Food, beverage giants plot strategy as Centre looks to tighten rules

According to officials, Prime Minister Narendra Modi’s administration has begun to look closely at policy proposals under discussion since at least 2015, raising concerns over the possible impact on the $57 bn sector. Alarmed by rising rates of obesity and diabetes, India plans to frame draft rules within a month requiring manufacturers to display the fat, sugar and salt content of products on packaging. It is also considering a nationwide “fat tax” for so-called “junk foods”, a senior government official said, although that is unlikely to be rolled out in the near term. 

Last month, executives from companies including PepsiCo, Nestle and Indian consumer firm ITC met trade groups in New Delhi to coordinate efforts and urge the government to resist pressure from health advocates, according to an industry source aware of the meeting. The attendees, who felt their efforts to push back had been too piecemeal, talked about forming a core group to unify their message when engaging the government, the source said. PepsiCo and Nestle in India did not comment directly on the meeting or its outcome. 

ITC did not respond to requests for  comment. Trade group All India Food Processors’ Association (AIFPA), whose members range from street vendors to global conglomerates, said two industry-wide meetings were held in February. Its members, who also discussed ways to offer more nutritious products, plan to send a joint representation to the government and approach health and food officials to express concerns about stringent regulations.

The stakes are high for companies like PepsiCo, Coca-Cola, Nestle and McDonald’s, which have collectively committed billions of dollars to expand in the world’s fastest growing major economy. India’s carbonated drinks sector is estimated to grow an average 3.7 percent annually between 2017 and 2021, while the packaged food sector will grow by 8 percent a year during the same period, Euromonitor International estimates.