The Food Safety and Standards Authority of India (FSSAI) gave the order after Nestlé India had itself announced the immediate withdrawal of the products at the weekend.
The move comes after a food scare involving reports of excess monosodium glutamate and lead in Maggi noodles forced nationwide concern.
Nestle has been under fire in India since one state's food regulator last month claimed to have found evidence of excess lead and MSG in some packets of Maggi instant noodles, a cheap and hugely popular snack food in India.
A number of other states have since followed suit in withdrawing Maggi noodles—most recently Punjab two days ago—though Nestlé executives continue to maintain their products are safe. Meanwhile, Bahrain has temporarily banned the import and sale of Maggi noodles manufactured in India.
"We have carried out extensive tests of our MAGGI Noodles in India in addition to our regular testing of the finished product and raw materials which is why we are saying the products are safe for consumption," the company said in a statement
"Nestlé India has tested around 1,000 batches of Maggi noodles in our own laboratories and also asked an independent lab to test an additional 600 product batches. These tests covered batches totalling 125m packets of noodles in total. These tests found that levels of lead in the products were within the food safety limits specified by the Indian authorities."
Fears of damage to the brand
Fearing brand damage more than revenue shock—Maggi sales in India account for less than 1% of Nestlé’s annual overall income—a management team led by global chief executive Paul Bulcke met with authorities on a charm offensive at the weekend as production at the Moga plant in Punjab, which manufactures the noodles, came to a halt.
The company has also recently been highly active on social media as it attempts to convince customers that Maggi as a brand stands for safety.
“In India Maggi is synonymous with noodles and completely dominates the market with 63% share in 2014. This means that the brand has a lot to lose,” said Lianne van den Bos, food analyst at Euromonitor International.
“The severe drop in popularity as a result of this scandal is likely to have been exacerbated by the media which are keen to highlight public safety issues especially when connected with multinational organisations.”
India is the second largest single market for Nestlé’s Maggi brand with retail sales worth US$623m last year across noodles, table sauces and other products, according to Euromonitor figures.
Nestlé’s strategy in India has been to provide affordable products that cater for a wide consumer base, including those in tier 3 and 4 cities.
“By building a strong image in an affordable product such as noodles, Nestlé has been able to broaden the Maggi brand’s remit, and extend into products with higher margins such as cooking sauces and meal solutions for the more affluent consumers,” added Van den Bos.
“This strategy has, however, been dependent on the trust that consumers have in Maggi and this is what is at risk.”
Government approaches the courts
In a further twist, India's government has filed for damages from Nestlé, Sydney Morning Herald has reported.
"It's a serious matter concerning public health and the law allows us to take suo moto legal steps, or legal actions, against erring entities," the paper quoted one consumer official as saying.
The claim, filed through a semi-judicial consumer disputes resolution commission, had been made on behalf of consumers and concerns unfair trade practices, SMH said.
This is thought to be the first case in which the Indian government has sought damages from a multinational.
This scandal could be very damaging for Nestlé in the short run as it affects its whole business strategy in India, though the Maggi brand has been in India for a long time and food scandals are frequent in the Indian market, said Van den Bos.
“It will not be long until another comes along and distracts consumers and the media from the Maggi food scandal of 2015.”