FSSAI Issues Draft Norms for E-Commerce Food Operators

India: Food Safety and Standards Authority of India (FSSAI), issued norms stating that, the companies operating in the Online Food Ordering and Delivery Market in India, must obtain license according to Food Safety and Standards Act, prior to commence business from the Central Licensing Authority. The FSSAI’s current move is only targeting the online food players, who have their own kitchen and relaxation has been provided to e-commerce companies such as Zomato, Foodpanda etc. which provides listing services to restaurants and hotels.

The Online food business operators will be covered under the Schedule-I of the Food Safety and Standards Regulation Act, 2011, which deals with Licensing and Registration of Food Business. Furthermore, FSSAI gave the definition of Food Business Operators (FBO) as those entities which carry out business activities as per the section 3(n) of the FSS act through e-commerce platform.

According to TechSci Research, FSSAI’s move of mandatory Licensing system for FBO (Food Business Operators) will assure that, no online food business operator which offers food which is unsafe, misbranded and extraneous is operating in the Online food ordering and delivery business. Also, such a move will convey a clear message to the firms in the online food ordering and business that, to operate in the online food ordering and delivery business they have to follow the legal norms, which were earlier not there.

According to a recent report published by TechSci Research, “India Foodtech Market Forecast and Opportunities, 2011 – 2021”, the foodtech market in India is projected to grow at a CAGR of over 12% during 2016-2021. Over the last couple of years, the country’s foodtech market has been witnessing huge fund inflows from domestic as well as foreign investors. On the basis of operation type, the market has been segmented into two categories, namely, food aggregators and restaurant based. Among these categories, restaurant based segment dominated the overall market in 2015, and the segment is anticipated to maintain its dominance over the next five years as well, owing to consumer loyalty and frequent cashbacks/discounts offered by the companies. In 2015, Cash on Delivery was the most preferred mode of payment among Indian consumers. Moreover, web based source of ordering dominated the India foodtech market in 2015 as it offers seamless customer experience in terms of ease of ordering, choosing alternate payment options and order tracking.