Tier 1, Tier 2 Indian cities are new demand hotspots for healthy branded food items

Personal hygiene products have also shown a rising trend even in rural India.

Question: I am in the business of distributing health foods. I have been exporting them to various cities in India after sourcing them from different parts of the world. Is it possible to penetrate the smaller cities and towns in India as I have reached a limit catering to the metropolitan areas?

Tier 1 and Tier 2 cities in India are the new demand hotspots for healthy and functional food items which are branded. During the pandemic, thousands of employees returned to their hometowns from the larger cities and they took with them the urban habits of food consumption and personal hygiene. The demand for these products grew through e-commerce networks. The penetration of e-commerce to smaller cities and even towns found the right consumers who had sampled these products while they were working in the metros. Despite inflationary pressures, the demand for these products is growing at more than 12 per cent per annum. Packaged food categories made by multinationals and large Indian enterprises are, in fact, finding it difficult to meet the growing demand. Personal hygiene products have also shown a rising trend even in rural India. Therefore, the prospects for you to export products which would reach the Tier 1 and Tier 2 cities have great potential.

Manufacturing in India is getting more and more automated. Will it not impact the labour market and generate more unemployment?

Companies which have taken a hit during the past three years are focusing on issues of sustainability so that even if a future pandemic were to hit globally, manufacturing can be sustained. As a result, automation is surging. There were less than hundred robots made annually for Indian industry about fifteen years ago. At present around 6,000 robots are built every year. This is spurred by the need for becoming part of the global supply chain. Robotics is mainly used in the automobile sector including those who manufacture components. Further, it is used in the manufacture of chemicals and pharmaceuticals. To ensure precision manufacture, robotics is used in the electronics space. Currently, this technology is being upgraded in the fields of Artificial Intelligence, machine learning, cloud computing, Internet of Things, and robotics.

Automated solutions are applied for measuring energy consumption patterns, quality control, maintenance, welding and riveting. Robotics helps in protecting human labour from toxic fumes, elevated pressures or high temperatures. It is also used for predictive analytics about condition of industrial equipment. Further, automated loading and unloading operations help prevent injuries to human beings.

Auditors and independent directors are under the scanner in view of certain large companies defaulting on corporate governance guidelines. I hope the Government is taking some effective action to deal with this problem.

The Ministry of Corporate Affairs is set to tighten norms and provide specific guidelines affecting auditors and independent directors.

Guidelines are being formulated which would standardise qualifications which an auditor generally makes in his audit report. To ensure their independence, restrictions are to be placed on non-audit business which can be carried out by a statutory auditor. Compulsory retirement after a specified period is meant to ensure that a new audit firm gives a fresh and critical look at the financial statements. A consultation paper is being drafted based on international best practices to protect the interest of all stakeholders. Independent directors are to be held accountable and will have to provide specific reasons if they decide to resign from the board of a company.

Further, such directors will have to step down from the board of a company on completing two terms of five years. This is meant to further strengthen corporate governance standards and ensure accountability.

H. P. Ranina is a practicing lawyer, specialising in tax and exchange management laws of India.

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