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FPI Disclosure Norms

Why in news?

Recently, the Securities and Exchange Board of India (SEBI) has extended the timeline for Foreign Portfolio Investors (FPIs) to provide additional disclosures. In May 2023, SEBI estimated that approximately Rs 2.6 lakh crore in Assets Under Management (AUM) could be classified as High-Risk FPIs, necessitating further disclosures based on data from March 31, 2023. High-risk FPIs are those that have over 50% of their equity AUM concentrated in a single corporate entity.

What are SEBI’s FPI Disclosure Norms?

• Requirement for Additional Disclosures: FPIs that hold a significant portion of their investments in a single Indian corporate group or have over Rs 25,000 crore of equity AUM in Indian markets must provide detailed information.
• Timeline for Compliance: Existing FPIs that exceed investment limits as of October 2023 must reduce their exposure within 90 days, unless they qualify for exemptions. If they fail to meet the January deadline for disclosing investor data, they will receive an additional seven months to liquidate their holdings.
• Liquidation of Holdings: This refers to the process of selling securities for cash, allowing investors to exit their positions, whether partially or entirely.
• Exempted Categories: Certain FPIs are exempt from these additional disclosure requirements. This includes Sovereign Wealth Funds (SWFs), publicly listed companies on specific global exchanges, public retail funds, and other regulated pooled investment vehicles with diversified holdings.

Why has SEBI Asked FPIs to Provide Additional Disclosures?

• Risk of Market Disruption: SEBI is concerned that FPIs with concentrated investments in single companies or groups may threaten the orderly functioning of the Indian securities market. Large holdings could lead to market manipulation or disruption.
• Potential Regulatory Circumvention: There is apprehension that promoters of companies or other investors might exploit the FPI route to bypass regulatory requirements, such as those outlined in the Substantial Acquisition of Shares and Takeovers Regulations, 2011 (SAST Regulations), or fail to meet Minimum Public Shareholding (MPS) norms.
• Alignment with Regulatory Objectives: SEBI aims to ensure the integrity and transparency of the Indian securities markets. By requiring detailed disclosures from FPIs, they strive to prevent misuse and enhance market stability.
• PN3 Exclusion: Although Press Note 3 (PN3) from April 2020 does not directly apply to FPI investments, SEBI remains cautious about potential misuse of the FPI route. Enhanced disclosures are deemed necessary to safeguard the interests of the Indian securities markets.

What are Foreign Portfolio Investors?

• Foreign Portfolio Investment (FPI) refers to securities and other financial assets that are held passively by foreign investors. Unlike Foreign Direct Investment (FDI), FPI does not provide direct ownership of financial assets and is relatively liquid, depending on market volatility. Examples of FPIs include stocks, bonds, mutual funds, exchange-traded funds, American Depositary Receipts (ADRs), and Global Depositary Receipts (GDRs). FPI is a component of a country's capital account and is recorded in its Balance of Payments (BOP), which measures the flow of money between countries over a year. FPIs are often referred to as "hot money" due to their tendency to exit quickly in response to economic instability. In comparison to FDI, FPIs are generally more liquid, volatile, and riskier.

What are the Advantages and Concerns Related to FPI?

• Advantages: FPIs bring several benefits to India, including increased liquidity, higher valuations in the stock market, and enhanced integration into global markets. The influx of foreign capital aids economic growth and boosts competitiveness, particularly in technology-driven sectors.
• Concerns: However, FPIs also pose risks, as market volatility can be influenced by global economic factors, leading to instability and currency fluctuations. The complex structure of FPIs complicates the identification of beneficial owners, raising concerns about potential misuse of funds and tax evasion. Regulatory risks, shifts in global economic conditions, and dependence on foreign investment trends can contribute to challenges in the FPI landscape.

India's Geographical Indication Landscape

Why in News?

The journey of Geographical Indication (GI) tags in India, which spans over two decades, is facing various challenges, with limited outcomes indicating a pressing need for reforms in the registration processes.

What is the Geographical Indication (GI)?

• A geographical indication (GI) signifies products that originate from a specific geographical location, highlighting that the characteristics or reputation of these products are intrinsically linked to their place of origin.
• According to Article 22 (1) of the Trade-Related Aspects of Intellectual Property Rights (TRIPS), GIs are defined as “indications which identify a good as originating in the territory of a member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographic origin.”
• In many EU countries, GIs are classified into two primary categories: Protected Geographical Indication (PGI) and Protected Designation of Origin (PDO). India currently recognizes only the PGI category.
• This certification is also applicable to non-agricultural products such as handicrafts, which are unique due to the human skills, materials, and resources specific to particular areas.
• GI serves as a vital tool for protecting traditional knowledge and culture, aiding in socio-economic development.

