Wednesday, July 08, 2015

The Maggi controversy

The Food Safety and Standards Authority of India (FSSAI) has banished the Maggi noodles from the Indian market, at least for the present. Should the Indian consumers thank FSSAI for safeguarding their health or should they curse FSSAI for unreasonably going into overdrive and playing spoilsport?

This issue becomes relevant since the food regulators in Singapore, the UK, Australia, New Zealand and Canada have declared the product as fit for human consumption. FSSAI has tested the product for presence of lead and monosodium glutamate (MSG) whereas regulators in other countries test only for lead. The Indian regulation focuses on parts per million (ppm) and regulatory authorities in other countries look at grams per kilogram. Therefore honest differences are possible.

Nestle, the producer of Maggi, asserts that the same product that was sold in India is exported abroad. Only the packing is different to meet various regulatory requirements. If this is true, FSSAI has gone overboard especially when viewed in the context of Maggi having been a regular household snack for a long time. The question obviously arises as to what FSSAI was doing all along? Has it suddenly become conscious about our health?

On the contrary, if it is found that Nestle maintained different standards for domestic and export consignments, the government should claim condign compensation from the company for hurting the health of unwary consumers in India. BP has recently agreed to pay $ 18.7 bn in the Deepwater Horizon case for causing environmental damage.

Unfortunately, going by past events, it is clear that neither FSSAI nor Nestle will ultimately be held to account. This too shall pass!

Added on 10th July:

It is argued by some that the government has acted recklessly in banning Maggi noodles which has caused heavy losses to Nestle India in the form of loss in revenue, earnings, image and market capitalisation. If it is proved that there was lack of application of mind by FSSAI / government, the company should be compensated in tune with natural justice. If Nestle India fights it out in the court, we will have occasion to test whether the government , in  exercise of its duty,  has any immunity against compensatory claims. Vistas of interesting arguments would then open up. 

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