New Delhi: The Indian government is all set to demand 4.26 billion rupees from Nestle, a Swiss transnational food and beverage company, over the alleged damages caused to Indian consumers.
The firm’s Indian unit had sold noodles branded Maggi in the country for decades.
However, in May this year, the Food Safety Regulators of the northern Indian state of Uttar Pradesh tested Maggi noodles and detected they had up to 17 times beyond permissible safe limits of lead in addition to monosodium glutamate.
On June 3, the New Delhi government banned the sale of Maggi in the national capital for 15 days because it found lead and monosodium glutamate in the eatable beyond permissible limit. The following day, Gujarat, western India, banned the noodles for 30 days after 27 out of 39 samples were detected with objectionable levels of metallic lead, among other things.
Some of India’s biggest retailers have imposed a nationwide ban on Maggi.
Thereafter multiple state authorities in India found unacceptable amount of lead and it has been banned in several other states.
On June 5, the Food Safety and Standards Authority of India (FSSAI) banned all nine approved variants of Maggi instant noodles from India, terming them “unsafe and hazardous” for human consumption.
The Indian ban had chain reactions. In June 2015 Nepal indefinitely banned Maggi over concerns about lead levels in the product. On the same day Food Safety Agency, United Kingdom launched a probe to find levels of lead in Maggi. Maggi noodles has been withdrawn in five African nations- Kenya, Uganda, Tanzania, Rwanda and South Sudan by a super-market chain after a complaint by the Consumer Federation of Kenya.
The United States Food and Drug Administration had refused import of the noodles in 2015 on grounds similar to the reasons for ban in India.
India’s Consumer Affairs Ministry is ready to file a complaint with the National Consumer Disputes Redressal Commission (NCDRC) in the next few days. The complaint, to be filed on behalf of Indian consumers, is against “unfair trade practices” and “misleading consumers” in the Maggi case.
A senior ministry official confirmed to Business Standard: “The file has been formally cleared.”
The development comes within days of Consumer Affairs Minister Ram Vilas Paswan telling the media that Prime Minister Narendra Modi had asked his Cabinet colleagues to “maintain decorum” on the Maggi issue.
Also, some ministers were critical of FSSAI’s Maggi recall order. While some have cited international investors’ nervousness in the matter without wanting to be named Food Processing Minister Harsimrat Kaur Badal has been more open. She had earlier said the Maggi incident had led to an environment of fear.
FSSAI Chief Executive Yudhvir Singh Malik had, however, told the Business Standard early August that he was more concerned that children should not be consuming contaminated products than anything else.
Industry, according to him, should be more proactive and sensitive in these matters.
Nestle India estimates indicate that the company destroyed products worth 3.6 billion rupees after FSSAI’s recall order, based on testing of Maggi samples by Food and Drugs Administrations (FDAs) of around half a dozen states. The regulator, on June 5, also stopped the company from manufacturing the noodles in India.
Subsequently, Nestle India moved court against the FSSAI order; a verdict is pending.
Though the Consumer Affairs Ministry had started the process of filing a complaint with NCDRC two months ago around the time FSSAI ordered a countrywide recall of Maggi noodles from retail shelves it had to go through layers of legal opinion to make it a watertight case, an official pointed out.
The compensation from Nestle India has been calculated on the basis of Maggi sales’ share in Nestle India’s total revenue in the country in 20142015. The company’s Maggi noodles revenue was pegged at around 25 billion rupees this was 25 per cent of the company’s total India revenue.
“In the interest of millions of consumers, the department of consumer affairs took suo motu action against the company,” the official explained.
When contacted, a Nestle India spokesperson said the company had not received any intimation on this from the government.
Usually, NCDRC comes into the picture when a consumer files a complaint. But a section of the Consumer Protection Act, 1986, also empowers the Centre and state governments to register complaints on behalf of consumers. The consumer affairs ministry is expected to file the complaint under this provision of law.