Legal Framework and Governance:

• GI in India is governed by the Agreement on TRIPS under the World Trade Organization (WTO).
• The Geographical Indications of Goods (Registration and Protection) Act, 1999, aims to provide for the registration and better protection of geographical indications related to goods in India.
• The Paris Convention emphasizes the protection of industrial property and geographical indications in Articles 1(2) and 10.

Status of GI Tags Registration:

• India lags behind other countries in terms of GI registrations. As of December 2023, Intellectual Property India has received only 1,167 applications, with just 547 products registered according to the GI Registry.
• Germany leads the world with 15,566 registered products, followed by China with 7,247, as reported by the World Intellectual Property Organization in 2020.
• Globally, wines and spirits account for 51.8% of registered GIs, while agricultural products and foodstuffs make up 29.9%. In India, handicrafts account for approximately 45% of GI products, with agriculture comprising about 30%.

Concerns Regarding the GI Tags in India:

• The GI Act of 1999, formulated over two decades ago, needs timely amendments to address contemporary challenges.
• There is a need for the simplification of registration forms and application processing times to facilitate easier compliance.
• Currently, the application acceptance ratio in India is only around 46%.
• Lack of suitable institutional development hinders the effective implementation of GI protection mechanisms.
• Producers often face challenges after GI registration due to insufficient guidance and support.

Ambiguity in Producers' Definition:

• The GI Act of 1999 lacks clarity in defining “producers,” leading to the involvement of intermediaries who benefit from GIs, thereby diluting the benefits intended for genuine producers.

Disputes at the International Level:

• Disputes regarding products such as Darjeeling tea and Basmati rice highlight that GIs receive less emphasis compared to patents, trademarks, and copyrights.

Academic Attention:

• There is limited academic focus on GIs in India, with only seven publications recorded. However, a recent increase in interest is evident, with 35 articles published in 2021.
• European countries like Italy, Spain, and France are at the forefront of GI-related academic publications.

What Can be Done to Realise the Potential of GI-based Products?

• Government initiatives should incentivize grassroots producers to increase the number of registered GIs.
• Legislation should be revised to exclude “non-producers” from benefiting, ensuring that genuine producers see direct advantages.
• Enhancing technology, skill development, and digital literacy among stakeholders is crucial for modernization.
• Government agencies should collaborate with trade associations to host exhibitions and promote GI products through various media channels.
• Indian embassies should actively endorse GI products to stimulate growth in international markets.
• Favorable international tariff policies and focused attention on GI products at the WTO could enhance their global presence.
• Integrating GIs with the One District One Product scheme can improve promotion and market accessibility.
• Establishing market outlet schemes, especially in rural areas (gramin haats), can enhance the visibility of GI products.
• Setting up testing laboratories at marketplaces is essential to build consumer trust in the quality of GI products.
• Linking startups with GIs and aligning their performance with Sustainable Development Goals (SDGs) can contribute to social development.

Funding Winter Impact on Start-ups

Why in news?

Bengaluru, often referred to as the Silicon Valley of India, is currently facing a major setback in its thriving start-up ecosystem due to a funding crunch caused by global occurrences. The aftermath of this funding winter has left many start-ups in the region struggling with various challenges, including layoffs and a cautious approach from investors.

What is Funding Winter?

• Funding winter refers to a phase characterized by a decline in capital inflows to start-ups. During this period, investors and lenders tend to be more cautious and selective, resulting in a reduction of available market funding.
• This phenomenon can have severe consequences for businesses and entrepreneurs, particularly those in early development stages or those looking to expand.

Reasons for Funding Winter in India

Fluctuations in Indian Start-up Funding:

• In 2021, Indian start-up funding reached an unprecedented USD 42 billion, leading to the creation of 42 new unicorns.
• However, in 2022, there was a dramatic 40% decrease in funding, marking a retreat from the optimism that accompanied the pandemic.
• This initial surge was driven by significant investments in digital ventures during the Covid-19 pandemic, but as the world returned to normal, investment patterns had to be reassessed.
• In 2023, funding for tech companies in India plummeted to USD 8.3 billion, a 67% drop compared to 2022.

