Delhi’s new excise policy recommendation may result in restrictive trade practices – Liquor manufacturers

INDIA – Leading liquor manufacturers in the Indian state of New Delhi have raised objections to the state government’s new excise policy recommendations and warned that these would result in restrictive trade practices.

Additionally, the liquor manufacturers pointed out the new policy recommendations if adopted would bring in cartelization besides hitting the government’s revenue.

The Delhi government had recently received around 10,000 suggestions on the recommendations of its expert committee on several issues.

Key recommendations include opening more private liquor vends and reducing the legal age for drinking from 25 to 21 years.

The excise department of the city government had sought comments and suggestions from the general public on the report of the expert committee.

In a letter to Delhi Chief Minister Arvind Kejriwal, four Indian liquor companies — Radico Khaitan Limited, Modi Illva India Pvt Ltd, Alcobrew Distilleries India Pvt Ltd and Jagatjit Industries Ltd – opposed some of the key recommendations.

These companies opposed any change in free pricing criteria and registration of brands and expressed concerns that a number of key recommendations were “unhealthy” and would “result in restrictive trade practices”.

While suggesting that there should be no change in the free pricing criteria cut off, the letter stated that the changes will disrupt 80-90 per cent of the Indian-made foreign liquor (IMFL) market.

“The proposed change to registration of brands with retail price of or less than Rs 600 per bottle for 750 ml and the sales volume of 1 lakh minimum in states, except Delhi, among others, is extremely unfair, one-sided and violative of principles of free competition,” the letter said

According to the companies, such proposals will disrupt 80-90 percent of the current IMFL market and bring no revenue to the government.

They argued that such a proposal will only create a monopoly of few companies and bring in cartelisation. “It will be a big setback to the retail–both corporation and private,” the letter said.

The group also opposed the recommendation of closing government-owned vends, saying it would hinder the availability of genuine brands at right price to consumers.

Meanwhile, British Scotch manufacturers are up in arms, protesting a decision by Canteen Store Department (CSD) of the India’s defence forces to ban all foreign liquor, bottled at origin, in the canteens.

The Scotch manufactures argued that it was unfair for PM Narendra Modi government to ban their drinks as it did not compete with Indian products.

“It is not as if India has domestically-manufactured Scotch, so why impose sales restrictions?” said an executive with a leading foreign brand. 

The UK is expected to raise the issue of a sales ban on Scotch when Liz Truss, UK’s Secretary of State for International Trade, meets with commerce and industry minister Piyush Goyal to discuss the proposed bilateral trade agreement post-Brexit.

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