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"Apples from US now subject to 75% tariff, 20% increase for almonds"
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Monday, 01 February, 2021, 08 : 00 AM [IST]
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 Food Safety and Standards Authority of India (FSSAI) has recently proposed to make registration, inspection and audit mandatory for foreign food manufacturing facilities that export food products to India in various categories. This latest move initiated by the apex food authority may be seen as non-tariff trade barrier which in turn could increase the compliance burden for food importers. Amit Lohani, founder and director, Forum of India Importers (FIFI) shares his views on this matter in an email interview with Kimberley Fernandes, excerpts
Non-tariff barriers to trade are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs. How will the non-tariff trade barrier put forth by FSSAI increase the compliance burden for food importers?
The imports of international food and beverage products in India has seen a slow growth and needless to highlight that the global pandemic derailed a lot of businesses. This has been topped with numerous recent notifications, advisories and draft notifications issued by the FSSAI. These notifications like physical audit of the international manufacturing facilities, requirement of Certificate of Analysis, or mandating a non-GM certificate are creating more ambiguous trade environment and also, does not support PM Modi’s ambitious Ease of Doing Business Campaign. We clearly see duplicity in the requirements and added bureaucratic burden, which will add to the commercial value of the consignments and have a direct impact on the consumers purchase decisions. Majority of food imports in India are inclined towards the Make in India campaign and use as intermediate facilitating production of food and beverages almost 70 per cent of agri, food and beverage imports is edible oil and balance 30 per cent is for commodities. Interestingly only 6 to 7 per cent of the total agri, food and beverage imports are in form of pre-package, processed, and value added food products.
What types of challenges and obstacles to international trade do you foresee due to these newly introduced norms with regards to import and export duty?
Lot of FIFI members and stakeholders are focused on exports of agri, food and beverage products to various countries in the world and are fearful of retaliation from these countries, which can hinder the prospects of Indian exports. In current era of globalisation India cannot be seen as a country which on one hand is inviting investors and on other hand taking such restrictive measures for international trade. We as a country should consider Aatmanirbhar Campaign as more holistic and inclusive.
If only meat, dairy, water, infant food and special dietary products are considered to be high-risk food products, then are the other imported products safe?
Yes, globally the above mentioned categories are considered as high risk given the nature of the product and end consumer. Technically, risk assessment is defined based on the microbiological hazards in foods and an informed decision has been taken by scientists at numerous global platforms to do quantitative and qualitative estimation before coming up with the high risk and low risk food product definitions. Even global bodies like WHO say, “when terms like “low risk” or “very low risk” are used, it is very important to consider the number itself, but even more so to examine the context to see what the number means.”
Additionally, it is important to know that even the product categories as titled as low risk are subject to sampling and testing by FSSAI and even after attaining the status of green channel products are subject to 5 to 20 per cent of sampling.
Will these new regulations prove to be a setback for the Indian economy? How can the apex food authority dodge this bullet while still maintaining high standards of food safety and hygiene?
Indeed, yes the notifications like these, which are in certain cases India specific are bound to have an impact on the Indian economy. Not only impacting the trade flow but, also having a negative impact on India’s image in the global market. India is a net exporter of agricultural, food, and beverage products and implementation like these can possibly cause a dent. Also, we as an association are committed to support food safety measures as imposed by FSSAI as we firmly believe in the fact that Indian consumers deserve the safe products. Nonetheless, we should be driven by food safety and not reinvent the wheel where global standards are present or impose policies, which are trade restrictive. For example India does not have clear guidelines for organic imports, or lack standards for organic dairy products clearly restrict the trade ties.
How much food import was affected due to Covid pandemic? if you could elaborate in terms of volume and value.
Overall international trade faced huge brunt of the global pandemic and international agri, food and beverage sector is no exception to the same. Given that food products have shelf life attached to them thus, many stakeholders have had huge losses where products never saw the day light. Still businesses had to make payment to the exporters to sustain the reputation of the country and then destroy the products to ensure that food safety protocols are maintained. All this was done by businesses themselves with no government aid to support them through these unprecedented times. Several HORECA industry players are still out of business or are seeing negligible inflow of customers causing a direct impact on the orders of the products. The unorganized sector has seen panic buying during initial phase of the national lockdown, which eventually translated into purchase of health products, and convenience buying. The e-commerce sector has been one of the biggest gainer albeit from a very small base.
Are we on the recovery path or still it would take some more time?
Yes and no both. The industry has started to see certain amount of positive business flow pre festive season however; the slowdown is again seeping in after Diwali. Consumers are mindful of the purchase decisions they make due to the economic slowdown and needless to highlight that over 60 per cent of us make shopping decisions while walking the retail store allies, which is currently not happening.
There are tariff barriers imposed by various countries, particularly the US, how has this added up to the importers' woes?
India has not seen any tariff barrier on food exports to the U.S. or any other country for that matter. However, on the flip side India has imposed restrictive tariff on goods originating from the United States. We have seen some massive tariff increase in past few years like tariffs on walnuts have gone up from 30 per cent to 100 per cent for all countries and accept for U.S. where it has gone up to120 per cent, fresh apples from the U.S. are now subject to 75 per cent tariff and a 20 per cent increase has been imposed on the American almonds to name a few. Needless to highlight that such extreme tariff increase have impacted the trade drastically and made many healthful products out of consumers reach. Also, ambiguity in certain definitions of healthful products like almonds, walnuts, pistachios, and hazel nuts etc., result in the products falling under higher GST slabs, which leads to blocked cash flow for businesses and impact the purchase decisions.
Recently FSSAI has issued a new set of rules for imported food items that it can order auditing of the overseas companies. How do you see this move and what impact do you see, of this decision, on the food import business?
The FSSAI notification is ambiguous and we as industry are seeking clarity on the implementation of the same. There are many unanswered questions and the ambiguity will lead to lower interest in the Indian market topped with slowdown. Additionally, duplicate regulatory authority will add on to the misery of the businesses for example BIS already mandated similar kind of audits for number of food products manufactured internationally.
Furthermore, FSSAI has issued more regulations regarding the speedy clearance of the imported food products. How do you analyse the process of clearance of imported food at ports and do you see any scope of improvement?
FSSAI did introduce progressive and ambitious Risk management System, which was implemented on ground for a very short duration of time. However, many companies are seeing 100 per cent sampling again, which have earlier received a green channel and interestingly no information and reasoning have been provided to these companies for moving them from green channel to 100 per cent sampling regime. We have requested senior administration of FSSAI to implement RMS in full force and ensure that it is practiced by the Authorized Officers too. The burden of providing evidence should not be put on the business in case of discrepancy instead authorities should take onus of implementation on themselves as they do for other regulations.
How is the demand-supply situation right now? Also if you could elaborate on what products are in demand more.
The Indian market like all other markets globally has seen something, which was never seen before. The first wave of lockdown bought in panic buying, stocking of goods, and also increased demand for in house cooking and backing. The second wave led to the increased demand for convenience products, which is now seeing a shift towards healthful products, baking needs, and products, which help increase the immunity. Healthful eating is seeing a new high and that we see the global pandemic will result into new trends, which will be hybrid of the previous world and the new era. Probably I won’t be wrong if I say we will emerge into a new world once we are through these times.
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