India industry outlook positive thanks to regulatory developments: Exclusive survey findings
The Food Safety and Standards Authority of India (FSSAI) introduced the scheme to "close the gap" in micronutrient malnutrition. Milk, oil, rice, and wheat are some products that require fortification.
For instance, edible oil brands are required to add 800 IU of vitamin A and 550 IU of vitamin D in per litre of product, while iron, folic acid and vitamin B12 should be added into rice and wheat.
However, as of December last year, many Indian companies still did not abide by the regulatory requirements. For instance, only 12% of the milk products had fulfilled the requirements, which were supposed to contain 770IU of vitamin A and 550IU of vitamin D per litre of milk.
Pawan Agarwal, CEO of FSSAI, explained that many state officials were still unclear on the importance and process of fortification, and therefore, state governments often needed "hand-holding" to warm to the idea of fortification.
Other than that, he said that fortification would incur "only a minor escalation in production cost, about 10 paisa per litre" and "shouldn't be a problem for big companies".
Meanwhile, survey results show that the respondents were divided in their views on the new list of permitted ingredients in India.
The list was published as part of FSSAI's new regulations for functional food, health supplements, nutraceuticals, food for special dietary use, food for special medical purposes and novel food.
45% agreed that the new regulations contain an adequate number of permitted ingredients, while 37.5% disagreed.
Some respondents commented that they would need to be more cautious as a result of the new regulations. Others said the list of permitted ingredients should be reviewed from time to time.
A total of 195 ingredients were added to the initial list published by FSSAI last year, including resveratrol, lutein and beta-glucan.
However, 34 submitted ingredients are still pending approval from the scientific panel due to "inadequate" data. They include common ingredients such as raspberry ketone, artichoke, cashew, and tea tree oil.
In response to concerns raised, Agarwal said earlier at the Associated Chambers of Commerce and Industry (ASSOCHAM) of India’s National Symposium on Nutraceuticals that they are "open to changing those standards, making provisions to address the concerns".
Higher GST not harming sales
Another hot topic in the country was the new GST regulations, which were implemented in July last year, leading to an increase in tax rate from 12% to 18% on nutraceutical products.
This invited criticism amid fears that it would affect existing businesses and discourage start-ups from entering the market.
However, more than half of our respondents (65%) disagreed that GST has harmed their businesses' sales.
Antony Kunjachan, executive director of curcumin supplier Arjuna Natural Extracts said in an interview with NutraIngredients Asia that outward tax liability can be partially offset against the GST businesses pay when buying goods and services.
This will be reflected in production costs and lead to an increase in total business volume in India.
As such, he said that the new GST framework would be "beneficial to the economy as a whole, and in turn will also benefit the company".