Q. A Reputed food product company based in India developed a food product for international market and started exporting the same after getting necessary approvals.
The company announced this achievement and also indicated that soon the product will be made available for the domestic consumers with almost sane quality and health benefits. Accordingly, the company got its product approved by the domestic competent authority and launched the product in Indian market. The company could increase its market share over a period of time and earned substantial profit both domestically and internationally. However, the random sample test conducted by inspecting team found the product being sold domestically in variance with the approval obtained from the competent authority. On further investigation, it was also discovered that the food company was not only selling products which were not meeting the health standard of the country but also selling the rejected export products in the domestic market. This episode adversely affected the reputation and profitability of the food company.
o What action do you visualize should be taken by the competent authority against the food company for violating the laid down domestic food standard and selling rejected export products in domestic market?
o What course of action is available with the food company to resolve the crisis and bring back its lost reputation?
o Examine the ethical dilemma involved in the case.
Question from UPSC Mains 2021 GS4 Paper
Model Answer:
This case exposes a severe failure of corporate governance and business ethics, highlighting a dangerous pursuit of profit at the direct expense of public health and consumer trust.
1. Actions by Competent Authority (Part A)
- Immediate Product Recall: Direct mandatory withdrawal of the substandard product from the domestic market (under FSSAI guidelines).
- License Suspension: Temporarily suspend the company’s domestic manufacturing and sales licenses pending a comprehensive inquiry.
- Penal & Legal Action: Initiate heavy fines and criminal proceedings for endangering public health and misleading advertising (Consumer Protection Act 2019).
- Public Advisory: Issue immediate nation-wide alerts warning consumers against consuming the specific product batches.
- Systemic Audit: Mandate rigorous, independent third-party laboratory testing for all other products manufactured by the company.
2. Company’s Course of Action (Part B)
- Unconditional Apology: Issue a transparent public apology, accepting full moral and administrative responsibility for the lapse.
- Voluntary Recall & Refund: Proactively withdraw all domestic stock and offer refunds, demonstrating accountability (similar to the 2015 Maggi crisis).
- Full Cooperation: Provide regulatory authorities unrestricted access to manufacturing facilities, export logs, and internal quality reports.
- Internal Accountability: Terminate/suspend executives responsible for the fraud and overhaul the internal compliance mechanism.
- Quality Parity: Upgrade domestic production lines to match international standards, establishing an independent ethics board to rebuild trust.
3. Ethical Dilemmas Involved (Part C)
- Profit Motive vs. Public Health: Prioritizing financial bottom-lines over the physical well-being of trusting domestic consumers.
- Integrity vs. Deception: Falsely marketing products as having the “same quality” while intentionally dumping rejected export batches.
- Dual Moral Standards: Valuing the safety and standards of international markets over domestic citizens, violating the principle of equity.
- Short-Term Gains vs. Long-Term Sustainability: Compromising the company’s enduring reputation and stakeholder trust for immediate revenue generation.
Conclusion
Ethical conduct is foundational, not antithetical, to business success. Integrating corporate social responsibility with stringent quality governance is imperative for sustainable growth and national health security.
