The ban imposed on Nepali ginger by
India for a few days in September could be a symptom of India looking to
promote its Make in India campaign.
Nestle, the Swiss multinational company,
has been selling its confectionary and food items in India since 1961.
It also owns a 70 percent market share in the popular packet noodles
with its brand Maggi.
However, in June last year India’s Food
and Drug Administration (FDA) discovered excessive amounts of lead in
packets of Maggi noodles harmful to human health. Then in a much
publicized case, the noodle brand was consequently slapped with an
embargo by the Food Safety and Standards Authority of India (FSSAI). The
scandal forced Paul Bulcke, CEO of Nestle to first explain that company
lab tests had shown nothing negative and then to fly to India to meet
with FDA officials. In the end, 27420 tonnes and 400 million packets of
Maggi noodles were razed in 40 days. It cost the company around USD 277
million in lost sales.
Apart from the financial loss, Maggi
also lost a huge amount of customer goodwill. The hashtag #Maggiban
trended on twitter throughout India. Maggi was accused of prioritising
profit over health and safety.
Nestle is not the only big company to
sell defective products, there have been several others. Sometimes it
happens unintentionally, sometimes intentionally. In the UK, Nestle
halted the production of Chunky KitKat because a handful of people found
small pieces of plastic in the bar. Toyota had to recall 41 thousand
automobiles finding a defect in the pipe tank just a year ago. Apple
recalled 233 thousand speakers just because six of them were found to be
over heating and the recent Samsung exploding phone case has been
estimated to have cost the company huge. These examples clearly indicate
that chances exist to correct mistakes.
The Maggi case ended in August 2015 when
the Bombay High Court lifted the ban. Maggi appeared again in the
market with the new tagline 'our commitment to goodness, you can always
trust', but sales have yet to reach previous levels. As a conspiracy
theory- whether Maggi was intentionally attacked or if the company
settled the issue through bribes will probably never be known. The
conspiracy theory is striking because at the same time Ramdev was
releasing aggressive statements, calling for 'lead and MSG free
noodles'. Today, Ramdev has his own Patanjali noodles in the market.
Chaudhary Group's WaiWai noodles could have seized the opportunity at
the time but, with Indian customers already entrenched in associating
noodles with the Maggi brand, it could not see any significant growth.
When big multinationals like Nestle fall
in to the net of India’s quality and safety tests, then even the recent
ginger debacle could have been predicted. The ban imposed on Nepali
ginger by India for a few days in September (accusing it of being 'high
in pesticides' or even 'Chinese ginger')could be a symptom of India
looking to promote its Make in India campaign, i.e. promoting their own
local resources. A report shows that Indian regions like Assam and
Manipur are currently producing huge amounts of ginger. But the matter
was seemingly resolved since the furor over ginger coincided with the
prime minister’s visit to India.
This Make in India campaign ultimately
aims to increase the growth rate of India by 12-14 percent and to push
the share of manufacturing to 25 percent of the GDP by 2020, which is
around 15 percent at present. Make in India is not about demotivating
foreign investment as India is known worldwide for its FDI policies and
the mushrooming MNCs throughout India have been acting as huge tax
revenues. Hence, for the sake of goodwill, India cannot reframe the
policy.
However, the unemployment rate and
growth rate of India has not moved ahead as expected. It can therefore
be regarded that, India equally wants to promote Indian brands and
companies too. Nestle's case will certainly boost Patanjali's image. We
have yet to see if WaiWai will have to face further obstacles.
India’s 2009 Foreign Trade Policy had
already restricted a certain amount of goods. But it should not come as a
surprise if the Make in India campaign puts in place further
restrictions in order to promote India’s own production. Ginger had been
one of Nepal’s most important export items to India. From exports worth
Rs 1610 million (2004/05), it went up to Rs 13120 million in (2012/13).
Falling exports can suggest that India wants to reduce imports from
Nepal.
Not only ginger, but other items like
pulses, oil cakes, catechu, jute goods, cardamom, noodles, cattle feed,
pashmina, threads textiles, etc are exported in large quantities to
India. However, India has been seeking quality standards for imported
Nepali products, while Indian products don't have any limitations- any
grade of product can enter Nepal.
For India, the process could still be at
the experimental stage, to ultimately move ahead with this agenda.
Otherwise, it would not seek for trade deals with the international
community. Will Indian consumers be prepared to pay a higher price when
substituting Chinese products is the next question. But the alarm bells
should be ringing and we also need to make our own stand.
At the same time, Nepal Rastra Bank
reports that the import rate of vegetables has been growing on an annual
basis. Nepal used to import vegetables worth Rs 9494 million in
2004/05, and this has increased to Rs 7897 million (2014/15).A clear
conclusion can be drawn here- 'While they are promoting the Make in
India campaign, the Nepalis have been promoting a Made in India campaign
too'. India takes away our ginger, and we purchase the same ginger back
from them in the form of 'Ginger Paste'. A quick glance at this
transaction reveals that with the removal of one problem- the
restriction ban- another larger problem appears in the end.
It is understandable that Nepal cannot
be self dependent. From Bollywood movies to Horlicks and other milk
products, Nepal is stuck like glue to the Indian economy. However, Nepal
needs to find an alternative somehow or the other. This ginger
diplomacy could be taken as a warning sign, and from farmers to policy
makers the country needs to be serious. If India can make garlic paste
and sell it back to Nepal, then, just to play the devil’s advocate here,
we can trigger the question- why can't Nepal have its own paste
producing firm?
While Bhutan’s Bhutan Food Products
Private Limited (BFPPL) has a good market in India and here in Nepal
too, through the sales of its Druk food items, why is Nepal taking only
one nation as its market alternative? Bhutan, too, has neighbouring
India as a big market, however, it clearly seems that India is not the
only option for Druk Food Products.
Nepal has been keeping all its eggs in
one basket. To the north, Nepal's export to China is really low- only
items like rudraksha, agarbatti and a few others are being exported in
large amounts. Doesn’t China need our products? Or are we just unable to
export them? For many countries around the world, including India,
China is turning out to be their important bilateral trade partner.
Economy Watch states the total value of imports made by China in the
year 2012 itself was USD 1.817 trillion.
Our geographical closeness to China does
not seem to have made us that familiar with the country, but, out of
interest let's not ignore how China took their train to Afghanistan.
It's more about interest rather than physical barriers. It would now be
unwise and foolish if we still want to be dependent upon one single
nation. It seriously takes two to tango.
A man keeps on feeding his goat,
whenever he wants to, but with one motive- one day the goat will be big,
weighty, heavy and then it could be sold at a good price. Are we being
the goat? Or do we want to roar, becoming independent- we need to
decide.
Published in New Business Age of December issue, 2016.
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