When India Told Britannia To Cut Biscuit Output

It sounds strange now but back in 1978 Government of India ordered Britannia Biscuit Company to make fewer biscuits.

Britannia was India’s biggest biscuit manufacturer by a huge margin, and a private company too. As if that was not bad enough under the socialist Janata Party regime of the day, it was also a multinational company.

“Why does the government encourage and back, directly or indirectly, the foreign multinationals like the Britannia Biscuit Company, which is a subsidiary of the British Multinational Corporation (sic),” asked Kanak Mukherjee, a woman MP from Communist Party of India (Marxist), on August 7, 1980.

Setting economics aside for a moment, Britannia had not been playing fair at the time. It was an age of licences and quotas when government decided who could make what and in what quantity. For Britannia’s three factories, Government of India had set these production quotas, in tonnes per annum:

britannias-licensed-capacity-production

So the company was not supposed to make more than 26,800 tonnes of biscuits in a year, although it was allowed to deviate from the licensed capacity of its individual factories.

Britannia was making biscuits far in excess of these numbers, and the Opposition alleged it was forcing small bakeries to fold up. It was also alleged that the company had imported additional biscuit-making machinery in a dismantled condition under the description of ‘spare parts and components’.

In March 1978, the Janata government served a show-cause notice on the company before fixing its manufacturing capacity. It also ordered Britannia to gradually scale down production to the licensed limit within three years, that is, by 1981. Sudden reduction would presumably have led to mass retrenchment of workers.

Did Britannia heed the government’s order? In 1978, it made 32,354 tonnes of biscuits — 20.7% more than its limit. In 1979, it made 38,952 tonnes — 45.3% more than its limit. Kanak Mukherjee’s display of outrage was justified.

There were charges of corruption against the bureaucracy. “Nothing happened because some joint secretary goes to the factory, has a nice time and takes money and comes back,” said Kalyan Roy, a Communist Party of India MP.

“Has any note been taken by the ministry, and is any action contemplated for this flagrant defiance of the directive of the government of India? Or will it just go on repeating by rote that it will wait for three years and only then it will take action,” said Prof Saurin Bhattacharjee, a Revolutionary Socialist Party MP.

What did the government say?

“We are thinking how to discourage it,” said minister of state for industry Charanjit Chanana.

A weighty suggestion came from P Ramamurti, communist MP from Tamil Nadu: “As a token of discouraging the trend, will the government order all the public sector undertakings and all the departments of the government not to use Britannia biscuits but to use Indian biscuits in their supply to guests?”

“It is a very good suggestion,” replied minister Chanana.

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