Global Macroeconomic Factors:

• Global conflicts, such as the Russia-Ukraine and Israel-Palestine situations, have significantly influenced the funding winter.
• These events have created uncertainty in global supply chains and trade, leading to a challenging investment climate for start-ups.
• A general slowdown in worldwide economies has further diminished investor confidence and capital flow.

Return on Investments (ROI) Focus:

• Investors have started to closely examine the sustainability and profitability of start-ups, resulting in a market correction.
• There has been a reduction in confidence towards unicorns and late-stage start-ups that focus more on growth than on profitability.
• Investor attention has shifted towards early-stage start-ups, with a more cautious approach and a focus on viable revenue models.
• The lack of mergers and acquisitions, alongside poor performances from listed start-ups, has limited exit options for investors.

Absence of Domestic Capital:

• The shortage of domestic capital is exacerbating the funding crisis in the Indian start-up ecosystem.
• Domestic pension funds are largely not investing in technology and venture start-ups, which represents a significant lost opportunity.
• Issues with tax policies from the Union Ministry of Finance and regulatory bodies create a challenging environment for start-ups.
• New regulations from the Reserve Bank of India restrict banks and Non-Banking Financial Companies (NBFCs) from investing in Alternate Investment Funds (AIF), which is viewed as overly restrictive.

Macro and Microeconomic Challenges:

• The crisis is not solely due to external factors, but also stems from internal decisions and strategies within the start-up ecosystem.
• Both macroeconomic conditions and the failure of some start-up founders to follow basic business principles have contributed to the current situation.

What is the Impact on Start-ups and Employees?

Mass Layoffs:

• A significant outcome of the funding winter has been widespread layoffs. Reports indicate that approximately 17,000 employees in tech companies in India were laid off between 2023 and January 2024.

Silent Layoffs:

• Some companies are implementing 'silent layoffs' where they provide lower performance ratings, subtly encouraging employees to leave rather than conducting formal layoffs.

Attrition Rates:

• Between September 2022 and July 2023, 111 Indian unicorns experienced an attrition rate of 4.72%, resulting in 41,208 employees leaving their jobs in Bengaluru alone.

What are the Indian Government’s Initiatives for Startups?

• Pradhan Mantri Mudra Yojana.
• Stand-Up India Scheme.
• Atal New India Challenge 2.0.
• National Initiative for Developing and Harnessing Innovations (NIDHI).
• Startup India Action Plan (SIAP).
• Ranking of States on Support to Startup Ecosystems (RSSSE).

Way Forward

• The entire ecosystem needs to focus on fundamental business practices, ensuring the right balance and planning for future market cycles.
• There is a pressing need for structural reforms in financing, including providing collateral-free loans to start-ups to promote sustainable growth.
• Continued government support, such as Karnataka's ELEVATE program, is vital to prevent start-up failures and cultivate a resilient ecosystem.
• Karnataka's ELEVATE program offers a one-time grant of up to ₹50 lakh to early-stage start-ups.
• The government should encourage public procurement from start-ups under preferential market access policies.
• Policies to incentivize domestic investments, particularly from pension funds, should be implemented.
• Start-ups must learn to adapt to changing market dynamics by focusing on frugality, efficiency, and organic growth strategies.

States’ Startup Ranking 2022

Why in news?

The Ministry of Commerce and Industry released the results of the fourth edition of the States’ Startup Ranking, showcasing a record participation of 33 States and Union Territories (UTs). Alongside the ranking, a 'National Report' was published, which includes a 'Compendium of Best Practices' and individual reports for each participating state, highlighting the entrepreneurial spirit across India. Notably, 31 States/UTs have developed State Startup Policies.

What is States’ Startup Ranking?

• This ranking is part of the Start-up India initiative aimed at creating a robust startup ecosystem that fosters innovation and provides opportunities for entrepreneurs.
• It is administered by the Department for Promotion of Industry and Internal Trade (DPIIT) since 2018.
• The ranking exercise is essential for improving the business environment for startups across the nation.

Objectives:

• Highlight progress made by States/UTs in promoting the startup ecosystem.
• Encourage competitiveness among States/UTs to adopt proactive measures.
• Enable States/UTs to identify and replicate successful practices.

Classification:

• States and UTs are categorized into five groups:
• Best Performers
• Top Performers
• Leaders
• Aspiring Leaders
• Emerging Startup Ecosystems
• Note: The 'Beginner list' was part of earlier rankings but was discontinued in 2019.

What are the Findings of States’ Startup Ranking 2022?

