Basic Legal Compliances For Tech Startups In Food Industry

Food industry has been through enormous changes, but all acknowledgements to the internet intelligence and growth of technologies. The changes in the food delivery system and distant dining practises have created a direct relationship between the restaurants and their customers. Many enterprises have redirected to non-public technology permitted mediums, like WhatsApp and other social media handles to interact with their customers.
Food industry is among those sectors in the market which will never be outdated or will go out of demand. Eating is a necessity for human beings so it’s important for them to eat and increase their disposable income which helps them to look for ways to overcome the food business mechanism to quench their starvation.Hence, this food industry is among one of the fastest-growing sectors in our country.

Essentials of a food tech-

The historic changes were seen in the food industry when the food ordering/booking apps conditions were really poor in India. But services like these have suddenly become an important part of people’s lives, especially in urban cities. There are various startups in the food industry and delivery services which began to expand in different parts of India during the year of 2018. Such enterprises got a lot of awareness and financing from the venture capitalists due to their high earning capability. Cloud services, delivery apps, etc gave this sector a required rise.

Scope of a food tech-
Tech startups in the food industry are a growing industry that contributes nearly 14% of mass production GDP and 13 % of total food exports in India. There is a very high demand for trained food professionals in both the Government and the Private sector.

Legal compliance-
Legal compliance is basically the process or the procedure which ensures that an organization is following all the relevant laws, rules and regulations. The basic requirements for an enterprise to be amenable with the law is only that its policies need to be compatible with the law.

Startups-
Startups are newly formed organizations/businesses or entities, by which an individual or a group of people who have a common goal can be called as Startups. List of some of the companies in food industry of India-

1. Amul (Year of Establishment: 1946)
2. Nestle India (Year of Establishment: 1866)
3. Cadbury India Limited (Year of Establishment: 1824)

Government schemes for tech startups in food industry-

1. Pradhan Mantri Kisan Sampada Yojana (PMKSY)- Cabinet Committee on Economic Affairs gave consideration for PMKSY in 2017 in August. It is a plan for amalgamating various progressing plans such as Mega Food Parks, Integrated Cold Chain, Value Addition Infrastructure, Food Safety, etc.

2. Mega Food Parks Scheme- This scheme aims at providing a mechanism which links agricultural production with markets by bringing together farmers, processors and retailers which ensures maximized value addition, minimized wastage, increased farmers income and creates employment opportunities particularly in the rural sector.

3. Make In India- Small portion of this campaign, the food sector was recognized as one of the 25 intensive areas. Hence, the ecosystem has been renewed to pull out financial, technological and human resources.

4. Food Processing Fund- A special fund in the NABARD worth rs. 2,000 crore was set up in the Financial year, 2014-15 for offering reasonable credit to food processing units.

FSSAI (Food safety and standard authority of India)-

FSSAI is a self-governing body which is established under the welfare of the Ministry of Health & Family, Government of our country. This was formed in the year of 2011. This was established under the Food Safety and Standards Act of 2006 which is an integrating enactment related to food safety and regulations in the country. FSSAI is also responsible for protecting and promoting the health of the general public through the regulations of food safety.
There are several licenses which are important for Tech Startups in the Food Industry in India which need to be followed if the business wants to run in the long-term smoothly.

Prevention of Food Adulteration Act, 1954-

This is basically applicable to all the parts of India except Jammu and Kashmir. This was established in the year of 1954. According to this act it is prohibited to even manufacture and sell the following-

1. Adulterated food– This means any substance which could be used for the motive of adulteration. A commodity of food shall be considered to be adulterated if,

1. If it is injurious to health.
2. If any cheaper or bad substance has been switched.

2. Misbranded food– A commodity of food shall be considered to be illegal.

1. If it is wrongly stated to be the product of any country.
2. If it is sold by a name which already belongs to a different commodity of food.

