Posted: Friday, 23 May 2014 14:59

FSSAI- Scourge for Wine Industry in India

Food Safety Standards Authority of India (FSSAI) formed under the Ministry of Health and Family Welfare of the Government of India, through its Notice of 25 February, 2011 demanded a strict compliance as per food and safety and standards authority directives dated 2 December 2010. This included imported packaged foodstuff, specified various requirements that included importer’s name, weight of the product, month of manufacture, declaration of Best Before date of month on the package, nutritional information and declaration of whether it is ‘vegetarian’ or ‘non-vegetarian’ had been made mandatory.

Most wine importers were blissfully unaware of FSSAI and the nightmares it was about to bring to their life till a few months ago as wine and spirits were brought in the purview of the Act. The recent policy of strict adherence of an earlier notice by this government body, FSSAI has brought them miseries much more severe than the lackluster market and the increasing costs of selling wines at various stages and far worse than the bar-code and online registration which had earlier stopped the supplies for more than two months, making many wonder if the government was adopting the delay tactics to reduce alcohol consumption. FSSAI is a big scourge for the importers and producers, threatening to halt the whole industry.

FSSAI covers the entire supply chain. All wholesalers, transporters and retailers must have last mile integration. The entire chain would have over 800,000 entities to register, says an importer according to whom all registrations must carry liquor certification by FSSAI before July 1, failing which the stocks may be seized at that level.

Despite the additional costs and lack of responsibility with all the authority vested in the FSSAI, it is a given that the system has to be followed as it is under an Act. However, what is perhaps lacking is the pragmatic approach. Some organizations have taken the legal view that since liquor is a state subject, the FSSAI has no locus standi. The matter is sub-judice but most legal experts opine that it is a matter of time before the court throws out their plea.

Labeling

By far, the most complicated and controversial issue is that the Act requires all the ingredients to be mentioned. Wine is made typically from grapes (or some other fruits) as a single ingredient but there are over 70 additives legally allowed to process the grapes-these include sugar, various acids, and fining materials. These are also used in the Indian wine production. It is not clear if all of them are to be mentioned on the label.

In all fairness, according to all importers, FSSAI is happy enough for the time being, if single ingredient fermented grape juice is mentioned on the bottle. Foreign producers are neither too hot on ‘degrading’ their carefully nurtured product and address it as grape juice nor willing to change the labels to add anything different, justifiably so because the volumes are too low to justify the heavy extra cost of special labels.

Another factor is that the information has to be in English or Hindi. Therefore Prodotto di Italia is not acceptable for the Product of Italy. This could be avoided if the importer were simply allowed to stick the appropriate label in the customs bonded warehouse and give an undertaking that the labeling is genuine and he would be responsible for the authenticity of the information with strict penalties for any faults.

However, this is proving to be an Achilles’ Heel.

Cost of Samples

The Act requires the submission of two samples-in this case it is the exact replica of what is being imported. This makes sense if the standard size of bottles is being imported in a reasonably big batch. But it explicitly insists that if someone imports 2 bottles of 12 liter Champagne, he has to import extra 2 bottles for testing! Consider this, one sample of which only 30mL are required is consumed after opening one bottle. The second bottle is opened in case the first wine is found to be defective. Therefore, for a sample of 30mL one has to import 24 liters extra!!

Again, the demand for the expensive wines is limited. It is not uncommon to get a consignment of only 6 bottles of Chateau Margaux or Petrus. Wines like Henschke Hill of Grace, Penfolds Grange, a Harlan or Screaming Eagle are all under allocation and one is lucky to get a few bottles a year, if that. Imagine giving out 2 precious bottles for testing a sample of 30mL for a product that is in acute shortage.

It may be mentioned that the customs duty is waived off for such samples and the second bottle, in theory, is returnable, if the sample is approved. Several importers have complained that on one pretext or the other many times the bottle is not returned and naturally one cannot question the impropriety for fear of a backlash for future dealings. The views are also divergent about what happens to the returned bottle. Some say the customs duty on it has to be paid while others would rather not talk about the subject.

Sampling

Is sampling really necessary? Yes, according to FSSAI. Even for the First Growth of Bordeaux or the top Italian wines? There cannot be any exceptions where the law is concerned. But every country has government approved testing labs that run the tests required for each country. I met Roberto Vassanelli, the owner of one such Italian lab recently in Brussels. He runs Vassanelli, approved by a central agency called Laboratorio Anilisi Agroalimentary Enocentro (www.enocentro.it).

This lab does the tests prescribed by each country including India. He was surprised they were not accepting such reports in India anymore. He has been doing these tests for countries like Brazil and China. FSSAI has a grouse that these countries do not accept reports from our Indian labs so why should we accept theirs-and the tussle continues.

Wastage of Time and Money

When the process of sampling started, it was mandatory to submit the documents along with a fee of Rs.3000 in the name of SGS India Pvt Ltd for appointment for next day sampling. Now, the system has been changed; the Pay order had to be for the amount plus service tax @12.36%. But what is an irritant for the importers-especially the smaller ones, is that now the payment has to be paid online using a credit card with the extra cost of 4% to be borne by the importer. With one consignment containing up to 10 labels at times for inspection, this small amount adds up to a pretty penny and the importers feel it is unjustified to twist their arms where it hurts.

Delays in Sample Collection

FSSAI is supposed to collect the offered samples from the Custom-bonded warehouse within 24/48 hours of depositing the sampling charges. This seldom happens, perhaps due to shortage of staff or more samples than can be currently handled. Earlier, the importer also had to co-ordinate with his Customs officer so that both could come at the same time, a practical impossibility. At least now there is relaxation given that the samples may be taken out of the warehouse to be handed to the FSSAI inspector. This process takes at times over a month. Several importers have shown me an ongoing delay of over 4 weeks-and this is nothing to do with the sampling time after collection or the result but merely collection of sample. There is no accountability at the FSSAI end, it appears.

Fortunately, since the consignment is in the customs bonded warehouse and not at the docks/airport as was earlier, wines don’t bake anymore for this delay except that the consignment is stuck as it cannot be sold. Importers are constrained in that they are expected to make payment to the suppliers within 90 days after the shipment leaves. No wonder a majority of suppliers delay in payments, resulting in a lack of financial credibility.

Thanks to the constraints there are an estimated 100 containers stuck at the ports or the warehouses pan India. Many restaurants have run out of stocks. Coupled with the fact that Delhi has extended the 2013-2014 excise policy and thus no new registrations are possible, it is a nightmare for the wine industry. But like in other similar problems in the recent past, this issue would be resolved and the panic will be over- till next time when a new one crops up.

Subhash Arora

Tag: Food Safety Standards Authority of India (FSSAI)