The food processing industry one of the largest industries in India is widely recognized as a ‘sunrise industry’ in India having huge potential for uplifting the agricultural economy, creation of large scale processed food manufacturing and food chain facilities, and the resultant generation of employment and export earnings.
The Indian food processing industry is regulated by several laws which govern the aspects of sanitation, licensing and other necessary permits that are required to start up and run a food business. The legislation that dealt with food safety in India was the Prevention of Food Adulteration Act, 1954 (hereinafter referred to as “PFA”). The PFA had been in place for over five decades and there was a need for change due to varied reasons which include the changing requirements of our food industry.
The act brought into force in place of the PFA is the Food Safety and Standards Act, 2006 (hereinafter referred to as “FSSA”) that overrides all other food related laws.
FSSA initiates harmonization of India’s food regulations as per international standards. It establishes a new national regulatory body, the Food Safety and Standards Authority of India (hereinafter referred to as “FSSAI”), to develop science based standards for food and to regulate and monitor the manufacture, processing, storage, distribution, sale and import of food so as to ensure the availability of safe and wholesome food for human consumption. All food imports will therefore be subject to the provisions of the FSSA and rules and regulations which as notified by the Government on 5th of August 2011 will be applicable.
Key Regulations of FSSA:
- Packaging and Labeling:
- Signage and Customer Notices:
- Licensing Registration and Health And Sanitary Permits
The FSSA provides for penalties in case of any non-compliance. Generally, non-compliance with various provisions of the FSSA may attract penalty of up to Two Lakh Rupees (approx USD 4000). However, under Section 63, it provides that if any person or food business operator (except the persons exempted from licensing under sub-section (2) of Section 31 of FSSA), himself or by any person on his behalf who is required to obtain license, manufacturers, sells, stores or distributes or imports any article of food without license, shall be punishable with imprisonment for a term which may extend to six months and also with a fine which may extend to Five Lakh Rupees (approx USD 9000).
The FSSA being a central act has to be complied with by all the food business operators in the country. However, India being a big market, each state may have their local laws which may also need to be complied with. Some of the other approvals and licenses that a food operator may be required to obtain from various authorities under other laws include: health and trade licenses from the municipal corporation of the relevant area, environmental clearance, no-objection certificate for fire prevention and safety, registration under the police act of the respective city/state, verification certificate under the Standards of Weights and Measures Act, 1976 for each of the outlets issued by the Department of Legal Metrology of the respective areas, registration under the shops and establishments act of the respective state, eating house license and liquor license.
Foreign Direct Investment in the Food Processing Industry:
Foreign Direct Investment (hereinafter referred to as “FDI”) is permissible for all the processed food products under 100% automatic route (except for items reserved for micro, small and medium enterprises, where FDI is permissible under automatic route up to 24%), subject to applicable laws/regulations/securities and other conditions.
The preamble of PFA laid emphasis only on provisions for prevention of food adulteration. FSSA lays emphasis on consolidating the laws related to food and to establish FSSAI for laying down science based standards for articles of food and to regulate their manufacture, storage, distribution, sale and import, to ensure availability of safe and wholesome food for human consumption and for matters connected with them. The new objectives clearly go far beyond the objectives of PFA. The strict penalties imposed in FSSA may lead to increase in corruption, as enterprises may resort to unfair practices to avoid these penalties.
The PFA dealt with countless Government ministries handling different food sectors as per separate orders, like the fruit products order, and other orders related to vegetable oil products, edible oils packaging, milk and milk products and meat food products, which were issued at different points of time and were sometimes overlapping and inconsistent. On the other hand, a unified act like FSSA enables unidirectional compliance. The administrative control of the FSSA has been assigned to the Ministry of Health and Family Welfare thereby establishing a single reference point for all matters and eradicating any possibility of multiplicity of orders or the chance that any coordination problems are caused.
Apart from the harmonization of laws relating to food quality and standards with established international norms, FSSA aims at regulating food hygiene and safety laws in the country in order to systematically and scientifically develop the food industry. Thus, the food processing industry may see FSSA as a mixed blessing but the practical application of this legislation, being at its nascent stage, will require some time to come into full force.