Economic Implications of Mandatory Labeling Policy in India

There are economic implications of introducing a strict mandatory labeling policy for GM food in India (based on the 2006 draft rule), focusing on four potentially affected products: cottonseed oil, soybean oil, brinjal (eggplant), and rice. A discussion paper on Labeling genetically modified food in India: Economic consequences in four marketing channels published by the International Food Policy Research Institute (FPRI) shows that GM food labeling would generate a specific market outcome for each of these products.

Researchers S. Bansal and G. Gruere said that all cottonseed oil would be labeled as GM, with limited costs but also limited benefits. Soybean oil derived from GM crops result in a change in market shares for edible oils at the benefit of domestic oils with trade implications. Labeling GM brinjal or rice, if these crops were commercialized, would be extremely challenging to implement. In each of these cases, mandatory labeling would generate significant adjustment costs, and consumer benefit would not always be visible.

Provided enforcement is ensured, a "well-designed" mandatory labeling regulation accompanied by awareness campaigns would lead to a much better outcome than the current draft rule in India, the paper concluded.

Download the discussion paper at  http://www.ifpri.org/sites/default/files/publications/ifpridp00946.pdf