India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

increased backward linkages. It is likely that as the organized retail sector grows,
backward integration will grow as well, triggering a push for more food processing. 100
Food Safety St<strong>and</strong>ards <strong>and</strong> Regulations
Food safety st<strong>and</strong>ards are set nationally under the authority <strong>of</strong> the central government
rather than state governments. Before 2006, <strong>India</strong>n food st<strong>and</strong>ards were governed by
several food laws enacted at different times <strong>and</strong> under the authority <strong>of</strong> different
ministries, including the Prevention <strong>of</strong> Food Adulteration (PFA) Act <strong>of</strong> 1954, enforced by
the Ministry <strong>of</strong> Health <strong>and</strong> Family Welfare; the Agricultural Produce (Grading <strong>and</strong>
Marketing) Act <strong>of</strong> 1937, enforced by the Ministry <strong>of</strong> Agriculture; <strong>and</strong> the St<strong>and</strong>ards <strong>and</strong>
Weights Measure Act <strong>of</strong> 1976, enforced by the Ministry <strong>of</strong> Food <strong>and</strong> Civil Supplies. 101
In August 2006, the central government passed the Food Safety <strong>and</strong> St<strong>and</strong>ards Act <strong>of</strong>
2006, in which eight separate laws were consolidated. 102 This act regulates food safety
st<strong>and</strong>ards related to the manufacture, storage, distribution, sale, <strong>and</strong> import <strong>of</strong> food for
human consumption. St<strong>and</strong>ards—still in the process <strong>of</strong> being formulated—will cover the
specifications for ingredients, contaminants, pesticide residue, biological hazards, <strong>and</strong>
labeling. 103 The establishment <strong>and</strong> enforcement <strong>of</strong> science-based food safety st<strong>and</strong>ards for
domestically produced <strong>and</strong> imported food is now carried out by the Ministry <strong>of</strong> Health
<strong>and</strong> Family Welfare through a regulatory body called the Food Safety <strong>and</strong> St<strong>and</strong>ards
Authority (FSSA), which began operation in July 2008. 104 Its activities include restricting
ingredients used in food preparations, sampling foods for poisons <strong>and</strong> other toxic
substances, licensing <strong>and</strong> registering businesses selling food for human consumption, <strong>and</strong>
regulating food manufacturing practices <strong>and</strong> labeling. State commissioners <strong>of</strong> food safety
will provide some <strong>of</strong> the staff <strong>and</strong> resources for enforcement. 105
Because implementation <strong>and</strong> enforcement <strong>of</strong> laws by the FSSA only began in late 2008
<strong>and</strong> certain authorities under the FSSA will not be operational until late 2009, it is too
early to assess the impact <strong>of</strong> the FSSA on U.S. exports <strong>of</strong> agricultural goods. 106 Early
actions, however, suggest that U.S. exports <strong>of</strong> wine <strong>and</strong> spirits may be negatively affected
by new labeling requirements. Under the law, each state has the right to require separate
labels with different information for consumers. According to industry representatives, if
<strong>India</strong>n states permit stickers to be added after shipment <strong>and</strong> the original labels remain, the
cost <strong>and</strong> administrative burdens are expected to be minimal. On the other h<strong>and</strong>, if states
insist on entirely new labels, the additional cost could be very high, forcing wine <strong>and</strong>
spirits manufacturers to exit certain markets, particularly <strong>India</strong>n states without highvolume
sales. 107
Another open question is whether enforcement practices by the FSSA will match or
exceed those that prevailed under previous laws. For example, some <strong>India</strong>n sources assert
100 Dhankhar, <strong>India</strong>: Food Processing Sector, July 2, 2008, 3.
101 For a full list <strong>of</strong> the <strong>India</strong>n laws impacting food safety, see Vision, Strategy <strong>and</strong> Action Plan for Food
Processing Industries in <strong>India</strong>, April 2005, 115–116.
102 The Times <strong>of</strong> <strong>India</strong>, “Health Ministry to Oversee Food Safety,” April 11, 2007.
103 Panagariya, <strong>India</strong>: The Emerging Giant, 2008, 317.
104 Briggs, “<strong>India</strong> Sets Up Food Safety <strong>and</strong> St<strong>and</strong>ards Authority,” July 8, 2008.
105 Food Safety <strong>and</strong> St<strong>and</strong>ards Act 2006, ch. 7, sec. 29–30.
106 The Financial Express, “FSSA to Unveil New Food Safety Guidelines Soon,” July 7, 2009.
107 Industry representative, interview by Commission staff, New Delhi, <strong>India</strong>, May 8, 2009.
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