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India: FSSAI issues draft norms for e-commerce food operators

October 24, 2016

The Food Safety and Standards Authority of India (hereby referred to as FSSAI) has recently on September 20, 2016, released a draft consideration, numbered 1(80)2016/Enf-II Info/FSSAI(Pt) on the need for regulations regarding e-commerce sites that provide services regarding food delivery. The unfettered existence of such sites without any regulations poses a challenge to the existing legal paradigm.

The Indian government established the FSSAI under the Food and Safety Standards Act, 2006. The rationale behind the establishment of such a regulatory authority was to supervise and look after matters related to the quality of food products, consumer related issues, and distribution of food products.

The recent upsurge in the number of e-commerce sites, which act as Food Business Operators (FBOs), and their popularity and widespread use led to the issuance of the draft regulatory norms by the FSSAI, with respect to the obtainment of licenses.

The discontent amongst the general public with respect to the quality and the quantity of food products as provided by the aforesaid e-commerce sites led to the FSSAI stepping in. Various reports have shown that many consumers have received poor quality of products from such websites. The scope and effectiveness of e-commerce must be understood at this juncture.

With the advent of the digital age, the field of e-commerce has bloomed and found its place in many fields, such as electronics, books, and clothes, and for the purposes of this article – food products. The notion of e-commerce has developed into a reality only because of the vast consumer usage, and FBOs have quite successfully tapped into this phenomenon. Due to the convenience of viewing and placing an order online, FBOs have garnered a strata of consumers, who would rather use such websites due to the ease of use, rather than actually going to a store and buying food or food ingredients. But even with the simple idea of distributing food through an online portal, complications can arise. And complications did occur, in the form of depreciation of food quality and the service. The industry has become tainted with problems arising out of the quality and the quantity of the products sold by such e-commerce websites.

The recent draft norms that have been issued by the FSSAI will be a major step in the direction of reducing of the aforementioned problems regarding the products provided by e-commerce sites through strict implementations of rules and measures. Such a regime will be a huge step in protecting the rights of consumers’ vis-à-vis e-commerce sites with respect thereto. For the purposes of this article, section 2 and 3 of the draft have been included-

2. BUSINESS MODELS OF E-COMMERCE FBOs

E-commerce FBO includes, but is not limited to, the following:

2.1 E-commerce entity providing listing services to sellers / manufacturer / restaurants on their platform, thereby providing platform for commerce to the sellers, manufacturers, restaurants, etc.

2.2 Sellers, vendors, importers, processors, packagers or manufacturers who display or offer their food products, including food services, catering services, sale of food or food ingredients for sale to the customers through either the market based model or the inventory based model of e-commerce.

2.3 Operating and providing storage and/or distribution services to the sellers, vendors, importers or manufacturers of the food products listed on their marketplace.

2.4 Providing transportation services to the sellers, vendors, importers or manufacturers of the food products and/or providing last mile delivery transportation to the end consumers.

3. REGULATORY REQUIREMENTS

3.1REGISTRATION & LICENSING REQUIREMENTS

3.1.1 E-commerce FBOs mentioned at clause 2.2, 2.3 and 2.4 above shall be covered under schedule-1 of Food Safety and Standards (Licensing and Registration of food Businesses) Regulation, 2011.These e-commerce FBOs have to obtain license from the Central Licensing Authority for the entire supply chain, i.e, Head Office/ Registered Office, Transportation, Storage, Distribution, etc.

3.1.2 E-commerce entities providing listing/directory services to the sellers, restaurants, vendors, importers or manufacturers of the food products, may not require to obtain license/registration under the Act, Rules & Regulations made thereunder, subject to their not being engaged in any activities as specified in the definition of Food Business as defined in Section 3(n) of the Act. Further, even these e-commerce entities (covered under clause 2.1 above) shall ensure that no misleading information/false claims pertaining to the sellers, vendors, importers or manufacturers, or food products images are made available on their platform. The e-commerce entities shall clearly specify on their platform that liability of any violation of the FSS Act and applicable Rules and Regulations made thereunder would be with the sellers, restaurants, vendors, importers or manufacturers of the food products.

By including e-commerce sites under Schedule 1 of the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulation, 2011, these sites will come under the same purview as other FBOs that operate outside the virtual world, thus ensuring a uniform standard regarding the same. Essentially, these sites will fall under the same set of regulations and restrictions that are imposed upon ordinary store owners, and thus make these e-commerce sites more accountable with respect to the products sold by them.

The FSSAI also defined FBOs under e-commerce with respect to Section 3(n) of the Food and Safety Standards, thereby enhancing the ambit of repercussions issued upon these e-commerce sites. Therefore, the draft norms issued for public comment by the FSSAI is a step toward better regulations and stricter fines imposed on these e-commerce sites will eventually help in regaining the trust in FBOs that operate through e-commerce sites in the minds of the consumers in general.

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