Why Nestlé Can Export Maggi Noodles Made in India But Not Sell Them There

Thousands of noodle cartons are being stockpiled at Nestle’s distribution center in northern India. Preetika Rana/The Wall Street Journal

An Indian court said Tuesday that Nestlé SA could export batches of Maggi 2-Minute Noodles made in India, but still could not sell them in the country.

Sales of the wildly-popular snack were blocked across India this month after regulators said they found elevated levels of lead in some samples, an allegation the company denies.

Nestlé challenged the nationwide ban in court. In the latest hearing Tuesday, Nestlé asked the Bombay High Court for clarity on whether it is permitted to export the Maggi noodles, even though regulators had not barred the company from sending the product abroad.

Nestlé’s Indian arm exports Maggi noodles to the U.S., U.K., Canada and Singapore, among other countries. Noodles exported to these countries and those sold in India are produced in the same facilities. Nestlé’s five noodle factories were shuttered amid heightened concern over the safety of the snack.

The court’s blessing could mean the Swiss company resumes noodle production, as long as the products are for sale overseas.

Still, the court’s decision may appear rather odd to some consumers: Why is Nestlé barred from selling its noodles in India but not abroad?

As with most developing nations, India’s food-safety regulator doesn’t monitor or test exports. It is typically up to the importing country to decide what it deems fit for consumption within its borders. Singapore, for example, tested samples of Maggi noodles after the scare broke out in India and said it found them safe. The U.S. Food & Drug Administration also said it would test Nestlé’s noodle imports.

India has a patchy record when it comes to exporting food. Data analyzed by India Real Time show that the U.S. rejected more snack imports from India than from any other country in the first five months of this year. Indian products led the world in snacks rejected from the U.S. last year as well.

The FDA cited excessive use of pesticides, unsanitary storage conditions, and the presence of salmonella, a bacteria known to cause diarrhea, fever and cramps, as some of the reasons for rejecting Indian imports. In one instance this year, the FDA said it rejected a snack from the western state of Gujarat because it “appears to consist in whole or in part of a filthy, putrid, or decomposed substance or be otherwise unfit for food.” False claims on labels and failing to identify one or more ingredients were a few other slips, the FDA said.

While India’s food-safety watchdog rushed to test everything from pastas to instant noodles in the wake of the Maggi scare, its chief says he doesn’t have the manpower or resources to check the millions of products fast filling kitchens cabinets in the world’s second-most populous nation – much less exports.

A Nestlé India spokesman declined to say what percentage of sales come from noodle exports. Maggi noodles dominate the Indian market, though, accounting for more than one out of every two bowls of instant noodles consumed here. One in every five dollars Nestlé earns in India comes from the sale of its noodles.

The Bombay High Court will resume hearing arguments in Nestlé’s case on July 14.