With the increasing awareness among consumers relating to health and wellness, the food, nutrition and wellness sector has seen a tremendous growth in recent years.
For instance, the food sector in India, especially the manufacturing and processing of branded 'ready to eat' food products, has been steadily growing. The gross value addition in the food processing sector increased from INR 1.79 lakh crore in 2016-17 to INR 2.37 lakh crore in 2020-21, growing at a compounded annual growth rate ("CAGR") of 7.27%.1 From April 2000 to December 2022, the sector received a total foreign direct investment ("FDI") of USD 11.79 billion.2
It is estimated that by 2025, the food processing sector will reach an output of USD 535 billion and grow at a projected CAGR of 15.2%.3 Against this backdrop, intensified funding and consolidation in this sector is evident, including by some of the major FMCG players.
The growth in this sector has led to increased scrutiny by sectoral regulators of, inter alia: (i) the advertising claims being made by manufacturers; (ii) the introduction of standards for newer categories of products such as 'nutraceuticals'; (iii) strengthened implementation of hygiene and safety standards; and (iv) notification of schemes for the promotion of local produce and grains.
This mid-year newsletter encapsulates some of the key regulatory developments, judicial decisions and market updates relating to the food, nutrition and wellness sector for the period between January 2023 to June 2023.
KEY LEGAL UPDATES
Key initiatives in the food processing and nutraceutical sector discussed in the Lok Sabha4
As part of the Lok Sabha Session XI, on March 14, 2023 and March 28, 2023, the ministers of Food Processing Industries (Centre and State) in separate written replies to questions raised in the Lok Sabha, discussed the food processing sector. The responses discussed the: (i) Production Linked Incentive Scheme for the food processing sector which is aimed at supporting food manufacturers to create a global hub where they can market Indian food products in international markets; (ii) task force constituted by the Government of India ("GoI") for the growth of the nutraceutical sector; (iii) reported growth of the food processing sector , i.e., 10.3% between 2015-16 and 2020-21 as compared to the growth of 5.1% witnessed in the overall manufacturing sector; and (iv) launch of schemes by the GoI to address the challenges and aid in the development of the food processing sector, such as the Pradhan Mantri Kisan SAMPADA Yojana and PM-Formalisation of Micro Food Processing Enterprises.
Food Safety and Standards Authority of India developing mandatory standards for nutraceuticals5
The Food Safety and Standards Authority of India (the "FSSAI") is collaborating with experts to establish standard operating procedure for nutraceuticals. Nutraceuticals are nutritional supplements that mostly contain vitamin C, vitamin D and zinc, and are expected to provide health benefits. In the post-covid era, the market for nutraceuticals has been growing rapidly and is expected to reach USD 18 billion by 2025.6 The standards on usage of health supplements and nutraceuticals will aim to ensure the delivery of quality and reliable products to consumers and maintain safety in the usage of these products by the consumers.
Union Budget 2023-24: Food and Nutrition related highlights7
The 2023-24 Union Budget presented by the Ministry of Finance, GoI on February 01, 2023 included the following key initiatives for the food and nutrition sector:
- development of Hyderabad-based Indian Institute of Millet Research as a Centre of Excellence to facilitate shaping India as an international centre for 'millets';
- commitment to spending over INR 2 lakh crore in 2023 to provide food subsidy under welfare schemes under PM Garib Kalyan Anna Yojana;
- setting up of an Agriculture Accelerator Fund ("AAF") to promote agri-startups in rural areas. The AAF will aid the farmers by incorporating modern, affordable technological solutions to increase productivity and profitability in agriculture;
- enhancing productivity of cotton crop by adopting a cluster-based and value-chain approach through public-private partnerships. This will be achieved through collaboration between farmers, state and industry for input supplies, extension services and market lineages; and
- increase in agriculture credit to INR 20 lakh crore with emphasis on dairy, animal husbandry and fisheries.
