Food, Drink Giants Plot Fightback as India Looks to Tighten Rules

According to officials, Prime Minister Narendra Modi's administration has begun to look closely at policy proposals under discussion since at least 2015, raising concerns over the possible impact on the $57 billion sector.

Last month, executives from companies including PepsiCo, Nestle and Indian consumer firm ITC met trade groups in New Delhi to coordinate efforts and urge the government to resist pressure from health advocates, according to an industry source aware of the meeting.

The attendees, who felt their efforts to push back had been too piecemeal, talked about forming a core group to unify their message when engaging the government, the source said.

Trade group All India Food Processors' Association (AIFPA), whose members range from street vendors to global conglomerates, said two industry-wide meetings were held in February.

Its members, who also discussed ways to offer more nutritious products, plan to send a joint representation to the government and approach health and food officials to express concerns about stringent regulations.PROMISING GROWTH

Government pressure comes in various forms.

Modi recently told PepsiCo CEO Indra Nooyi that her company needed to focus more on public health, an aide to the prime minister said.

Separately, the prime minister's office asked PepsiCo to outline how it would reduce sugar in beverages sold in India, the aide added.

PepsiCo did not comment on those remarks by Modi and his office. It referred Reuters to its October 2016 global commitment "to transform its portfolio and offer healthier options". Modi's office did not respond to an email seeking comment.

A Coca-Cola India representative referred questions on proposed regulatory changes to the Indian Beverage Association, which said their impact was "under evaluation".

"These are complex public health issues which require (a) holistic multi-stakeholder approach and we are committed to work with authorities," Khajuria said in an email.

The CEO of the Food Safety and Standards Authority of India (FSSAI), Pawan Kumar Agarwal, welcomed industry concerns about tougher rules.

"It is a good thing if it helps in providing healthier options," he told Reuters in an interview.PLANNED REGULATIONS

The number of obese men and women in India rose to about 30 million by 2014 from 1.2 million in 1975, according to a study by British medical journal The Lancet, although the comparative figure for China was around 90 million.

Concerns about the health effects of fast food and soda drinks have been growing globally in recent years.

Agarwal denied industry pressure was affecting the implementation of tighter regulations, adding that India was nudging companies to make healthier products while working on new rules.

The FSSAI is considering advertising norms to check on health claims made by companies and is working on educating consumers about the health effects of foods containing high levels of sugar or fat.

"Most Indian foods will be red. So what purpose does it serve?" said the group's president, Subodh Jindal.

Potentially more significant for major brands would be a nationwide "fat tax", which authorities are discussing and was last year announced by the southern state of Kerala.

There, branded restaurants like McDonald's and Domino's Pizza face a 14.5 percent tax, higher than that applied to smaller, indigenous outlets serving the same fare or Indian cuisine often high in sugar and fat.

"It makes the larger players nervous," said an industry executive, calling the discourse on "junk food" in India discriminatory and unscientific.