Plan panel for more liquor licences

In a proposal to make grant of liquor manufacturing licences more liberal, the Planning Commission has recommended that state governments grant more licences for setting up breweries, wineries, distilleries, and imported and country liquor manufacturing facilities.

This is one of its many suggestions to ensure that the sector witnesses enhanced competition, greater efficiency and utilises more farm produce like molasses, barley, grain, sorghum and other waste starch products.

The commission feels the liberal licensing regime should be linked with the requirements of each state and lead to more exports, both to other states and overseas. It has suggested that state governments invite more applications for new licences.

Any individual who desires to set up a 100 per cent export-oriented unit (EOU) should be encouraged, the proposal says. Decisions like investment and location of a distillery or a brewery should be left to the entrepreneur, it adds.

Acceptance of the commission's proposals is expected to benefit companies like the UB Group, Jagajit Industries, Seagrams and United Distillers Ltd, among others, who have plans to bring more foreign brands to India and manufacture them locally.

"It is a good suggestion," said All India Distillers Association Secretary General VN Raina. States have exclusive rights to grant licence to manufacture potable liquor.

There is a high level of interest in manufacturing liquor. Maharashtra has received 440 applications for manufacturing Indian Made Foreign Liquor.

Since the number of applicants is more, the Bombay High Court has directed the state to issue licences only by adopting a transparent policy of auctions or tenders as provided under Section 139 of the Bombay Prohibition Act, 1949.

Raina said in case of EOUs the company had to just inform the state authorities about their plan to get an early licence to manufacture liquor.

In 2002, the Supreme Court had ruled that states had exclusive powers to grant licences for the manufacture of potable liquor meant exclusively for conversion into intoxicating liquor.

The commission has also recommended that new licences be based on installed capacity, availability of raw material, requirements of individual states and scope for exports.

It has also suggested that state governments allow anyone willing to pay a fixed licence fee to open retail outlets, subject to local restrictions. "This system will have uniform but graded fees for metro, city, urban, semi-urban and rural areas," said an official source.

There are over 2,826 wholesale outlets and 1,10,374 (of which 53,440 are for country liquor) retail outlets in the country. The population per retail outlet in India is approximately 9,000, whereas population per retail outlet globally ranges from 94 in Peru to 2,122 in South Africa.