Notification of the Food Safety and Standards Authority of India (Financial) Regulations, 20238
On January 20, 2023, the FSSAI notified the Food Safety and Standards Authority of India (Financial) Regulations, 2023 ("FSSAI Financial Regulations"). The FSSAI Financial Regulations provide for the creation of a fund ("FSSAI Fund") by FSSAI to meet the objectives of the Food Safety and Standards Act, 2006 ("Food Safety Act"). All expenses of the FSSAI are to be met through the FSSAI Fund.
Notification of the draft Food Safety and Standards (Prohibition and Restrictions on Sales) Amendment Regulations, 20239
On April 27, 2023, the FSSAI published the draft amendments to the Food Safety and Standards (Prohibition and Restrictions on Sales) Regulations, 2011 ("Draft Prohibition and Restrictions on Sales Amendment Regulations"). The Draft Prohibition and Restrictions on Sales Amendment Regulations propose to permit the sale of 'Multi-Source Edible Oil' in packages weighing not more than 15 litres, in compliance with the requirements of Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011. Further, the requirement for: (i) the Bureau of Indian Standards ("BIS") certification for food for infant nutrition and Indian Standards Institution certification for milk products have been omitted; and (ii) agricultural marketing certification mark (AGMARK) requirement for multi-source edible vegetable oil and fat spreads, and BIS certification for packaged drinking water have been proposed to be omitted. The Draft Prohibition and Restrictions on Sales Amendment Regulations were open for public comments for a period of 60 days post their notification in April 2023.
Notification of the draft Food Safety and Standards (Alcoholic Beverages) Amendment Regulations, 202310
On May 11, 2023, the FSSAI published draft amendments to the Food Safety and Standards (Alcoholic Beverages) Regulations, 2018 ("Draft Alcoholic Beverages Amendment Regulations"). The Draft Alcoholic Beverages Amendment Regulations aim to introduce some key changes including: (i) introduction of a new classification of 'ready-to-drink / low alcoholic beverages' and its standards and composition; (ii) revising standards for the composition of country liquor, either in plain or blended form; (iii) addition of honey wine / mead as a new type of wine and introducing its production standards; (iv) revising the standards for wine from other agricultural and plant sources; and (v) introduction of various indigenous liquors, with specifications regarding their product names and raw material, under the existing categories of alcoholic beverages.
The Draft Alcoholic Beverages Amendment Regulations were open for public comments for a period of 60 days post their notification in May 2023.
Notification of the Revised Nutritional Standards under the National Food Security Act, 201311
On January 25, 2023, the Department of Food and Public Distribution, Ministry of Consumer Affairs, notified the revised nutritional standards for meals under the National Food Security Act, 2013 ("NFSA").
The nutritional requirements for children have now been updated a decade after the enactment of NFSA.
The amendment under Schedule II of the NFSA has introduced comprehensive nutritional standards for children, including various food groups and micronutrients, for children aged 6 months to 1 year and those in upper primary classes. Further, three new categories have been created for undernourished children aged between 6 months to 6 years.
Amendments to the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 201112
On January 11, 2023, and February 21, 2023, the FSSAI notified amendments to the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 effective from August 01, 2023 and September 01, 2023, respectively with an aim to lay down certain quality standards with respect to Basmati rice and millets in India.
Settlement of the 'curd' versus 'dahi' nomenclature dispute by FSSAI13
On January 11, 2023, the FSSAI had notified provisions for the replacement of the term 'curd' with 'dahi' in the Standards of Fermented Milk Products. In light of such changes by FSSAI, many representations were made by food business operators ("FBOs"), especially from non-Hindi speaking states against the omission of the word 'curd'. This directive of FSSAI was alleged to be a move to "impose" Hindi.14 Accordingly on March 30, 2023, FSSAI in its press release, addressed the grievance of the FBOs and allowed the usage of the word 'curd' alongside any regional nomenclature of the product, mentioned in brackets on the label of the product, such as 'curd (dahi)', 'curd (mosaru)', 'curd (zaamut daud)', 'curd (thayir)', 'curd (perugu)'.
4. Question numbers 2141 and 392, Lok Sabha Session XI, https://sansad.in/ls/ questions/questions-and-answers
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