India Should Limit Foreign Investment in Junk Food
by Amit Srivastava
The Economic Times
November 30, 2013
PepsiCo's announcement on investing another $5.5 billion in India by 2020 — to manufacture and sell more junk food — does not bode well for India's long- term public health.
India has genuine development needs, and meeting some of these requires investment. But the manufacture and consumption of more junk food such as potato chips and high-sugar beverages — PepsiCo's portfolio — does not bring development.
In fact, quite the opposite. The large-scale consumption of junk foods has created a public health crisis in many countries as more and more people are affected by obesity-related diseases such as diabetes, high blood pressure and heart ailments. The financial and social costs of these health problems are huge. For India, a growing obesity problem will further burden an already overstressed, underfunded public health system, and adversely impact the quality of life of millions.
Although India lags behind many countries on consumption of junk food, policymakers must learn from the experiences of others. The US, one of the largest consumers of junk food, is also one of the most obese countries in the world. Ten years ago, the US Surgeon General characterised childhood obesity in the US as an epidemic and squarely laid the blame on unhealthy eating habits and lack of physical activity.
Things have gotten worse. In 2010, two retired US army generals labelled childhood obesity a threat to national security because "27% of all Americans aged 17-24 were too overweight to serve in the military". The generals called upon Congress to pass legislation that would "get the junk food and remaining high-calorie beverages out of our schools". In recent findings that must give us pause, for the first time in modern history, children born today in the US are likely to live shorter than parents — because of obesity. Surely this is not progress.
In the US, and generally in industrialised countries, consumption of soft drinks is on the decline as consumers become more aware of the negative health impact of junk foods such as those sold by the likes of PepsiCo, Coca-Cola, Nestle and others.
City after city in the US is trying to introduce higher taxes on high-sugar beverages in order to pay for the increased health costs and deter consumption. School districts across the US have removed junk food and high-sugar beverages from the reach of children. Such initiatives, including a recent one in New York City to restrict "supersized" drinks, are being met with a well-funded beverage industry lobby.
But it is a matter of time before high-sugar beverages and other junk foods are regulated and taxed — to pay for associated public health costs and to curb consumption, particularly by children. This is similar to how the tobacco industry has been regulated in the US and other countries, with significant success.
Attempts to regulate and rein in junk food are not limited to the industrialised world. Mexico is arguably the most obese country in the world. Not coincidentally, Mexicans are the largest consumers of Coca-Cola. Mexico just passed a sugar tax earlier this month to curb the consumption of sugar beverages, it also passed an 8% junk food tax on products such as candies, chips and high calorie foods. The US Food and Drug Administration has recently taken action to completely remove trans fats from food products in the US.
So, while there is a growing global movement to regulate, tax and limit the intake of junk food, including in the US where PepsiCo is based, the Indian government's move to welcome such a substantial investment in junk food is perplexing. The government's consent seems driven by a blind faith that any foreign investment is the panacea to our problems.
In this instance, policymakers are also blind to the repercussions of allowing such an investment. PepsiCo's investment in India will cost the nation more than it is worth.
The writer is a California-based activist with the India Resource Center, working on corporate accountability.
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