Food, drink giants plot fightback as India looks to tighten rules

30 March 2017

With the alarming rise in the prevalence of obesity and diabetes in India, health experts and the government are considering implementing tighter food regulations. A number of food and drink multinationals are concerned that this would negatively impact sales and have been lobbying against the proposals of higher taxes and stricter labelling of sugary and fatty foods. The policy to introduce this “fat tax”, where branded restaurants that sell products high in fat, salt or sugar would pay a 14.5% tax, has been under discussion since 2015. However, the implementation can create a large negative impact on this $57 billion industry and has been called discriminatory due to its exclusion of authentic Indian restaurants, some of which also offer products high in fat and sugar.

The stricter labelling policy would require manufacturers to display, salt, sugar and fat content on product packaging or implement the “traffic light” system where traffic light colours indicate the product’s nutritional value. These policies would have an impact on all businesses within the food and beverage sector in India but the “fat tax” would especially impact sales for companies in carbonated drinks and packaged foods sectors. While the growth of carbonated drinks and packaged foods sectors may be good for the Indian economy, the government has started pressuring major food and drink companies to offer healthier alternatives with reduced sugar and fat contents. As global obesity and diabetes rates rise, some countries (such as Mexico and South Korea) have been actively trying to reduce sales of products high in salt, sugar and fat. However, India has been slow to agree on or implement tighter rules. It is important for all businesses in India’s food and beverage sector to know about these debates to make themselves ready for the possible implementation of new, tighter regulations in the market.

Read the full on the CNBC website

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