The Indian government is suing Nestlé and has demanded $100 million as compensation over “unfair trade practices” while selling its popular instant noodles brand, Maggie.
The Indian government confirmed that it has filed a suit with the country’s top consumer court, National Consumer Disputes Redressal Commission (NCDRC), against the Indian arm of the Swiss food giant. At the heart of contention is Maggie, the instant noodles brand. The government is seeking “6,400 million rupees” ($98.6 million) in damages.
The Government has also demanded the imposition of 18 percent interest on the compensation sought, till Nestlé deposits the money in escrow, and added that the amount may increase as more incriminating evidence is unearthed, reported MSN. Acknowledging the lawsuit, additional secretary at the Ministry of Consumer Affairs, G Gurcharan, said as follows.
“Our complaint is over their unfair trade practices and the court will now issue them notices to hear their response.”
The primary culprit is Maggie, the hugely popular instant noodles brand of Nestlé. Interestingly, there are a few points that the Indian government isn’t happy about, apart from the company allegedly flouting health regulations.
This year, the national government ordered a nationwide ban on Maggie after a few laboratories confirmed the samples they received for testing contained lead in much higher levels than permissible. Moreover, they claim to have found traces of artificial flavor enhancer Monosodium Glutamate, or MSG. Interestingly, the government is less worried about the presence of the chemical than it is of the fact that it wasn’t mentioned on the packaging.
Apart from these allegations, the Indian government is concerned about the implied message of “health and vitality” that Nestle propagates through its advertising campaigns. Officials don’t approve of the advertising slogan “Health is enjoyable.” Additionally, they have accused Nestlé of falsely claiming their sub-brand, “Maggi Oat Noodles,” has been approved by the Food Safety and Standards Authority of India (FSSAI).
We do not add MSG to MAGGI Noodles & there was never any intention to mislead consumers. Full statement http://t.co/278R4MtDTi (3/4)— Nestlé India (@NestleIndia) August 12, 2015
Nestlé has challenged the ban since the very beginning and will now have to gear up to face the government in court. While it may choose to snub India in the future, it just cannot ignore the $240 million business that Maggi alone generates in the country.
[The language is Hindi, but the video shows the systematic destruction of Maggi]
Following the ban, Nestlé was forced to spend thousands of dollars to destroy about $50 million worth of Maggie. Now, it is facing a potential fine of $100 million. Fortunately for Nestlé, all the subsequent tests conducted by independent laboratories, even internationally, have certified Maggi to be a safe product for human consumption. However, the Indian government has challenged those findings. Now, the NCDRC will hear both sides and decide if Nestlé is liable to pay the damages.
[Image Credit: Diptendu Dutta / Getty Images]