Ensure deal safety in India’s Food M&A with LawCrust food safety due diligence mitigate FSSAI compliance risks before acquisition.

Ensure deal safety in India’s Food M&A with LawCrust food safety due diligence mitigate FSSAI compliance risks before acquisition.

Food Safety Due Diligence: The Cornerstone of Successful Food M&A in India

As India’s $900B food industry sees rising M&A activity, food safety due diligence has become vital for ensuring deal safety, regulatory compliance, and consumer trust. This article offers senior leaders a strategic lens on compliance risks, FSSAI updates, and practical due diligence steps guided by LawCrust’s hybrid consulting expertise.

Industry Overview & Context

India’s fast-growing food sector fuels M&A opportunities but also demands strict adherence to FSSAI and other regulatory standards. Food safety due diligence is essential to mitigate compliance risks, avoid costly disruptions, and protect brand equity. It ensures operational continuity and builds consumer trust key to securing long-term success in any Food M&A deal.

1. Recent Developments Influencing Food Safety Due Diligence Compliance

In 2025, India’s food regulatory landscape has evolved significantly, amplifying the need for meticulous food safety due diligences in Food M&A:

  • FSSAI AI-Powered Inspections and Traceability Tools: FSSAI now leverages AI-driven inspections and advanced traceability systems to monitor supply chains, ensuring compliance with FSSAI standards from source to shelf.
  • New Recall Protocols and Hygiene Rating Mandates: Stricter recall mechanisms demand rapid, transparent responses, while mandatory hygiene ratings for food establishments impact brand perception and operational compliance.
  • GST-Related Changes: Revised Goods and Services Tax (GST) rules affect input tax credits for food processors, requiring financial scrutiny during food safety due diligence to assess tax compliance and cost implications.
  • PLI 2.0 Revisions: The Production Linked Incentive (PLI) Scheme 2.0 for processed and fortified foods ties incentives to stringent safety and sourcing requirements, impacting M&A valuations.
  • BRSR Guidelines: Updated Business Responsibility and Sustainability Reporting (BRSR) norms mandate enhanced disclosures on food safety and ESG practices, increasing transparency expectations.

These updates underscore the need for dynamic food safety due diligences to navigate regulatory complexities and secure deal safety.

2. Key Food Safety Compliance Risks in M&A

In Food M&A, overlooking compliance risks can derail transactions or lead to post-deal liabilities. Acquirers must address these critical areas during food safety due diligence:

  • Incomplete or Outdated FSSAI Licensing: Expired or missing FSSAI licenses can halt operations or trigger penalties, posing immediate legal risks.
  • Gaps in HACCP/GMP Documentation: Missing or inadequate HACCP and GMP records indicate poor food safety controls, exposing the business to regulatory scrutiny and deal disruption.
  • Past Violations or Consumer Complaints: Unresolved FSSAI notices, consumer grievances, or violation histories can escalate into legal and reputational liabilities.
  • Inadequate Cold-Chain or Hygiene Controls: Substandard cold-chain infrastructure or poor hygiene practices in facilities risk contamination and costly recalls.
  • Non-Compliant Labeling: Misleading claims (e.g., “natural” or unverified health benefits) violate FSSAI standards, inviting penalties and relabeling costs.
  • Poor Traceability: Ineffective systems for tracking allergens, shelf life, or ingredient origins compromise safety and complicate crisis management.

Proactive food safety due diligence mitigates these risks, ensuring deal safety and protecting against unforeseen costs.

3. How to Conduct Robust Food Safety Due Diligence (Hybrid Lens)

Effective food safety due diligence demands a multidisciplinary approach, integrating legal, operational, financial, technological, and managerial perspectives:

  • Legal: Scrutinise compliance with FSSAI standards, BIS certifications, packaging laws, and Extended Producer Responsibility (EPR) codes. Validate licenses, review supplier contracts, and assess past litigation or regulatory notices to avoid legal entanglements.
  • Operations: Evaluate Standard Operating Procedures (SOPs) for food handling, sanitation, pest control, and recall readiness. Conduct site audits to verify facility compliance with hygiene and safety protocols.
  • Finance: Model risk-adjusted valuations, factoring in potential penalties, remediation costs, and reputational impacts. Quantify financial exposure to ensure deal safety.
  • Technology: Audit traceability systems, IoT-enabled monitoring, batch tracking, and digital quality logs. Ensure alignment with FSSAI’s 2025 AI-driven mandates to enhance safety and efficiency.
  • Management: Assess the target’s safety culture, employee training programs, third-party audit outcomes, and ESG reporting. A strong safety culture reflects operational resilience.

LawCrust’s hybrid expertise ensures food safety due diligence addresses these facets comprehensively, safeguarding Food M&A transactions.

Illustrative Example

In a functional beverage M&A deal, LawCrust’s food safety due diligence uncovered licensing lapses, labeling gaps, and traceability failures. Strategic legal, operational, financial, and tech interventions averted ₹4 crore in penalties and safeguarded brand equity ensuring deal safety.

Conclusion

In India’s dynamic food industry, food safety due diligence transcends a legal formality it is a strategic imperative. For senior leaders navigating Food M&A, prioritising robust due diligence safeguards deal safety, protects brand equity, and ensures seamless integration. By adopting a hybrid approach leveraging legal, operational, financial, technological, and managerial insights with LawCrust’s expertise businesses can mitigate compliance risks, align with FSSAI standards, and unlock the full potential of India’s thriving food sector. Make food safety due diligence the cornerstone of your M&A strategy to build a resilient, future-ready food business.

About LawCrust

LawCrust Global Consulting Ltd. delivers cutting-edge Hybrid Consulting Solutions in Management, Finance, Technology, and Legal Consulting to ambitious businesses worldwide. Recognised for our cross-functional expertise and hybrid consulting approach, we empower startups, SMEs, and enterprises to scale efficiently, innovate boldly, and navigate complexity with confidence. Our services span key areas such as Investment Banking, Fundraising, Mergers & AcquisitionsPrivate Placement, and Debt Restructuring & Transformation, positioning us as a strategic partner for growth and resilience. With an integrated consulting model, fixed-cost engagements, and a virtual delivery framework, we make business transformation accessible, agile, and impactful.

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