FSSAI To Tighten Grip On $80 Billion Online Market

E-commerce is the next big focus area for the Food Safety and Standards Authority of India, its Chief Executive Officer Rajit Punhani said in an interview. "We are trying to tighten and make them accountable," he said.

FSSAI plans to require online listings to display manufacturing and expiry dates and batch numbers of food products, and to hold platforms accountable for misleading claims by manufacturers. It is also considering rules mandating photographs and addresses of dark kitchens, along with stricter checks on dark stores to ensure proper storage conditions, including on frozen items.

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Over the past few months, the federal food regulator has intensified enforcement through investigations, including based on consumer complains, and penal action. Eternal Ltd.'s Blinkit, Swiggy Instamart, Walmart Inc.-owned Flipkart and Amazon.com Inc.'s India unit have all faced regulatory action for violations ranging from misbranding and sale of prohibited items to invalid licenses.

These measures could reshape India's $80 billion online retail industry, where Redseer Strategy Consultants estimates groceries account for as much as 51% of sales.

Instamart said in July, after an FSSAI probe, that it was reviewing the listings flagged by the regulator and is in touch with the authorities to resolve the same. Amazon operates as an online marketplace where independent third-party sellers list and sell their products, a spokesperson said in response to a query last week, adding that it removes non-compliant products. "We confirm that the said product is no longer available on our marketplace."

The regulator's broader crackdown now extends well beyond online platforms. FSSAI has increased scrutiny of food manufacturers, hotels and restaurants for advertising, product claims, infant-product marketing, labeling and food storage practices. Companies including Nestle India Ltd., PepsiCo, Dabur India Ltd., as well as hotel operators including JW Marriott have been pulled up for violations.

Punhani said state food and drug enforcement agencies - which operate independently of FSSAI - should also increase oversight of these businesses.

Prosecution involving e-commerce companies have risen at least five- to sixfold over the past year, he said, adding that "they are gradually improving, but not at the pace that they should."

The stricter scrutiny follows years of viral social-media posts and consumer complaints exposing malpractices by manufacturers as well as restaurants and small businesses.

Regulatory bodies conducted about 700,000 inspections between April and September, almost double the number from a year earlier, Punhani said.

The most visible action has come from Maharashtra, India's richest state, where reform-minded bureaucrat Tukaram Mundhe has overhauled the state Food and Drug Administration's enforcement strategy. Regulators in the provinces of Jammu and Kashmir, Karnataka and West Bengal have also intensified checks on restaurants, food manufacturers and quick-commerce operations.

The FSSAI is stepping up scrutiny of India's fast-growing supplements and nutraceuticals industry too, particularly products sold online, Punhani said. The regulator is reviewing approvals granted as far back as three to five years ago to check whether companies are making claims they weren't cleared to use, and plans to issue notices and suspend licenses where it finds violations.

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"We are vetting them," he said, adding that weight-loss claims aren't permitted. FSSAI acted against a joint venture between Dr. Reddy's Laboratories Ltd. and Nestle India for its supplement last week over misleading claims.

Punhani said the regulator is also assessing trademarks such as "GLP Plus," which could give consumers a misleading impression about a product. FSSAI has raised the issue with India's trademark authorities, as part of a broader push to ensure that branding and labeling information reflect the true nature of food products.

Staffing remains a challenge as enforcement ramps up, with state governments carrying out most inspections. At the same time, major food companies have begun pushing back more aggressively. PepsiCo Inc., Reliance Consumer Products Ltd. and Monster Beverage Corp. have all challenged FSSAI notices in court, creating additional hurdles to its implementation of better standards.

These firms recently secured an early procedural win - with a court saying the companies were not given adequate opportunity to respond or present their case to the regulator - signaling that the push back is bound to strengthen as companies lawyer up.

But Punhani is confident of winning against large foodmakers even as these legal challenges intensify.

"They are resisting but we are far stronger and we have consumer support," he said.