Nearly 10% of FMCG distributor applications fail FSSAI checks: Report

BENGALURU: Nearly one in 10 FMCG distributor onboarding applications checked by verification firm AuthBridge in FY26 failed food safety licence checks, with expired licences, missing product approvals and invalid certificates among the problems detected.The findings are based on about 3,500 applications processed through AuthBridge’s platform for FMCG companies across India during FY 2025-26. The dataset covered tier-1, tier-2 and tier-3 distribution networks and was drawn from actual company-led onboarding checks rather than a survey, AuthBridge said. It did not identify the FMCG companies involved.Around 9.8% of the applications failed checks against Food Safety and Standards Authority of India (FSSAI) records. Another 8% showed identity mismatches across regulatory documents, while 4.5% failed goods and services tax (GST) compliance checks.These categories are not mutually exclusive. A single application could carry multiple flags, such as an expired FSSAI licence and a GST registration issued for a different state. The percentages, therefore, cannot be added to determine an overall failure rate.The FSSAI-related failures included expired licences, licences that did not cover the relevant product category, and invalid or forged certificates. GST issues included cancelled registrations, incorrect certificates and registrations submitted for the wrong state.Cross-document checks also found cases where addresses differed across GST and FSSAI records, or where the legal name on a PAN did not match GST records. The report said such discrepancies could result from data-entry or documentation errors, but could also point to dormant entities or identity fraud.Another pattern identified was what the report called “trade identity fraud”. In such cases, a business sought a distributor code under one trade name while submitting a GST identification number belonging to another legal entity. Such discrepancies may escape manual scrutiny unless information declared by the applicant is matched against official records.“Trust cannot be established through documents alone,” AuthBridge founder and CEO Ajay Trehan said. He called for companies to monitor regulatory records, identities and financial health throughout their relationship with distributors, rather than limiting checks to onboarding.Weak screening could expose FMCG companies to credit losses, tax disputes, regulatory scrutiny, product recalls and supply-chain disruption, the report said. It recommended live regulatory checks, cross-document identity matching and periodic monitoring of compliance and credit records.Get the latest Business News and Live updates. Download the TOI app.