The Impact of India’s Online Food Regulation: After the consumer complaints arises against the poor quality products and services of online food retailers, the Food Safety and Standards Authority of India (FSSAI) decided last week that it was about time to add more regulation to food e-commerce business in the country. E-commerce food companies or “Food Business Operators” (FBOs) are defined as businesses realizing their commercial activity on online channels. Then, e-commerce FBOs will have to comply with the schedule-I Regulation of 2011. In order to do so, they will have to get a license issued by the Central Licensing Authority for every stages of their supply chain.
What changes are to come due to India’s Online Food Regulation?
In accordance with the new guidelines issued by FSSAI called “Operations of e-commerce Food Business Operators,” the Indian entity precises that BFOs will not only have to licence their entire supply chain but also ensure that their delivery team is properly trained. This in order to preserve food safety of course.
Under the new measure, what the FSSAI consider supply chain includes: the company Headquarters, their manufacturers, the transportation service providers, the storage warehouse and the distribution process. “The last mile delivery” approach, is now a well known rule among online retailers worldwide, and having a well trained delivery team is crucial as the safety of food product is not compromised until it reaches the final consumer.
But India’s online food business retailers fall under even more obligations. Indeed, in order comply with FSSAI rules, they will have to ensure as well that their websites do not contains ambiguous information or worse, false claims. This includes the information about the sellers, the brands, the importers, or the manufacturers, as well as the images of food products.
That’s not all: from now on, FBOs will have to specify on their platform, that the responsibility for violating the FSS Act and its rules is now in their hands. As for the supply chain part, the FSSAI declared that all online food sellers in India will need to sign an agreement with the above mentioned third-party involved to prove that they really comply with the new FSSA Act and its resulting rules and regulations.
Also, if any consumer complaint occurs, FSSAI ordered that the online seller will be obligated to promptly report it to the concerned entity (either food industrial/importers/sellers, or brand owners) who would then be responsible for finding a quick solution to solve the problem. Finally, in the event that there is a recall on a product that does not comply with the new FSSAI Act, the FBOs should completely and immediately remove the item from their platform.
Amazon attempts to change the game
If India is taking a step further to a better online food regulation, it is for a good reason. First, it is to please customers and ensure they consume healthy food even if ordered online. But it is also about to make a major move. Indeed, until now, online retailers like Flipkart, Snapdeal and the giant Amazon have been running their e-commerce activities like simple marketplaces on which only Indian-owned entities can sell products. They had no authorization for selling the food products itself.
However, the Indian government decided in February 2016 to allow 100% foreign investment in the food retail business. Their action is limited though, as they can only sell processed food uniquely made in India. Thus, things are about to change in Indian online food retail world. Wasting no time, Amazon applied for the right to invest $500 million in an independent and sovereign entity that would store local food items and sell them online. They would then be the 1st foreign online retailer to enter the sector.