India’s economy is expected to grow by 6.4% in 2015 – and is expected to catch up with that of China by 2016-17 – on the back of reform measures unveiled by the new government, according to the World Bank. Steps taken by the government to revive growth and boost sentiment since it assumed power in May 2014 – as well as the sharp slide in global crude oil prices – will help India.
The World Bank ranked India the 10th largest economy in 2014, in terms of nominal GDP. At the same time, the country climbed significantly to 3rd place when ranked in terms of purchasing power parity (PPP)-denominated GDP.
Economic growth has fuelled the expansion of the middle class, now comprising 25% of the population of 1.2 billion, based on criteria set by Asian Development Bank. The segment does not compare to the 63% in China but is as big as that of the US. It is a key driver of consumption, including in the food processing industry which is deemed a ‘rising sector’.
Moves are underway to turn the food industry into a major international player. The Ministry of Food Processing Industries has formulated the ‘Vision 2015’ Action Plan which targets trebling the size of the sector, to increase value addition from 20% to 35% and enhance India’s share of global food trade from 1.5% to 3%.
In connection with this, the government has been working towards a unified empirical standard under the Food Safety and Standards Act 2006 (FSSA) to:
Figure 2: Differences between the FSSA and Prevention of Food Adulteration Act 1954
Changes under the FSSA:
The FSSAI was set up with a mandate to lay down science-based standards for food products and to regulate their manufacture, storage, distribution, sale and import.
Its work will see the repeal of eight sets of overlapping legislation (Figure 3) and elimination of procedural delays due to differing jurisdictions. Implementation will involve all levels of government.
Figure 3 – Laws to be repealed by the FSSAI
The FSSA extends its jurisdiction to all persons involved in the food business. This refers to any undertaking (profit/non-profit/public/private) related to any stage of manufacture, processing, packaging, storage, transportation, distribution and import of food. It also covers food services, catering services, and the sale of food or food ingredients. As such, the law will go a long way to boost consumer confidence and give the food processing sector a much-needed fillip.
However, effective implementation is fraught with challenges. India presents a unique case of vastness and complexity in providing regulatory oversight from farm to fork. For instance, there are current limitations to the number of Food Safety Officers, funds at state level, and quality laboratories of uniform standard.
The domestic industry looks to the FSSAI to spearhead harmonisation of food standards with those of the Codex Alimentarius Commission. However, the sector would also like the government to take into account the realities on the ground in bringing domestic standards in line with international practice. Should trade and industry feel hampered by the new procedures, it could prove to be counter-productive to overall growth of the food sector.