3. Food license–
If someone wants to establish a Tech startup in the Food Industry in India, they have to apply for a food license which is only provided by FSSAI. Anyone can apply for this license online as well from the official site of FSSAI, which was founded in the year of 2011. Documents which are required for the registration of food license are as follows-

• PAN & Aadhar card

• Passport size photo & an addresses proof

• NOC agreement

FSSAI license for the state is given to a Tech startup/company in the Food Industry, hotels etc. and FSSAI license for the centre is given to Slaughtering Units and proprietary Foods etc. The kind of documents that are required for FSSAI License for the state consists of a list of food items that should be made by the company, NOC, all the contact details of the important members as well as business owners, place where company should be located, certificate of food safety, Partnership affidavit of Proprietorship. etc. Validity of the license provided can stay for 1-5 years and it can also be easily renewed. If the presence of any serious matter is suspected with respect to the quality of food like food poisoning, getting stone present in the food etc. then the license can be suspended or can be taken away from the owner. Other than this, if any infringement happens from the rules of FSSAI, in that case also the license can be taken away.

4. NOC

The Non Objection Certificate is required from the fire department, so that in case of any kind of accident because of the fire then industries must have all kinds of equipment related to must be used in such situations. That is the reason why there must be a fire exit present in all the industries.

It also holds the responsibility for food research as well as quality assurance of food that should be served or manufactured. It was also formed by Union Health Minister Dr. Anbumani Ramadoss. It basically has five branches. It is necessary to hire a lawyer and get all essential legal certifications which are required to run the Tech Company in the Food Industry.

FoodTech Industry In India-
Our food tech sector has completely changed the way we Indians eat. It was almost a sector that was non-existent in the past, the Indian food tech sector had observed exponential growth in the past few years.

The Indian foodtech industry is currently handling an annual Gross merchandise value of worth approx $2.5-3 billion in 2021, and it possesses an opportunity to even cross $16 billion in annual GMV by 2025, it was observed by a February 2021 HSBC report based on the consumer internet market of India.

When it comes to terms of investments, this sector is currently experiencing a huge participation from VC firms, it has increased from $288 Million in 2016 to $4.8 Billion in 2017.

With an enormous investment of approx $2.3 Billion that is made in the food-tech industry in 2018, India is currently holding the position of second-largest country all over the globe just after China, which possesses a big share of investment of 16%. Bengaluru arose as the hotspot for a number of food tech startups.

According to the reports, the Indian food tech sector has received $898 Million coming from funding in 2020.

Legal Compliances in the Food Industry-
Major laws include, The Food Safety and Standards Act, 2006, The Food Safety and Standards Rules, 2011, and several Regulations, namely,

• Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011
• Food Safety and Standards (Packaging and Labelling) Regulations, 2011
• Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011
• Food Safety and Standards (Prohibition and Restrictions on Sales) Regulations, 2011
• Food Safety and Standards (Contaminants, Toxins and Residues) Regulations, 2011
• Food Safety and Standards (Laboratory and Sample Analysis) Regulations, 2011 Legal

Compliance as to Registration/ Licensing-

Who requires Licensing/Registration ?
• It is required by any person that is carrying out a business related to manufacture, packing, storage, sale, transport related to food and is called Food Business Operator (FBO).
• All the FBOs require either Registration or a License under the said Act to carry out their business of manufacture, packing, storage, sale, transport of food.

Registration-
• All the food Manufacturers are expected to get themselves registered with the Registration Authority after submitting an application for getting registered in Form A under Schedule 2 with the fees that are provided in Schedule 3.

Compliance as to regulations vis-à-vis Label Declaration-
• Every FBO needs to ensure that labelling of foods should be according to the regulations that are made and must not mislead the consumers.

Conclusion-

Food tech came up in India especially as the most proper and possible technology enabled businesses. Food sector is largely driven by technology and is heading into a more modern, sustainable and an efficient sector through all its stages, be it food preparation, food preparation and its delivery or its consumption.

However, with such big advancements a number of legal complexities are involved in this sector. If you have any legal doubt, just consult an experienced lawyer in a Food Tech start-up instantly to get quick as well as reliable legal advice with respect to all your queries.

References-

1. https://vakilsearch.com/blog/7-food-tech-trends-shaping-a-fascinating-future-for-the-food-biz/
2. https://www.lawyered.in/legal-disrupt/articles/legal-compliances-food-tech-startups/
3. https://www.icsi.edu/media/portals/70/food.pdf
4. https://thestartuplab.in/foodtech-india-growth-trends-and-future-of-foodtech-industry-in-india/