An enterprise operating as an agricultural and dairy products manufacturer has to comply with 831 unique regulatory compliances for agri and dairy products.
India, the fifth largest economy in the world in terms of Gross Domestic Product (GDP), also stands as the second runner-up in terms of purchasing power parity (PPP). Reaching the $5 trillion mark by 2027 will translate into $16 trillion in GDP in terms of PPP. It brings to immediate notice that Indian consumer spending is expected to grow to $6 trillion by the end of the decade and that there is explosive growth in the number of high-income and middle-income households.
This growth is not limited to tier 1 cities, as tier 2 and tier 3 cities have already overtaken metropolitan cities in retail consumption. The FMCG sector is set to experience increased demand from rural and semi-urban areas as the average household gets access to more and more disposable income, with FMCG accounting for 50% of the total rural spending.
TeamLease Regtech, India’s leading Regulatory Technology (Regtech) solutions company, has released its report titled ‘Simplifying Compliance Management for the FMCG Sector.’ The report provides an overview of the complexity of compliance and the challenges entrepreneurs and employers face in the FMCG sector. It also delves deep into the present regulatory framework and suggests actionable recommendations for enterprises and policymakers.
Regulatory challenges faced by agricultural and dairy products units
This new report takes a deep dive into the regulatory requirements and challenges FMCG enterprises face. It finds that an enterprise needs at least 23 licenses and registrations under 14 Acts to start a manufacturing facility. Once the enterprise starts operations, it must adhere to over 1,252 unique compliance obligations. These include maintenance of records, returns, and filings under the state-specific labour laws; Food Safety & Standard Act, 2006 and Food Safety & Standard Rules, 2011; and Warehouse Rules, among others.
Rishi Agrawal, CEO and Co-Founder TeamLease RegTech, says, “The FMCG sector is a key indicator and driver of economic growth. Food processing continues to be one of the most significant contributors, approaching a $1 trillion domestic market size. PLI has made the industry more attractive. However, the industry has to understand its regulatory obligations if it has to continue to grow. A small agricultural and dairy products company deals with 831 unique and over 3,000 total compliance obligations in a year.
These compliances include at least 23 different types of licenses, permissions, and registrations. In addition, the employer also needs to comply with 421 unique compliances for every warehouse it operates. This report explores the complexities present in the regulatory framework for FMCGs.”
Enterprises must ensure compliance with industry-specific acts, rules, and regulations such as the Food Safety & Standards Act, 2006 and Food Safety & Standard Rules, 2011; Food Safety & Standards (Advertising and Claims) Regulations, 2018; Essential Commodities Act, 1955; Export (Quality Control and Inspection) Act, 1963; Prevention of Food Adulteration Act, 1954 and Prevention of Food Adulteration Rules, 1955; and Bureau of Indian Standards Act, 2016 & Bureau of Indian Standards (Conformity Assessment) Regulations, 2018 among others.
The report reveals that an enterprise operating as an agricultural and dairy products manufacturer has to comply with 831 unique regulatory compliances. Of these, labour constitutes 28% (232), industry-specific constitutes 27% (224), and commercial constitutes 25% (209) of the total obligations. In addition, 138 of these need to be complied with annually, while 156 have to be kept up with on a monthly basis. Tracking and managing all applicable regulatory obligations can be exceedingly difficult when done with Excel sheets dependent on people and done on an ad-hoc basis. The report concludes with recommendations for compliance reforms that can further improve the ease of doing business and provide a new-age solution for compliance management for employers.
