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.
Laws governing the food industry:
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. It specifically repealed eight laws which were in operation prior to the enforcement of FSSA:
- The Prevention of Food Adulteration Act, 1954
- The Fruit Products Order, 1955
- The Meat Food Products Order, 1973
- The Vegetable Oil Products (Control) Order, 1947
- The Edible Oils Packaging (Regulation) Order, 1998
- The Solvent Extracted Oil, De oiled Meal, and Edible Flour (Control) Order, 1967
- The Milk and Milk Products Order, 1992
- Essential Commodities Act, 1955 (in relation to food)
Need for the new act:
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:
A. Packaging and Labeling:
FSSA provides for separate packaging and labeling regulations known as Food Safety and Standards (Packaging and Labeling) Regulations, 2011 (hereinafter referred to as the "Packaging and Labeling Regulations") which lay down the statutory and regulatory requirements for packaging and labeling of products. A plain reading of the Packaging and Labeling Regulations, show that there are different kinds of products: Pre-packaged, Proprietary and other specific products as mentioned in the regulations.
Regulation 2.12 of the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 defines "proprietary food" as food that has not been standardized under these regulations. Regulation 1 (8) of the Packaging and Labeling Regulations defines "prepackaged" or "pre-packed food", as food, which is placed in a package of any nature, in such a manner that the contents cannot be changed without tampering it and which is ready for sale to the consumer.
The Packaging and Labeling Regulations provide the general requirements for labeling of food products prescribed under the FSSA, as follows:
- The particulars of declaration required under these Regulations to be specified on the label shall be in English or Hindi in Devnagri script: Provided that nothing herein contained shall prevent the use of any other language in addition to the language required under this regulation.
- Pre-packaged food shall not be described or presented on any label or in any manner that is false, misleading or deceptive or is likely to create an erroneous impression regarding its character in any respect;
- Label in pre-packaged foods shall be applied in such a manner that they will not become separated from the container;
- Contents on the label shall be clear, prominent, indelible and readily legible by the consumer under normal conditions of purchase and use;
- Where the container is covered by a wrapper, the wrapper shall carry the necessary information or the label on the container shall be readily legible through the outer wrapper and not obscured by it.
In addition to these general requirements specified above, every package of food shall also carry the following information on the label: (i) name of the food; (ii) list of ingredients; (iii) nutritional information; (iv) declaration regarding veg. and non-veg; (v) declaration regarding food additives; (vi) name and complete address of the manufacturer; (vii) net quantity; (viii) lot/code/batch identification; (ix) date of manufacturing or packing; (x) best before and use by date; (xi) country of origin for imported food; and (xii) instructions for use.
Since a large variety of food products are being imported into India, under the Packaging and Labeling Regulations, it becomes necessary to mention the country of origin of the food on the label of food imported into India, and when a food undergoes processing in a second country which changes its nature, the country in which the processing is performed shall be considered to be the country of origin for the purposes of labeling.
Therefore, the above are the statutory and regulatory requirements that are to be complied with regard to labeling of products that are sold in the Indian market as "pre-packaged goods".
B. Signage and Customer Notices:
Having briefly dealt with the statutory and regulatory requirements with respect to labeling of products, it is necessary to understand the statutory and regulatory requirements with respect to signage and customer notices more from the point of view of a food outlet. It is important to note that though the provisions of FSSA do not specifically provide for any statutory and regulatory requirements either for signage or customer notices, but it has certain provisions with regard to advertisement of products by food business operators.
Section 3 (1) (b) of FSSA defines the term "advertisement" (which includes a "notice") as any audio or visual publicity, representation or pronouncement made by means of any light, sound, smoke, gas, print, electronic media, internet or website and includes through any notice, circular, label, wrapper, invoice or other documents.
Section 24 of the FSSA provides that no advertisement shall be made of any food which is misleading or deceiving or contravenes the provisions, rules and regulations made there under. No person shall engage himself in any unfair trade practice for purpose of promoting the sale, supply, use and consumption of articles of food or adopt any unfair or deceptive practice including the practice of making any statement, whether orally or in writing or by visible representation which:
- falsely represents that the foods are of a particular standard, quality, quantity or grade-composition;
- makes a false or misleading representation concerning the need for, or the usefulness;
- gives to the public any guarantee of the efficacy that is not based on an adequate or scientific justification thereof, provided that where a defence is raised to the effect that such guarantee is based on adequate or scientific justification, the burden of proof of such defence shall lie on the person raising such defence.
FSSA being applicable to all food business operators in India, the provision with regard to advertisements would have to be complied with.
C. Licensing Registration and Health And Sanitary Permits
It is also important to note that FSSA, being the only legislation applicable to the food industry throughout the country, will also apply as far as the national health and sanitary permits are concerned.
The Food Safety and Standards (Licensing and Registration of Food Business) Regulations, 2011 (hereinafter referred to as "License and Registration Regulations") govern the aspect of license and registration of a food business operator.
Under Regulation 2.1 of the License and Registration Regulations, all food business operators in the country are required to be registered or licensed in accordance with the License and Registration Regulations, hence no person shall commence any food business unless a valid license is possessed by the food business operator, and the conditions with regard to safety, sanitary and hygienic requirements have to be complied with at all times by them.
One of the prime purposes of these conditions is to ensure that the food business operator maintains sanitary and hygienic standards as specified in each food category. It is hereby recognized and declared as a matter of legislative determination that in the field of human nutrition, safe, clean, wholesome food is indispensable to the health and welfare of the consumer of the country.
It shall be the deemed the responsibility of the food business to comply with the labeling, safety and health and sanitary requirements laid down in the License and Registration Regulations. The labeling requirements are specified under the regulations and they need to be complied with at all times especially with regard to pre-packaged goods.
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.
A license for playing music in restaurants is also required for playing recorded or live music. It is mandatory for a food business to obtain insurance from any insurance company with regard to public policy, product liability, fire policy, building and assets. Other insurances though are not mandatory may be useful if taken.
Some of the other registrations and permissions may include registration under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 if it is engaging more than 20 employees. Registration is also required under the Central Excise Act, 1944 as in respect of goods specified in Third Schedule of the said act, repacking, re-labeling, putting or altering retail sale price etc. will fall into the category of manufacture. Subject to applicability, other statutory and regulatory compliances may also include registrations under Income Tax Act, 1861, Customs Act, 1962, sales tax, service tax and other labour laws.
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.
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