• States and UTs were classified into two categories based on population:
• Category A (Population > 1 crore)
• Category B (Population < 1="" />

7 Broad Reform Areas:

• Participants were evaluated across seven broad reform areas, consisting of 25 action points such as:
• Institutional Support
• Fostering Innovation and Entrepreneurship
• Access to Market
• Incubation and Mentorship Support
• Funding Support
• Capacity Building of Enablers
• Roadmap to a Sustainable Future
• 15% of the total scores were based on over 10,000 survey responses collected in nine languages through telephonic and web-based methods.

What are the Initiatives Taken to Promote Startup?

Funds of Funds (FoF) Scheme:

• Established in June 2016 with a corpus of Rs. 10,000 Cr, this scheme aims to strengthen the Indian startup ecosystem by facilitating access to domestic capital.

Startup India Seed Fund Scheme (SISF):

• Approved for a four-year period starting from 2021-22 with a corpus of Rs. 945 Cr, it provides financial support to startups for proof of concept, prototype development, market entry, and commercialization.

Startup India Investor Connect:

• This initiative uses AI for matchmaking between startups and investors, simplifying the process for entrepreneurs to present their ideas to multiple investors through a single application.

Startup India’s Multilateral Engagements: Startup20:

• Initiated during India's G20 Presidency in 2023, this platform serves as a global forum for startups, enhancing India’s status as a startup hub.
• It engages with G20 leaders on macroeconomic issues, supported by the G20 India Sherpa and the Startup20 secretariat.

Other Interventions Under the Startup India Initiative:

• Startup India Innovation Week is organized around National Startup Day (January 16) to celebrate entrepreneurship and promote innovation.
• National Startup Awards (NSA) recognize startups and ecosystem enablers that contribute to innovation and economic growth.
• MAARG Portal serves as a comprehensive mentorship platform for startups across various sectors and stages.

Other Related Initiatives for Startups:

• Open Network for Digital Commerce
• Fisheries Startup Grand Challenge
• Start Up India Fund
• Policy Reforms for Startups
• Start-up Cells
• National Startup Advisory Council
• Aatmanirbhar Bharat ARISE-Atal New India Challenge
• AIM-iCREST
• National Startup Day 2024

What are the National Startup Awards 2023?

• This initiative aims to recognize startups and enablers demonstrating exceptional capabilities, focusing on sectors identified by the government to enhance India's manufacturing capabilities.
• The fourth edition of NSA received over 2,000 applications, indicating growing acceptance among stakeholders in the startup ecosystem.
• NSA 2023 actively promoted inclusivity and saw numerous applications from startups led by women.
• Many applicants also highlighted their commitments to sustainability, targeting areas like climate change, waste management, and renewables.

Market Monopoly and Laws in India

Why in News?

Recently, the Competition Commission of India (CCI) dismissed a complaint against PVR, a prominent multiplex chain, regarding alleged abuse of its Dominant Market Position, which has raised concerns about Market Monopoly.

What were the Allegations and CCI’s Verdict?

• The complaint alleged that PVR leveraged its market dominance by favoring films from wealthy production houses, thereby creating barriers for independent filmmakers.
• PVR denied these allegations, stating that there was no evidence to support them and suggested that the complaint was an attempt to coerce the exhibition of a specific film without legal grounds.
• The CCI concluded that there were no significant competition concerns, highlighting that regulatory actions should not occur unless clear evidence of harm to competition was present, thereby preserving the autonomy of exhibitors.

What is Market Monopoly?

• Market monopoly is a condition where a single company or a group holds a substantial share and control over a specific market or industry.
• In a monopolistic market, there is typically one seller or producer, and consumers have no close substitutes available for the given product or service.
• This dominance grants the monopolistic entity significant market power, enabling it to influence pricing and supply conditions.

Features of Market Monopoly:

• Single Seller or Producer: A monopoly is characterized by having one entity that dominates the market, serving as the exclusive provider of a product or service.
• High Barriers to Entry: Monopolies often arise due to substantial obstacles that prevent new competitors from entering the market, including high startup costs, exclusive resource access, regulatory barriers, or strong customer loyalty.
• No Substitutes: Consumers face limited or no alternative options for the products or services provided by the monopolistic entity.
• Market Power and Pricing Control: The monopolistic company has considerable power to set prices without significant concern for competition, often leading to higher prices for consumers and lower output.
• Influence Over Supply: The monopolist can control the quantity of product produced, adjusting supply to influence market conditions.
• Lack of Competition: The absence of competitors leads to a scenario where monopolies lack direct competition, which can diminish their motivation to innovate and improve efficiency.

