Non-Compliance with Food Labelling: A Costly Mistake for MSMEs in India's Food Processing Industry

Learn why food labeling is essential for the growth and success of MSMEs in India's food processing industry. Discover how LabelBlind® can help businesses become compliant and differentiate themselves in a rapidly growing and diverse sector.

February 27, 2023

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In India, the food processing industry is an important segment within the MSME sector. According to the Annual Report 2020-21 of the Ministry of MSMEs, the food processing sector accounts for around 8.4% of the total MSMEs in India. The report also states that the food processing industry is one of the priority sectors for the government's MSME schemes and initiatives. The government has launched various programs to support the growth and development of the food processing industry within the MSME sector. These programs include financial assistance, technology upgradation, skill development, and market linkages, among others.

Businesses are classified as Micro, Small, and Medium Enterprises (MSMEs) based on their investment in plant and machinery or equipment, from investment up to Rs. 1 cr and turnover up to Rs. 5 cr for Micro-Enterprises to businesses with investment up to Rs. 50 cr and turnover up to Rs. 250 cr for Medium Enterprises.

The food processing industry is a diverse and rapidly growing sector, with a wide range of enterprises operating at different scales and levels of technology, including various sub-sectors, such as fruits and vegetables, dairy, meat and poultry, fisheries, and more. A micro-enterprise in the fruits and vegetables sub-sector could be a small-scale unit engaged in the processing and packaging of fresh fruits and vegetables. Similarly, a small enterprise in the dairy sub-sector could be a milk processing unit with limited production capacity, while a medium enterprise in the same sub-sector could be a large-scale dairy processing unit with modern facilities and advanced technology.

Large companies have an advantage with established structures of business operations and Standard Operating Procedures (SOPs). On the other hand, MSMEs are known for their frugal structures based on the economy of business operations, which can be hindered by compliance challenges for various reasons:

  1. Compliance to Food Safety Standards of FSSAI and Legal Metrology: Food labelling is a legal requirement and MSMEs must comply with these regulations to avoid penalties, fines and loss of reputation.

  2. Consumer Trust in Businesses: Food labelling provides important information to consumers, such as nutritional information, ingredients, and potential allergens. This information is crucial for people, esp those with dietary restrictions, allergies, or food intolerances, to avoid health risks, or children and other vulnerable consumer segments, like the elderly and pregnant women. Food Labelling helps build brand recognition and customer loyalty.

  3. Level Playing Field: Food labelling encourages product innovation to better consumer value proposition and creates a level playing field for MSMEs to differentiate their products from established players. MSMEs can use labels to highlight unique aspects of their products, such as natural ingredients, organic or local sourcing, or specialized diets.

  4. Export Compliance: If the MSME is exporting its products, then complying with the labeling regulations of the importing country is essential. International labeling regulations are diverse and stringent and require additional information on the label, including country of origin, net weight, nutrition and dietary information, other than cultural compliance compliances like halal, kosher etc.

Non-compliance with food labelling can result in significant issues for both businesses and consumers. This can be due to a variety of reasons, such as inaccurate or incomplete information, intentional mislabelling, or the failure to meet specific labelling requirements. Here are some instances of food labelling non-compliance:

  1. Inaccurate Nutritional Information: Providing inaccurate nutritional information on the food label is one of the most common examples of food labeling non-compliance. It can be due to poor testing or incorrect calculations. For example, a product claiming to be low in calories may have higher calorie content than advertised.

  2. Allergen Omission: Failing to list allergens on the label can be hazardous for people with allergies. An example of this type of non-compliance is when a product contains nuts but does not mention it on the label, resulting in an allergic reaction in people who are allergic to nuts.

  3. False Claims: Labelling a product with false or misleading claims is another example of non-compliance. For instance, a product that claims to be organic when it is not, or a product that is labelled as sugar-free but contains hidden sugars.

  4. Incorrect Labelling: This type of non-compliance is usually due to human error, such as using the wrong label or printing the incorrect information. An example of this type of non-compliance is when a label states the wrong ingredients or has a wrong expiration date.

  5. Missing or Inadequate Information: Certain information is required by law to be on a food label, such as ingredients, net weight, allergen information, and nutrition information. Failing to include this information or providing inadequate information is a type of non-compliance. For example, not including the country of origin on the label when it is required by law.

In conclusion, food labelling is essential for MSMEs in the food industry for legal compliance, consumer safety, product differentiation, branding, and export compliance. By prioritizing food labelling, MSMEs can ensure their products are safe, legal, and attractive to consumers.

About LabelBlind®

Established in 2018 and based in Mumbai, LabelBlind® specialises in the area of Digitising Food Labelling and Regulatory Compliance. FoLSol® by LabelBlind® presents India’s 1st Digital Food Labelling Solution. The SaaS platform supports Food Businesses to be Labelling Compliant and Build Consumer Trust. FoLSol® by LabelBlind® is designed to strengthen the food labelling ecosystem across a wide spectrum of services including, Packed Food Labelling, Menu Labelling, Exports Labelling, Nutraceuticals and Food Supplements Labelling and Labelling for Ecommerce players. FoLSol® Digital Food Labelling Solution is fast, accurate, and cost effective. The company is ISO9001 certified in its processes.

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Rashida Vapiwala (Founder at LabelBlind®, Food Label Specialist, Ph.D (Food Science and Nutrition))

Rashida is passionate about solving problems for the food industry using technology. She loves creating tech-led solutions in the space of Nutrition.

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