Doing Business in India; Nutritional ingredients supplier perspective. Jaime Piza DSM Nutritional Products November, 2012

Transcription

1 Doing Business in India; Nutritional ingredients supplier perspective Jaime Piza DSM Nutritional Products November, 2012

2 Table of contents Doing business IFC classification. Still some hurdle to take... But, if you are going Global you ought to be in India! The horse sense recommendations... Notes on Nutritional Supplements and Food registration rules The ingredients and solution supplier perspective DSM / DSM in India and how can we help you? Page 1

3 Despite efforts by the Government, India remains among the more complex countries to develop a business Page 2

4 Doing Business in India rankings* Doing Business sheds light on how easy or difficult it is for a local to open and run a small to mediumsize business when complying with relevant regulations Topic Rankings DB 2012 Rank DB 2011 Rank Change in Rank Starting Business No change Dealing with construction permits No change Getting electricity Registering property Getting credit it take 3 steps and 3 days to start a business in Singapore, and it takes 12 steps and over 29 days in India Protecting Investors Paying taxes Trading across borders Enforcing contracts No change Resolving Insolvency * Page 3

5 Table of content Doing business IFC classification. Still some hurdle to take... But, if you are going Global you ought to be in India! The horse sense recommendations... Notes on Nutritional Supplements and Food registration rules The ingredients and solution supplier perspective DSM / DSM in India and how can we help you? Page 4

6 The India Opportunity Page 5

7 India continues bringing millions of avid consumers into the market every year Consumer Spending in India increased to INR BIL in May of 2012 from INR BIL in February of 2012, according to a report. From 2004 until 2012, India Consumer Spending averaged INR BIL x Note: 1 USD = INR Page 6

8 Disposable personal income Disposable Personal Income in India increased to INR MIL in June of 2010 from INR MIL in June of 2009 Page 7

9 And business confidence remains high In India, business confidence declined to in July of 2012 from in April of Historically, from 1995 until 2012, India Business Confidence averaged reaching an all time high of in October of 2010 and a record low of 68.3 in June of 1998 Page 8

10 When the shoe doesn t fit anymore: India's biggest challenge is its infrastructure deficit India is suffering a shortfall of $500 billion in the infrastructure sector and is in urgent need of capital Page 9 from: Ian Gomes, KPMG International 2007

11 And some shibboleths of Indian economic orthodoxy... The fear of the foreigner Fear to permit a modern market economy The obsession with small-scale enterprise Fear to open and scale up Indian agriculture Dogged refusal to recognize the benefits of an economy of scale Page 10

12 Retail in India a long story short Page 11

13 Retail in India Rough estimated in USD Billion, India retail is the 5th in in the world and one of the pillars of the country s economy and representing ~15% of the GDP. From now on? Last month, New Delhi finally said foreign companies can own up to 51 per cent of multi-brand retail businesses, a potentially transformative decision in a country where modern stores ring up just 6 per cent of total sales. The government also relaxed sourcing rules to make it more viable for singlebrand retailers to set up their own stores. But international retailers are still expected to proceed cautiously, given the complex, uncertain policy environment, with still entrenched political opposition to foreign-owned stores Page 12 ft.com: By Amy Kazmin in New Delhi October

14 Table of contents Doing business IFC classification. Still some hurdle to take... But, if you are going Global you ought to be in India! The horse sense recommendations... Notes on Nutritional Supplements and Food registration rules The ingredients and solution supplier perspective DSM / DSM in India and how can we help you? Page 13

15 Companies attracted to India must do more than merely transplant strategies You may wan to start by Developing an India strategy with long term view Choose the right regional model Use global best practices Choose the right Joint Venture and collaboration partners Conceptualise India specific products Optimally blend expatriate management with local talent Have a program to choose and develop the right multicultural talents to support your strategy Page 14 Source: Ian Gomes, KPMG International 2007

16 Some personal observations Create you company's solid, local network Legal Regulatory and red tape process support Peer companies support Collaborations from the right suppliers The locals know better Trust India supply of talents Be patient, will take time and test your endurance Try to enjoy every minute of this beautiful culture and peolple! Page 15

17 Table of contents Doing business classification. Some hurdle to take... But, if you are going Global you ought to be in India! The horse sense recommendations... Notes on Nutritional Supplements and Food registration rules The ingredients and solution supplier perspective DSM / DSM in India and how can we help you? Page 16

18 Supplements: some facts and figures In 2010, the Indian supplements or nutraceutical consumption was estimated in ~$2 billion, roughly 1.5 per cent of the global nutraceutical industry. 40% Dietary Supplements and Functional Food 60% Functional Beverages Nutraceuticals market is expected to reach $5 billion by provided some legislation adjustments

19 Notes on FSSAI rules Before May 2011: no formal process for Nutraceuticals... import was relatively easy. May 5th 2011: Food Safety & Standards Authority of India (FSSAI) issued regulations on Operation and import licensing Manufacture, packing and labeling and registration of food products Food products standards and approved additives etc. FSSAI provides one single legislation and authority to regulate manufacture, sale and distribution of food, functional food, nutraceuticals and dietary supplement in India. Grey areas and some confusion is still in place in the FSSAI, mostly, due to lack of clarity of specific regulations for supplements, functional ingredients and some additives

20 FSSAI challenges for the supplements industry 1. All drugs defined on 1940 Drugs and Cosmetics Act and also Indian traditional medicine as Ayurvedic, Siddha and Unani are excluded from the definition of supplement under FSSAI. Regulatory officers are categorizing nutraceuticals, especially those manufactured on traditional Galenic forms like tablets, capsules or oral dosages as Rx drugs 2. Some commonly used colours and additives such as binding agents, granulating agents used in formulating tablets do not find place in the list of permitted food additives under the regulations 3. Though functional claims are permitted, there is no clarity on the permitted structure of functional claims for nutraceuticals and dietary supplements. From Dr. R. B. Smarta, Regulatory Perspective of Nutraceuticals in India. Interlink Marketing Consultancy Pvt. Ltd. Dec 2011.