How does India Deal with the Practices of Market Monopoly?

• Competition Act, 2002: This is the principal legislation in India that addresses antitrust issues, aiming to promote competition in markets, prevent anti-competitive practices, and safeguard consumer interests.
• The Act prohibits anti-competitive agreements, the abuse of dominant positions, and regulates combinations that could negatively impact competition within India.
• Competition Amendment Bill, 2022: This proposed amendment seeks to bolster the regulatory framework further, tackle emerging challenges, and improve the enforcement of competition laws.
• Competition Commission of India (CCI): The CCI is the regulatory body overseeing competition in the Indian market, responsible for enforcing the provisions of the Competition Act, 2002. It comprises a Chairperson and other members appointed by the Central Government.
• The CCI investigates and acts against anti-competitive behavior, abuse of dominant positions, and anti-competitive agreements.
• Competition Appellate Tribunal and NCLAT: Originally, the Competition Appellate Tribunal (COMPAT) handled appeals against CCI decisions. However, in 2017, it was replaced by the National Company Law Appellate Tribunal (NCLAT), which now addresses competition-related appeals.

What are the International Initiatives to Curb Anti-Competitive Practices?

• OECD Competition Committee: The Organisation for Economic Cooperation and Development addresses anti-competitive practices through various initiatives, facilitating discussions and cooperation among member countries on competition issues.
• United Nations Conference on Trade and Development (UNCTAD): UNCTAD promotes international trade and development, providing guidance on competition law and policy via its Intergovernmental Group of Experts on Competition Law and Policy to help nations implement effective competition frameworks.
• International Competition Network (ICN): The ICN is a collaboration of global competition authorities that promotes communication and cooperation among member jurisdictions to tackle international competition challenges, sharing best practices and guidelines on competition law.
• World Trade Organization (WTO): While primarily focused on trade issues, the WTO addresses competition policy through its Working Group on the Interaction between Trade and Competition Policy to ensure that competition policies do not create unnecessary trade barriers.

What are the Judgements Related to Market Monopoly in India?

• Competition Commission of India v. Steel Authority of India Ltd (SAIL), 2010: The Supreme Court upheld the CCI’s order to investigate SAIL for anti-competitive practices in supplying rails to Indian Railways, ruling that SAIL was subject to the Competition Act.
• Competition Commission of India v. Google LLC & Ors, 2021: The CCI appealed against a Karnataka High Court order investigating Google for alleged anti-competitive practices in India's smart TV and Android app store markets, which was quashed due to jurisdiction issues and lack of opportunity for Google to present its case.

Way Forward

• Continuously review and strengthen antitrust laws to ensure they are effective in addressing emerging challenges in the business environment, allowing the legal framework to adapt to changing market dynamics.
• Empower and provide adequate funding to regulatory authorities like the Competition Commission to enforce antitrust laws effectively, enabling them to investigate, penalize, and deter anti-competitive behavior.
• Ensure transparent and efficient processes for reviewing mergers and acquisitions to prevent the formation or reinforcement of monopolies through consolidation.

Indian Spices Face Global Rejections Amid Contamination Concerns and Regulatory Scrutiny

Why in News?

Recently, there has been a significant increase in the rejection of Indian spice shipments by various countries due to concerns over contamination and regulatory scrutiny.

Indian spices and herbs rejected by the U.S. FDA in 2023

A scrutiny of FDA’s import refusal report, for the calendar year 2023, cites at least 30 instances wherein entry was refused because the products appeared to contain salmonella

• Over the last six months, approximately one-third of spice shipments from Mahashian Di Hatti (MDH) Pvt Ltd to the US were rejected due to salmonella contamination.
• Hong Kong's Centre for Food Safety has halted the sale of three MDH spice blends (Madras curry powder, Sambhar masala, and curry powder masala) along with Everest fish curry masala.
• Suspensions in Singapore and Hong Kong affected several products from MDH and Everest Food Products Pvt Ltd due to the detection of ethylene oxide, a pesticide linked to cancer.
• Investigations are ongoing in various countries, including Singapore, Hong Kong, and the US, regarding possible contamination in spice mixes from leading Indian brands.
• Complaints have highlighted the presence of ethylene oxide beyond permissible limits, prompting calls for stringent quality checks by the Food Safety and Standards Authority of India (FSSAI).
• Increased scrutiny has also raised concerns regarding protein drinks, fruit juices, health drinks, and imported Nestle baby products, emphasizing regulatory lapses and health risks.
• Consumers are showing heightened concern regarding the safety and quality of trusted spice brands.

