FSSAILegal Advice

Starting an Organic Food Business: Legal Requirements

Over the last decade, India's organic industry has experienced rapid growth and continues to attract new players. If you're looking to become one of them, this article will explain how to obtain an organic food business licence.

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Organic foods and supplements are grown naturally using manure, sunlight, and without the synthetic application of fertilizers and chemicals. In recent times, organic farming has gained momentum, and people have started to prefer organic products. Farmers are also slowly adapting to the change and are using chemical-free stuff for growing produce. The cost of production is also comparatively less. India at present is becoming a hub for organic food products.

If you want to start an organic food business, you should have a complete body of knowledge and information about these organic foods and their emerging trends. Section 22 of the Food Safety and Standards Authority of India (FSSAI) governs the organic industry. If you are in the business, you need to register, certify, and label your products and services. 

If you are a small company and don’t have the time or the bandwidth to do the paperwork, you can approach us at Vakilsearch. Our team of experts will guide you through your journey, answer all relevant questions, and ensure that you get the licence to begin your business journey.

Incorporation

To incorporate an organic food business in India, owners should decide upon an exclusive name for the company. This trademark needs to be registered. Register the business under Udyog Aadhar through MSME Online Registration.

The food safety and standards (Organic Food) regulations check that the business gets two certification systems. The Ministry of Agriculture and Farmers provides a participatory guarantee system (PGS), and the Ministry of Commerce and Industry provides a National Programme for Organic Production (NPOP).

It is mandatory to get an Indian organic certificate that certifies the products following the national standards. Under Pradhan Mantri Kaushal Vikas Yojana, they cannot export the product. 

The Agricultural and Processed Food Products Export Development Authority (APEDA) certificate makes it compulsory for the owners to obtain third-party certification for export.

START YOUR FOOD BUSINESS

License and Permit

These food companies have to approach FSSAI for a food license that is valid for five years.

  • FSSAI Registration license is issued when the turnover is less than Rs 12 lakh
  • The state license is issued when the turnover is over Rs 12 lakhs
  • FSSAI Central license is issued when the turnover is above Rs 20 crores

Companies should apply for a state government licence to run an organic business. Owner has to file an employee identification number (EIN).

Labelling

The FSSAI has made the license mandatory. If the business gets the license, then the product should bear an India Organic Certificate in all its products. The entity should get a voluntary logo from FSSAI. The Food Safety and Standards (packaging and labelling) Regulations of 2011 has mandated that the following particulars must be mentioned on the label.

  • Name of the food, its ingredients, and nutritional information
  • Presence of any food additives, veg/non-veg
  • Complete details of the packer/manufacturer
  • Net quantity
  • Details such as lot no./code no./batch no
  • Manufacturing date
  • Usage and expiry date

Instructions to be Followed

The new laws make it mandatory for businesses to receive certification from one of the following organisations:

  • National Programme for Organic Production (NPOP)
  • Participatory Guarantee System for India (PGS-India).

Companies also have the option of getting a voluntary logo from FSSAI, which proves that their product is organic.

The USDA’s Organic Program (NOP) is changing its approach to oversight of imports from India. This decision has started a transition period that will allow Indian organic operations certified by APEDA-accredited certifiers to apply for direct certification by USDA-accredited certifiers to the USDA’s organic standards. Certification by USDA-accredited certifiers will be required for products exported from India to the United States.

Legal Documents Required

  1. PAN card
  2. Aadhar card
  3. Voter ID
  4. Driving license
  5. Ration card
  6. Business agreement
  7. Memorandum of association
  8. Articles of association
  9. NOC (No objection certificate)
  10. Bank statement.

Growth in the Market

The online food business is growing, with experts predicting a 25% growth in the three years to follow. The increase in the organic farming sector, development of new products, research into genetically modified crops, and help from the government have all played essential parts in sustaining and achieving this growth. As more and more people become aware of the advantages of organic products, these trends will only grow exponentially. Hence, the government is trying its best to encourage companies to take up and utilise these opportunities for growth and innovation.

Struggles and Hopes

The growth is encouraging because, since its onset, the organic business has had to face many hiccups and difficulties, with the main ones being adulteration, low safety standards, and a lack of general awareness. Organic food products also possess a high margin, but in comparison, the global organic food consumption is less than 0.2% of India’s $300 billion economy. 

While the extent of opportunity has improved thanks to the timely intervention of e-commerce platforms, the organic food industry is still a tough one to enter. Small farmers find it difficult to have direct access to large-scale markets where their products will fetch a reasonable amount.

Natural products require separate storage to prevent cross-contamination, increasing the logistical effort. However, as the new generation has better access to information, they are becoming increasingly aware of the health benefits that organic food brings with it. Hence, we see a number of people switching to such alternatives. Better resources concerning spending and growing popularity for natural products have made this growth possible for the organic food business. The government has also been extending an olive branch by releasing several new initiatives.

The Government’s Position and Capabilities

  • The central government has formed the Participatory Guarantee System (PGS) to provide subsidies to small-scale farmers, and this initiative is being supported by the Pradhan Mantri Kaushal Vikas Yojana (PKVY) scheme
  • Currently, farmers cannot export their products as that requires certification by the APEDA
  • Additionally, governments could help farmers is by offering subsidies to those who have switched from conventional methods to organic methods
  • Introducing laws that help to convert farmlands into organic farms will also go a long way in helping farmers 
  • Moreover, standardising policies with respect to fertilisers and making organic fertilisers more accessible by increasing their production and manufacture can help organic farmers improve their yield
  • In 2017, the government launched the Jaivik Bharata logo and the Indian organic integrity database portal to help farmers and organic food businesses. State governments are also trying to do their part by authorising various certification agencies and have also undertaken several new initiatives to promote organic farming
  • The FSSAI, in a bid to help small farmers, has agreed to relax certification norms for organisations and individuals whose annual income does not exceed ₹12 lakhs. They have also directed officers to use these regulations as a form of encouragement rather than as a means to prosecute these farmers
  • They also have relaxed norms for organisations whose turnover falls below ₹50 lakh per annum by allowing them to sell products without certification from NPOP or PGS-India. However, such organic aggregators will not have the allowance to use the Javik Bharat logo.

 

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