Promoting Own Products

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Promoting Own Products

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.

--BY DWAIPAYAN REGMI

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. 

Regmi is a freelance writer and a blogger. He can be reached at [email protected]

jhankar

good analysis. it would be better if the writer can find the source to contact to those country that the Nepal can sell their product other than India & China.

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