JOIN USThe scale of the Indian food ecosystem has expanded incredibly with increasing organised food (retail and e-commerce) businesses, surge in investments and innovative models being used to reach consumers. But unlike mature economies, India is still treading on the path to build robust food quality and safety standards. Recent cases related to adulteration of food products, export rejections due to quality issues and court cases around disputes have raised multiple questions on the availability and consumption of safe and healthy food in the country.
Regulatory initiatives
The Food Safety and Standards Authority of India (FSSAI) is the apex body governing the food safety and standards to develop an ecosystem that protects consumer health, augments product acceptance and enables businesses to be competitive globally. With various initiatives taken by the regulator to maintain stringent quality and hygiene standards, the adoption of the food safety and quality mechanism still remains voluntary.
Keeping the above factors in view, food businesses in India should strive to: (a) develop a Food Safety Management System (FSMS) plan for their product and supply chain compliance. An importer can also have a FSMS plan that assumes responsibility of the safety and standards of imported products; (b) develop an internal audit schedule and perform corrective actions, as deemed necessary; (c) have a qualified food safety supervisor to uphold the FSMS plan.
It is critical to address the risk factors in the entire food value chain -- from the point of origin to the point of consumption -- and take appropriate measures to adopt leading global practices. As businesses grow and the demands of stakeholders increase, organisations may inadvertently cut corners, leading to non-compliance issues. This can augment threats related to safety and hygiene. Hence, it would be prudent to involve an intermediary neutral body that assesses potential risks and highlights gaps to create a healthy food ecosystem.
Third-party auditors
Food Business Operators (FBOs) are mandated to have regulatory inspections either prior to getting the licence or within a year of obtaining a FSS licence. FSSAI is in the process of recognising third party auditors and agencies for carrying out independent food safety audits of FBOs in the country. This is a positive step that will prompt the food industry to work together and get the sanctity of products ratified by an independent food safety auditor.
The three important elements of a food safety audit by an accredited audit agency or an independent auditor who have met selection criteria as per the third-party food safety audit regulations will involve: (a) conducting the audit; (b) monitoring the audit process; and (c) reporting the audit results to the regulator.
However, the selection of an auditor may be through the FSSAI’s list of empanelled auditors or directly assigned by FSSAI themselves.
Steps toward self-compliance
Traditionally, organisations have been conducting internal and external audits of certain business functions regularly, thereby adhering to ‘self-regulation’ mandates. While these controls may be in place, organisations may still be subjected to limited regulatory reviews for added monitoring and scrutiny. Similarly, the food regulator is looking to assist the FBOs in adopting a ‘self-compliance’ approach and eventually contribute toward providing safe and healthy food for consumers.
Initially, the regulator has proposed to make third-party audits mandatory for only high risk foods. However, it is expected to add more categories of FBOs that would be subjected to similar third-party audits. In the long run, with an increase in the number of FBOs, independent auditors would need to be enrolled across the nation. Once the infrastructure and regulations are in place, the independent audits would potentially become mandatory for all FBOs.
Way forward
Food businesses in India can consider the following to transition to a well-defined compliance ecosystem: (a) being prepared for the possibility of an ISO compliance review by an external agency; (b) mitigating instances of conflict of interest with the chosen or assigned third-party agency; (c) taking timely and corrective actions on the audit findings; and (d) evaluating IT-based food safety audit frameworks with self-generated audit modules.
The food industry in India can look at utilising the window of the third-party food audit regulations that are currently under the draft stage to its utmost potential. The regulations can help organisations review their existing business practices, institutionalise internal controls and be better prepared for external reviews.
(Vinay Garodiya, Executive Director, Fraud Investigation & Dispute Services, EY India; Arpinder Singh is Partner and Head - India and Emerging Markets, Fraud Investigation & Dispute Services, EY)