Rashida Vapiwala, Founder, LabelBlind
In India, the food processing industry is an important segment within the Micro, Small and Medium Enterprises (MSME) sector. According to the Annual Report 2020-21 of the Ministry of MSMEs, the food processing sector accounts for around 8.4 per cent of the total MSMEs in India. The report states that the food processing industry is one of the priority sectors for the government’s MSME schemes and initiatives. The government has launched various programmes to support the growth and development of the food processing industry within the MSME sector. These programmes include financial assistance, technology upgradation, skill development, and market linkages, among others.
Businesses are classified as MSMEs based on their investment in plant and machinery or equipment, from investment up to Rs 1 crore and turnover up to Rs 5 crore for micro-enterprises to businesses with investment up to Rs 50 crore and turnover up to Rs 250 crore for medium enterprises.
The food processing industry is a diverse and rapidly growing sector, with a wide range of enterprises operating at different scales and levels of technology, including various sub-sectors, such as fruits and vegetables, dairy, meat and poultry, fisheries, and more. A micro-enterprise in the fruits and vegetables sub-sector could be a small-scale unit engaged in the processing and packaging of fresh fruits and vegetables. Similarly, a small enterprise in the dairy sub-sector could be a milk processing unit with limited production capacity, while a medium enterprise in the same sub-sector could be a large-scale dairy processing unit with modern facilities and advanced technology.
Large companies have an advantage with established structures of business operations and Standard Operating Procedures (SOPs), addressing those of food regulations compliances. However, MSMEs are known for their frugal structures based on the economy of business operations and may lack comprehensive knowledge or expertise of domestic and global food regulations. The impact of such compliances on MSME food businesses is manifold;
Compliance with Food Safety Standards of FSSAI, Legal Metrology, and Plastic Waste Management: Food labelling is a legal requirement and MSMEs must comply with these regulations to avoid penalties, fines and loss of reputation.
Consumer Trust in Businesses: Food labelling provides important information to consumers on food quality, food safety, nutritional information, ingredients, and potential allergens. This information is crucial for people, especially those with dietary restrictions, allergies, or food intolerances, to avoid health risks, or children and other vulnerable consumer segments, like the elderly and pregnant women. Food labelling helps build brand recognition and customer loyalty.
Level Playing Field: Food labelling encourages product innovation to provide better consumer value propositions and creates a level playing field for MSMEs to differentiate their products from established players. MSMEs can use labels to highlight unique aspects of their products, such as natural ingredients, organic or local sourcing, or specialised diets.
Export Compliance: If the MSME is exporting its products, then complying with the labelling regulations of the importing country is essential. International labelling regulations are diverse and stringent and require additional information on the label, including country of origin, net weight, nutrition and dietary information, other than cultural compliances like halal, kosher etc.
Front of Pack Labelling: The Food Safety and Standards Authority of India introduced the Front of Pack Labelling (FOPL) draft regulation on September 20, 2022. The regulation is aimed at strengthening the food labelling ecosystem in India and offering quick guidance to consumers on the nutrition profile of packaged foods. The Indian Nutrition Rating (INR) system encourages consumers to choose products with more stars, educating them on healthy packaged products. FOPL regulations will also encourage food companies to develop healthier products for better Star Ratings.
Non-compliance with food labelling can result in significant inconveniences for both businesses and consumers. This can be due to a variety of reasons, such as inaccurate or incomplete information, mislabelling, or the failure to meet specific labelling requirements. Here are some instances of food labelling non-compliance:
- Inaccurate Nutritional Information: Providing inaccurate nutritional information on the food label is one of the most common examples of food labelling non-compliance. It can be due to poor testing or incorrect calculations. For example, a product claiming to be low in calories may have higher calorie content than advertised.
- Allergen Omission: Failing to list allergens on the label can be hazardous for people with allergies. An example of this type of non-compliance is when a product contains nuts but does not mention it on the label, resulting in an allergic reaction in people who are allergic to nuts.
- False Claims: Labelling a product with false or misleading claims is another example of non-compliance. For instance, a product that claims to be organic when it is not, or a product that is labelled as sugar-free but contains hidden sugars.
- Incorrect Labelling: This type of non-compliance is usually due to human error, such as using the wrong label or printing incorrect information. An example of this type of non-compliance is when a label states the wrong ingredients or has a wrong expiration date.
- Missing or Inadequate Information: Certain information is required by law to be on a food label, such as ingredients, net weight, allergen information, and nutrition information. Failing to include this information or providing inadequate information is a type of non-compliance. For example, not including the country of origin on the label when it is required by law.
- Diversity of Exports Labelling Regulations: Export labelling regulations are significant for businesses engaged in international trade, especially for MSMEs in the food processing industry. These regulations ensure that food products meet the standards and requirements of the importing country, including labelling and packaging requirements. Non-compliance with these regulations can result in the rejection of the products at the port of entry, delays in delivery, and loss of credibility and reputation of the business. Moreover, non-compliance can lead to penalties, fines, and even the suspension of trade with the importing country. Export labelling regulations also provide a competitive advantage to businesses that comply with them. By meeting the labelling and packaging requirements of the importing country, businesses can build trust with foreign consumers, improve the marketability of their products, and enhance their competitiveness in the international market.
In conclusion, food labelling is essential for MSMEs in the food industry for legal compliance, consumer safety, product differentiation, branding, and export compliance. By prioritising food labelling, MSMEs can ensure their products are safe, legal, and attractive to consumers.