Importers and manufacturers of Dietary Supplements and Nutraceuticals take the brunt of the FSSAI Product Approval Scheme

The ambiguous scheme of Product Approval despite having a stay order from the Bombay High Court for 6 months is causing harm to the Dietary Supplements, Health supplements, Functional foods and Nutraceutical Industry. The scheme was introduced by FSSAI in 2012 and since then its guidelines have been changed eight times, the last one being in May 2013. The stay order meant to provide interim relief while decision on the Product Approval scheme is pending, has failed to blow life in the fading businesses of importers and manufacturers alike.

The stay on product approval process remains till August 2014, yet port authorities have been demanding the product approval from importers of Dietary Supplements and Nutraceuticals. The authorities refuse to send the landed products for testing without the product approval; as a result, no clearance is being made for import of goods in India.

Jayesh Mehta, Proprietor, Paradise Nutrition Inc. (one such import company) says, "We filed for the product approval application 2 years back, but there is no revert on it from the authorities. It has neither been processed, nor rejected or accepted. This has affected over 70% of our business. Our imports have completely stopped since September 2013 and we are struggling to stay afloat with the sale of old insufficient stock. We have the necessary licence required to import and do business, and as per the stay order, we should have been allowed to run the business during this while."

India is a fast growing market of Nutraceuticals & Dietary supplements owing to the increase in life expectancy and subsequent increase in lifestyle diseases. The industry is expected to grow rapidly in next 10 years (FICCI - Frost & Sullivan report in 2010). Yet, Indian players are suffering huge losses with many forced to shut down business.

A large number of FBOs are also exporting Nutraceuticals and Dietary supplements to developed markets like US & Europe, where there is no such product approval system, however are adversely affected by the uncertain regulatory regime in India.

Leading industry associations after making several representations to FSSAI officials, intense discussions with its own members and open conferences with the stake holders have found no direction or definite solution from the authorities on the issue of Product Approvals. Food Business Operators (FBO), however, through their associations are determined to find an effective way to resolve the prevailing issues and demand an independent body to help the cause.

Background:

The Food Safety & Standards Act, 2006 was implemented in August 2010 and the FSSAI has framed Regulations covering food products in August, 2011. In January 2012, FSSAI introduced a Product Approval system directing all FBOs to obtain Product Approval before applying for the Licenses under the New Act. The new Act provided automatic transition of existing licenses under the earlier regime of Prevention of Food Adulteration Act, but the Regulations issued in 2011 provided for one year time limit. This time limit has been extended several times with no conclusion.

It appears from these advisories that the initial thought was only to limit the requirement of product approval for novel foods that contain ingredients which are introduced for the first time in the country or which do not have a history of safe use. However, the scope of advisories was extended to cover all categories of products which are not standardised, even if they were old and established in the market.

Most of the FBOs, including those who were producing proprietary foods for a long period of time have applied for Product Approval by paying Rs.25000 for each product applied, in order to transfer the licences of existing products under erstwhile licenses and regime to the new one. However, due to lack of clarity in implementation and the criteria adopted for such approvals, many of the FBOs have been facing significant problems. Majority of them have not received Product Approval/NOC despite having applied for it over a year ago, thus making them unable to apply for licenses.

Following this, a Writ Petition has been filed in Bombay High Court against advisories of Product Approval issued by FSSAI, for which the proceeding is on. So far, FSSAI has been unable to justify whether this power to release advisories has been passed before both the Houses of Parliament or not. Such arbitrary Acts by the Food Authorities has adversely affected various sectors of food industry, especially in the states like Maharashtra, Gujarat, Karnataka, Madhya Pradesh, Himachal Pradesh and Tamil Nadu. The adverse effect has particularly been amplified due to interrupted operations in lieu of ultravires advisory leading to poor economics of the industry causing shut downs and labour layoffs.

In the interim, on 31st January the Bombay High Court stayed the Product Approval Advisory dated 11th May, 2013 for a period of 4 weeks from February 4th. While, the High Court has extended the period for conversion of old license by a period of 8 weeks, in an Advisory issued recently, FSSAI has extended the time period by 6 months, till August, 2014.

Source : Equity Bulls

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