FSSAI License – retailer to e-tailer

The Food Safety and Standards Act 2006, and Registration of Food Businesses Regulations, 2011, and Amendment Regulations, 2014 (FSSAI) regulates, manufacture, storage, distribution, sale, and import of food to promote health and safety of consumers. It governs people involved in any food business, whether manufacturing or selling, and food business operators. These include shops, stalls, hotels, restaurants, airline services, and food canteens, places or vehicles where any article of food is sold or manufactured or stored for sale.

Like our local retail/wholesale shops, E-commerce companies have become e-tailers from whom we can buy anything online, any time, including various food products. So FSSAI authorities, by way of various statements in the media, have clarified that e-tailers will also be required to obtain license/registrations under FSSAI and comply with other relevant regulations.

“These e-commerce players are also selling food products or dealing with the food business in one form or another on their platforms. And food and food businesses come under the ambit of FSSAI, so they have to register with us," says Ashish Bahuguna, Chairman of FSSAI.

E-commerce companies primarily function in the following ways:

1. Marketplace – where they act purely as platform providers/directories for buyers and sellers. Their revenue model is service charges and advertising
2. Retailing/wholesale – where they sell the products under their own brand or any other brand and the revenue is income from sale of goods
3. Hybrid – where they function as a marketplace and also as a retailer/wholesaler and the revenue is service charges and income from sale of goods

FSSAI regulations will have different impact on each business model.

In the case of the Marketplace, since it is not dealing in food in any way, but only acting as a directory or a platform to showcase the food vendors and their products, the regulations regarding FSSAI registration/licenses can’t be invoked . If a platform like Zomato and online directories are liable to be registered under FSSAI, then Google, which is largest platform provider for any type of goods and services should also get registered under FSSAI. Likewise, Just Dial, Yellow Pages, or other forms of media, where we can search for food vendors should also get registered with FSSAI. At the very least, such platform should only list vendors who are registered under FSSAI and are ensure compliance of FSSAI regulations.

In the case of Retailers/Wholesalers, they will be required to get licenses/registration under FSSAI for each category, be it importers, retailers, wholesalers, storing, and processing, and for each location they operate in. FSSAI regulations also provide for centralised registrations of large retailers and wholesalers exceeding turnover Rs. 20 - 30 crore, annually, or those who store food products beyond 50,000MT. Further, they will also be required to comply with requirements relating to:

1. Packing and labeling of various foods items. Every package should clearly list details such as ingredients, date and place of packing, name and address of manufacturer, marketer, and FSSAI license number.
2. Standards of quality prescribed for various food items
3. Use , quality, and quantity of various ingredients
4. Maintenance of records, filing of returns, and intimations with the authority for any changes in particulars of registration/license

If any person or food business operator (except those exempt from licensing under Sub-section (2) of Section 31 of this Act), himself, or by any person on his behalf, who is required to obtain a licence, manufacturers, sells, stores, or distributes or imports any article of food without licence, he shall be punishable with imprisonment for a term which may extend to six months, and also with a fine of upto Rs 5 lakh. If a person, in connection with a requirement or direction under this Act, provides any information or produces any document that the person knows is false or misleading, or if no punishment is specifically provided for any contravention in the regulations, then he shall be punishable with imprisonment for a term, which may extend to three months and also with fines, which may extend to Rs 2 lakh. More stringent penal provisions exist for selling low-quality food products.

So, on one side e-tailers are expected to analyse their business models and accordingly adhere to FSSAI regulations; on the other, the department should not insist on registration/licences for the marketplace model.

FSSAI regulations were primarily introduced to ensure good quality food is offered to consumers. Since e-tailers have become a part of our daily shopping lives, and we purchase articles such as grocery, packed food, etc., it is essential to regulate them in the same way as our local food vendors. In fact, food chains like Pizza hut, Dominos who take orders online are already registered with FSSAI.

Now e-tailers have to ensure that vendors, who are selling goods online are registered with FSSAI, so that the concerned department can ensure that food products sold are as per prescribed standards, and that vendors are complying with other applicable rules.

Such technology-based companies can ensure compliance by integration of technology and compliance. Visualise an automated compliance management system that identifies the applicable and relevant compliances; assigns the due tasks; tracks and monitors the progress of the pending tasks; and reports the status of all due compliance tasks not only of the e-tailor, but also of the various vendors selling goods on their platform. This will enable e-tailers to track non-compliant vendors and can restrict them from selling on their platform. Compliance Management tools take the ease of compliance to another level by building a comprehensive library of acts and laws and a complete repository of the required documents

These tools are cost-effective as it does not require any capex on the server or the creation of a library. These tools can be accessed 24X7 from anywhere.

If an enterprise is adhering to product-related regulations like Food Safety, BIS, Legal metrologies, etc., then their products are more acceptable and the business is insured against regulatory risks.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)