21 Some unpractical implications Approval of Nutraceuticals, Supplements as well as their ingredients under food category, will take from 1-2 years. Approval apply for finished products ingredients/additives for which there are no standards in the regulations. Vitamins, minerals and most common used nutritional or nutraceutical ingredients are registered with Drug Authority for Pharma use... but any new registration may takes months A product containing additives which are not mentioned in the standards of a particular finished product will also need approval. Time is longer for new ingredients or new to the country ingredients. Regulations in India are getting very much streamlined and in the years to come would be harmonized with the global ones to facilitate international trade.

22 What can we expect There is enough lobbying going on to, hasten the process. New regulations on Nutraceuticals is expected to provide a clearer picture for Food Supplements and for Health claims in it would be necessary to amend Schedule K of the Drugs and Cosmetics Rules, 1945 to provide for specific exemption to nutraceuticals, dietary supplements, health supplements from the scope of Drugs and Cosmetics Act, 1940 and Rules, 1945*. 2. It is also necessary to have specific regulations for product approval, approval of claims, permitted additives, quantity of vitamins and minerals etc. for nutraceuticals as it is necessary to treat this segment as an independent and unique entity under the Food Safety Standard Act, 2006* Regulations in India are getting streamlined and in the years to come are expected to be harmonized with the global ones to facilitate international trade. *From Dr. R. B. Smarta, Regulatory Perspective of Nutraceuticals in India. Interlink Marketing Consultancy Pvt. Ltd. Dec 2011.

23 Table of contents Doing business IFC classification. Still some hurdle to take... But, if you are going Global you ought to be in India! The horse sense recommendations... Notes on Nutritional Supplements and Food registration rules The ingredients and solution s suppliers perspective DSM / DSM in India and how can we help you? Page 22

24 DSM as a solution provider in India DSM imports to India under 2 categories; Food and Parma; but also source nutritional ingredients from various, properly audited, Indian manufactures. Pharma Regulations are well in placed and not much changes took place, except for stricter enforcement. Product registration takes is ~1 year and we support our customers with the documentation needed for regulatory submission. Food and supplements. Enforcement of FSSAI is strict. Customs is strict on sampling and labeling criteria. Licensing and Registration is mandatory for approval of products and ingredients new to the country and for which standards are not well defined. Import VS local manufacturing: importing RM or buying ingredients locally for manufacturing in India might help to reduce time and cost. DSM works closely with industry associations and authorities in India. We are also working to support harmonization of Indian standards to facilitate international trade. DSM can source, document, analyze and blend approved nutritional ingredients for the Supplements and Functional Foods industry in our new plant located in Baroda, Gujarat

25 Table of contents Doing business IFC classification. Still some hurdle to take... But, if you are going Global you ought to be in India! The horse sense recommendations... Notes on Nutritional Supplements and Food registration rules The ingredients and solution supplier perspective DSM / DSM in India and how can we help you? Page 24

26 DSM: How can we help your business in India? Nutritional Profile of your Product From the basic nutritional concept to a complete ingredients formula and approved claims support All ingredients sourcing and management Complete blends with all necessary nutritional ingredients for your product. We take care of the entire chain, from suppliers approval and purchasing to quality control. Custom packaging, tolling or manufacturing support From custom packs to fit your batch size to a complete solutions with the support of our co-packer partners and manufacturing collaborations in India CoA and QfL : Secure content and bio-availability of ingredients supported by DSM Quality for Life seal of guaranty that means Quality, Reliability, Traceability and Sustainability Regulatory support Highly experienced Indian team at your service HNH premix plant for India Recognizing increasing demand from the nutrition market in India, DSM is setting up its first India Human Nutrition Premix (HNH) plant in Vadodara, Gujarat. The plant is an addition to eight HNH premix sites worldwide

27 DSM in India History & Milestones SHAKTI school, Pune from DSM composite materials Aug 2011 DSP - New products launched under asset light model DSM and Sinochem Group establish global anti-infectives joint venture Aug 2011 Company incorporated in India DEP India Certified for QS Enzymatic technology launched in India DEP renamed as DSM India HNH Pre-mix site at Baroda to localize manufacturing in the Nutrition business DSM acquires Max-GB Agreement with Cenka extended till 2006 DSMs engineering plastics compounding plant in Pune Mar 2009 DRS begin operations in Jan 2011 Innovation Center set-up in Gurgaon in Feb 2012 Agreement with Century Enka for compounding Engineering Plastics DSM expands Anti-Infectives facilities at Toansa to increase production of penicillin-related intermediate 6-APA & of active pharmaceutical ingredients (APIs) Nov 2005 DSM partners with Kemrock Industries for specialty resins Mar 2011 DSM-PEDA lease for five yrs Jun 2012

28 DSM presence in India 8+ locations, 700 employees Ludhiana DSM PEDA Leased Site Punjab Toansa DSM-Sinochem JV Manufacturing Unit Haryana Gurgaon DSM India HQ Innovation Center Baroda Human Nutrition & Health Pre-Mix Plant Site Gujarat Mumbai DSM Nutritional Products Ambarnath Animal Nutrition & Health Pre-Mix plant Pune DSM Engineering Plastics Maharashtra Andhra Pradesh Hyderabad DSM India Shared Services Centre