India's response to the spice contamination crisis includes:

• The Spice Board of India has initiated mandatory testing of products exported and is collaborating with exporters to uncover the root cause of contamination.
• Thorough inspections at exporter facilities are being conducted to ensure compliance with regulatory standards.
• Preventative measures are being implemented to avoid ethylene oxide contamination through voluntary testing and proper storage protocols.
• The FSSAI has instructed state regulators to collect samples from major spice brands, including MDH and Everest, for testing of ethylene oxide.
• Plans are in place for a nationwide surveillance initiative in 2024-25, targeting various food products, including spices.

About Indian Spices:

• Spices are plant-derived substances used to enhance the flavor of dishes, with applications in culinary, cosmetic, and incense industries.
• Historically, spices have been integral to Indian culture, tracing back to the Indus Valley Civilization and were utilized for both culinary and medicinal purposes.

History & Evolution of Indian Spices:

• Spices have been traded since ancient times, facilitated by India's strategic location on trade routes like the Silk Route.
• Medicinal properties of spices were recognized in Ayurveda, and during the medieval period, Arab and Persian traders helped spread Indian spices to the West.
• European powers sought direct access to Indian spices, leading to the establishment of trade routes and colonial dominance.
• The British East India Company monopolized spice trade, establishing large-scale plantations for the most sought-after spices.
• Post-independence, India remains a significant player in the global spice market, producing a diverse range of spices.

Spices Market of India:

• India is the largest exporter, producer, and consumer of spices, with a domestic market valued at $10.44 billion in 2022.
• It produces 75 out of 109 spice varieties as per the International Organization for Standardization (ISO).
• The top three importers of Indian curry powders in the fiscal year 2022-23 were the US, UAE, and UK.
• India's major exported spices include pepper, cardamom, turmeric, and curry powder, among others.
• In 2023, India's spice exports reached approximately $3.73 billion.
• Major spice-producing states include Madhya Pradesh, Rajasthan, and Kerala.

Government Initiatives for Growth of Spices Production in India:

• The Spices Board of India promotes exports through infrastructure development and technology upgrades.
• Established in 1987, the Board acts as a link between Indian exporters and international buyers.
• Spices Parks are being set up to enhance market access for farmers and improve the overall spice cultivation system.
• The Codex Committee on Spices and Culinary Herbs aims to set international food safety standards.

Significance of Indian Spices:

• India's spices are in high global demand, providing livelihoods to millions involved in spice cultivation and trade.
• Indian spices have evolved from raw exports to value-added products like spice oils and ready-to-use mixes.
• Culturally, spices are integral to Indian traditions, cuisine, and herbal medicine.

Challenges faced by the Indian Spices Sector:

• Regulatory actions could jeopardize around $700 million worth of exports, with potential losses increasing significantly if major markets further restrict imports.
• Maintaining quality standards and compliance with pesticide regulations poses ongoing challenges for exporters.
• Food safety concerns are paramount, with consumers increasingly skeptical about the safety of spices.
• Traceability issues in India's fragmented spice supply chain hinder compliance and accountability.
• Tariffs and trade barriers create significant obstacles for spice exporters, who face stiff competition from other nations.
• Price volatility due to various external factors complicates the economic stability of spice exports.
• Logistical barriers prevent effective tracing of ingredients, impacting food safety across the supply chain.

Societal Impact:

• Farmers growing affected crops could bear the brunt of economic losses, increasing their financial burden.
• Contamination concerns around MDH and Everest’s spice mixes have exposed consumers to potential health risks associated with pesticide residues.
• Ethylene oxide, used for sterilization, has been flagged for its carcinogenic potential, raising alarms about its use in food processing.

About Ethylene Oxide (EtO):

• EtO is a colorless, flammable gas primarily used for sterilizing medical devices but also finds applications in food processing.
• Though it helps extend shelf life and reduce microbial contamination, its carcinogenic classification raises significant health concerns.

Way Forward

• Emphasize Good Agricultural Practices (GAP) and organic farming to enhance quality and safety in spice production.
• Implement strict regulatory measures and improve transparency in food production standards to rebuild consumer trust.
• Explore safer alternatives to ethylene oxide that do not pose health risks while maintaining product safety.
• Invest in quality infrastructure and enhance traceability to meet the demands of developed markets.
• Focus on sustainability and organic farming practices to meet growing global demand for eco-friendly products.
• Diversify markets to reduce dependence on traditional spice markets and create opportunities for lesser-known spices.

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