INDIA BUSINESS WORLD - FEBRUARY 2007
The Month that was ...

IMPLEMENT FOOD SAFETY LAW SOON, SAYS INDIA INC

India Inc wants early implementation of Food Safety and Standards Act of 2006, which will have a major impact on consumers, processed food industry and food retailers. The move comes at a time when the emerging organised retail industry is seeking to build a farm-to-retail chain to build its business on the basis of huge volumes and thin margins.

According to a study submitted to the finance ministry by Ficci, the domestic industry also wants to seek the abolition of APMC Act, which will provide farmers more flexibility in selling their produce. Since APMC rules make it mandatory for companies to obtain licence and maintain records on procurement, cost of inputs increase. Therefore, the industry wants the law to be scrapped so that raw materials can be sourced directly from producers and primary processors. Most of the rules under the law are archaic in nature, representatives of the industry feel.

The Ficci study was recently submitted to senior finance ministry officials including revenue secretary K M Chandrasekhar. The study is based on a quick survey by the industry chamber to understand the roadblocks faced by the business community in dealing with food and food-processing industries.

With organised retail set to takeoff, the industry expects government to come out with initiatives in the 2007 Budget to boost the food processing segment. Respondents felt that APMC regulations were hampering inventory management, leading to higher costs without taking into account seasonal fluctuation in prices and demand. "This sort of situation may warrant the industry to hold larger stock of raw materials sufficient for 6 months or more," says the study.