Human Rights

Food safety licensing costs will scuttle unorganised food sector

ArujGarg_BhukkadWhen dealing with government authorities, you are often advised to pay a consultant or a tout an amount of money to immediately get your work done without facing any harassment. As the owner of a food business in search of a food safety license, I was also tempted. I made inquiries and the lowest quotation for the food safety license was ten thousand rupees. The statutory cost however, is only one hundred rupees. As I could not afford ten thousand rupees, I had no option but to go through the process myself.

After three weeks of running around six different offices, I finally understood the process. The website of the Food Safety and Standards Authority of India (“FSSAI”) is very comprehensive but it didn’t offer much practical help. The local municipality, which is the implementing agency, has its own norms. Even though I am a trained lawyer, I faced a lot of trouble in just trying to understand how the law worked. It made me wonder how difficult it must be for others, especially the small operators.

LawSchoolInductionMuniyappa sells dosas in a mobile van at a busy crossing in the Banshankari area of Bangalore. On a good day, he makes a profit of approximately eight hundred rupees. He also pays a cop fifty rupees to allow him to use that junction. He told me that while he was aware of the new food safety law that requires him to get a registered license, he simply could not afford a consultant. The proper process of registration would also require him to shut shop for a few days. Apart from losing money, he might even lose his spot if he did not show up for a few days.

Cost of compliance

The costs to be incurred relate to applying for the license and compliance. Let’s analyse these costs with respect to a small or Petty Food Business (“PFB”), who have to undergo a process of registration and medium-sized enterprises, which have to obtain a ‘license’.

For the average PFB in India such as Muniyappa’s, the costs associated with registration are too high. It is much more cost-efficient for him to pay a bribe upon inspection than to undergo the process of registration. The cost of compliance is also too much for him. People like Muniyappa also cannot arrange for the conditions expected from a PFB under Schedule 4 of the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011, such as an effective drainage system and the compulsory use of potable water.

To ensure compliance by a PFB, I suggest that the law should provide for a process of spot registration, and also offer training and aid to adhere to the safety guidelines. An online registration exists but is not yet activated in all the states in the country. Even this will not be a viable option for most PFBs in the country, as the process requires the use of computers and the Internet.

For medium-sized enterprises, the compliance costs are the main cause of concern. Very few enterprises truly understand the complexity of the conditions, and the owners are finding it difficult to renovate their premises just to comply with the new law. Some medium-sized enterprises, like those in the manufacturing sector, are required by the provision in Annexure 3 to the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011to hire experts to oversee the process of production and help them upgrade their facilities and to meet the conditions prescribed under Schedule 4. This is also proving to be difficult, both in terms of talent and in terms of cost.

A sweet shop in Nagarbhavi, near the NLSIU campus at Bangalore, has been in operation for more than eight years now. The owner and the employees have picked up their skills on the job and do not possess any requisite degree to monitor their processes. The requirement of labels under the Food Safety and

Image by Connie Ma, published under a CC BY-SA 2.0 license.
Image by Connie Ma, published under a CC BY-SA 2.0 license.

Standards (Packaging and Labeling) Regulations, 2011 will require considerable time, effort, and investment for the unorganised packaged food industry, including the shops that sell ‘local chips’. They neither have the expertise nor the funds to implement such labeling guidelines.

Unprepared for US standards

These examples clearly demonstrate how difficult it is for the unorganised food industry to work under this new law. It has the potential to scuttle the unorganised sector and will benefit the organised food industry and multinational corporations by reducing local competition. These enterprises have the financial muscle to adhere to the conditions and ensure regular compliance with the Act. As a Food Business Operator (“FBO”) under Section 3(o) of the Food Safety and Standards Act, 2006, responsible for compliance under this law, I understand that the conditions stipulated by law are essential for protecting public health. Some of the conditions are critical to ensure food safety and a phased enforcement of these conditions might be a solution. But, as these conditions have been inspired by the ‘hazard analysis and critical control points’ approach to food safety, adopted by organisations like the United States Food and Drug Administration, it will take more time and training for it to be replicated successfully in India. I shall explore these codes in my next post here.

With the infinite number of food vendors in this country, the current administrative setup is woefully inadequate to implement a law with such an exhaustive list of conditions fairly and effectively. To make the intention of this law a reality, dedicated food zones need to be created, where vendors of all sizes can set up shop without worrying about the physical infrastructure to facilitate their business. Otherwise, the writing is on the wall for most food vendors in this country.

(Aruj is the Chief Bhukkad at Bhukkad, a natural fast food brand. Bhukkad’s second outlet is opening soon at 80 Feet Road in Koramangala, Bangalore.)


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