and atmospheric contamination and preserve food, thereby protecting consumer health. Good packaging also ensures that there is no change in sensory properties or composition of food when packed. 

 The FSSAI has also issued regulations for specific food categories, which are amended from time to time to keep with the latest industry trends.  
 - For example, the Nutraceutical Regulations and Organic Food Regulations have been recently issued for these food categories. 
 - Alcoholic Beverages Regulations have been amended to accommodate innovative products such as flavoured beer, low alcoholic drinks etc. 
 - Labelling requirements have been amended to include vegan logo along with veg / non veg logo. 
 Evidently, the regulations issued and the role played by FSSAI is constantly evolving.  

   | Q4 | Samyuktha | So if an FBO does not comply with some requirements under these Regulations, would kind of consequences would they face?  

   | A4 | Sweta | The FSS Act lays out various types of offences and the consequence for each of these offences would vary on the seriousness of the offence or the nature of involvement of the party concerned.  Offences such as sale of sub-standard or misbranded food may attract a monetary penalty on the manufacturer, importer or seller. Unhygenic or unsanitary practices by a manufacturer could also attract a monetary penalty.  However, in case of more serious offences such as where the food is considered ‘unsafe’ for consumption, where a business is carried on without a license etc., it may also attract criminal prosecution, i.e., imprisonment.  Another important aspect I would just like to highlight here is the provision for ‘recall’ of food in certain situations, especially in the context of unsafe food. In case of such problems arising, an FBO may initiate a ‘food recall’ procedure to remove the food from all stages of the food chain, including those possessed by consumers. Detailed Regulations and guidelines have been issued on this subject. As recent as 2015, Nestle was ordered to recall their instant ‘Maggi noodles’ by the FSSAI.   
 
  | Q5 | Samyuktha | Yes, the Maggi incident was widely publicized. That does go to show how important it is to ensure that the products in the market are well in compliance with the Regulations.  Lastly, do you have any other specific points / closing remarks that you would like to touch upon?

  | A5 | Sweta | Yes. It is important to note that the FSS law in India is a consumer protection legislation. Given this, the authorities are quite receptive and open to discussions with FBOs to address any concerns that they may have. We have observed that filing representations before the authorities is a fairly effective recourse to seek clarifications or action from the authorities.  For instance, till recently, where a lab report found some parameters in a food sample to be non-compliant, all the parameters would be once again tested by a second referral lab. This was time-consuming and ineffective.  Upon various representations filed in this regard, a clarification has been issued to the effect that only those parameters found non-conformant in the primary laboratory report will be tested by the referral laboratory, and the analysis report of the referral laboratory shall be final.  Courts too have recognized that the FSSAI, being a watchdog for the consumer as well as a regulator of the food industry should not take an adversarial approach, and ought to act in a fair and transparent manner that encourages foreign investment into India. This was specifically held by the Hon’ble Bombay High Court in a 2015 decision of Pernod Ricard v. Union of India. In this matter, the FSSAI had refused to issue an NOC for import to the company on the ground that the additive ‘tartaric acid’ used in their wine was not mentioned in Appendix A of the Regulations. The Hon’ble Court however, held that it is sufficient if tartaric acid is permitted to be added either in the Additive Regulations or in ‘Appendix A’. Further, the Indian Bureau of Standards recognizes tartaric acid as a permissible additive for table wines. The Alcoholic Regulations which were at a draft stage then were also referred to and a holistic view was adopted in favour of the importer.  Such decisions bring to light, the importance of the role played by the FSSAI in the food industry and the position in law enunciated by Courts that FSS provisions are to be read in a purposive manner, to secure consumer interest. 

  | Conclusion | Samyuktha | Thank you Sweta for sharing your thoughts.  With this, we hope to have given our listeners an insight into the overall scope of food laws and role of the FSSAI in India.  I look forward to hosting you again on our podcast, to explore these ideas in more depth and detail.  

   | Sweta | Thank you, Samyuktha!