Maggi row: MNCs' double standard for nations like India is bad; but are our regulators sleeping?

Adequate time has passed since the Maggi controversy was out in the open and the discussions have been on two issues: the harmful ingredients in a widely used popular MNC consumer food product in India which would not be tolerated in their own home country and the use of celebrity endorsement. While the umbrage at the former is understandable, the latter appears to have been stretched a bit far with the legal system now getting into the frame. The implications are quite deep for us. [caption id=“attachment_2282210” align=“alignleft” width=“380”] Maggi in a soup. AFP[/caption] The laboratory findings appear to be divergent with the product having different results based on the company’s own findings and that by the food quality departments operated by the government. At the same time the same product will be allowed in Singapore where one would have expected stringent conditions for testing. Therefore, the case is quite nebulous with varying results. If Nestle has taken liberties with the quality issue in India, it is certainly foolish. In case it has been lax, then it will pay the price. But the fact remains that it will set a precedent and hopefully ensures that standards are maintained. Several other FMCG companies dealing in food products are running for cover by withdrawing the product based ostensibly of not having gotten permission, though there could be review of quality. In India we have tended to be stricter with MNCs when quality of a product is concerned and ignored the street vendor who uses impure water, unwashed hands, uncertain ingredients etc. This is not to say that two wrongs make a right, but that MNCs should take this into account when operating in India that they are more likely to be targeted than a domestic seller of a similar local product. It is also true that MNCs have had lower standards when they operate in developing countries and that the same would not be the case in other developed nations. But this could be because of the standards and the seriousness with which it is pursued. A common example is the use of helmets which is mandatory in all countries, but rarely enforced in India. The BVO content in soft drinks in India or the infamous worms in a Cadbury chocolate bar created a stir in the past while the Maggi controversy takes the cake literally. At the economy level, the FMCG sector would receive a setback as what starts off in food could lead to inspections of other products also to ensure that there are no deviations from what is stated on the product label. The FMCG sector has been one of the better performing sectors last year, where the domination comes from MNCs which have rewritten strategies to reach out to the bottom of the pyramid by customizing products with price affordability. Hence, this episode will mean a drawback on demand to begin with. One is not sure if similar products by domestic manufacturers will witness some substitution, as the hype created is scary as it talks of all such products harming children, which is a big consuming class of most packaged food products. In fact, the logical corollary is to also have a check on products like milk, ice creams, biscuits, soft drinks etc. and verify if there are any deep violations of standards. At the government level, the ideological dilemma is that if we are so particular about the health of the citizens, should we be very strict with the millions of unorganized sellers/restaurants/stalls which sell products that are used by the people, especially children. The local ice-lollies, unbranded toffees, sweets, etc. sold outside schools are unlikely to meet any of the so-called Maggi standards. Are we prepared to go full steam against them and discipline them or will we forget about it not just because the logistics are challenging but also that they are potential vote banks as they have affiliation to various local parties that will be sympathetic to the cause of – ‘let the poor seller do what he wants as the state is not supporting him anyway’? Hypocrisy is not new to us and this story is another example of how we react to situations that make us contradict ourselves. The second factor is the celebrity involvement piece. The judicial processes will decide whether the endorsers are responsible for the product or not and hence the verdict will be known. But practically speaking when we have various government departments such as the Food Safety and Standards Authority of India (FSSAI) and the Food and Drug Administration (FDA), it should be their responsibility to ensure the quality checks are in place. One cannot expect the endorser of a product to be checking the same and have laboratories and hire scientists before doing so. This would be carrying the theme a bit to the limit. In fact, if companies like Nestle have been selling a so-called sub-standard product for over two decades, should some authority which monitors quality be held responsible for being negligent? If models that go with the endorsement in advertisements are to be responsible for the product, then it would become risky for anyone to take on this role. A celebrity endorsing toothpaste which promises whiteness or the disappearance of bacteria can be in the dock if someone finds this is not true. Carrying this step further, can we put the actor in the dock if someone replicates a stunt seen in the movie and perishes? Using this logic any celebrity who models for a bank or institution or company that goes down should also be held responsible for failure? One need to bear judgment here are distinguish between the responsibilities of the company, endorser and the regulatory authority. The issue certainly has been magnified today because of the involvement of a MNC. After the Bhopal Gas leak, one is skeptical of these companies as the belief is that what they do in India is not what they would do in the USA or any other country. While there may be some truth in some cases, the onus really should be on the government to have responsible agencies which set such standards and ensure their compliance on an ongoing basis. For this we need to have structures in place. The issue is not just with a food product containing lead, but also the wide scale pollution by effluents in our water streams which are consumed by people. While going back into the past would be close to impossible, we certainly need to invest in creating these structures to ensure that these episodes are not repeated. Therefore, on a positive note, this could be sued as a wake-up call so that both the government as well as the players is cognizant of their roles to ensure a safer environment for all of us. (The author is chief economist, CARE Ratings. Views are personal)