• ISWAI suggests 3E framework of Excise, Enforcement and Education to control informal liquor market

• Illicit and spurious liquor trade is a burden on public health and exchequer

Punjab : With the onset of the festive season, the International Spirits & Wines Association of India (ISWAI), an apex body of the premium Alcobev sector, urged the state government for strict checks and enforcement to counter the illicit and spurious liquor trade. The Association strongly recommended for a balanced, pragmatic and transparent approach to the AlcoBev business in the State as the way forward to promote responsible consumption and build the economic opportunity for the State.

In 2020, number of deaths have been caused by the consumption of illicit and spurious liquor in Punjab. The consumption of illicit or spurious liquor not only has negative consequences on the health of the citizens of the state but also hampers governments’ ability to tax and control legally produced alcohol.

The illicit and counterfeit liquor trade leads to a loss in state revenues. As per the general estimate and based on market reports, in 2019-20, the loss in state revenues due to the illicit and spurious liquor trade is around Rs 55 crore from country liquor and close to Rs 355 crore from Indian-made foreign liquor (IMFL). After the hooch tragedy in three districts of Punjab namely Tarn Taran, Amritsar rural, and Gurdaspur; the state government took various strict enforcement measures like ‘Operation Red Rose’ to curb illicit liquor trading and nail excise-related crimes; precise tracking systems and administrative coordination which helped to check illicit distillation, smuggling of liquor and spurious liquor trade. But the continuity of stringent checks and measures needed to regulate the menace of the informal alcohol market in the state.

Appreciating the Punjab state government’s enforcement measures and progressive liquor policy, Ms. Nita Kapoor, Chief Executive Officer, ISWAI said, “ISWAI applauds and supports the state government’s bold initiative in implementing stringent enforcement measures to check the spurious liquor market and also bringing changes in excise duties.” Ms Nita Kapoor further said “We urge the state government for a consultative and progressive policy-making to ensure responsible consumption and ease of doing business. ISWAI will be happy to engage and partner with the Punjab government in this exercise.”

A report published by the Reserve Bank of India (‘State Finances: A Study of Budgets of 2019-20’), shows that state excise duty on alcohol accounts for around 10-15 per cent of the Own Tax Revenue of a majority of states. According to the RBI report data, state governments earned around Rs 1.75 trillion from excise duty, most of which came from liquor sales, in FY20. In Punjab the share of revenues from AlcoBev was 16.5% of its own tax revenues (Rs 6,200 crore).

Mr. Suresh Menon, Secretary-General, ISWAI said, “We have witnessed three broad concerns faced by the AlcoBev sector in the state of Punjab which are primarily illicit, spurious and counterfeit liquor trade. This not only causes harm to public health, but also brings loss in state revenue.” Mr. Menon further stated that “Bootleggers selling counterfeit products in premium branded bottles not only pose a risk to consumers, but also damage brand reputation, restrict future investments by companies and lead to a loss of legal sales. Hence, adopting and enforcing policies to eliminate illicit production, sale and distribution of alcoholic beverages as well as to regulate or control informal alcohol are critical for the state.”

Highlighting the 3E Framework to control the informal liquor market in the state, Ms Nita Kapoor stressed on a long-term solution by devising Excise Tax implementation (designed in a way to prevent incentivisation of smuggling of liquor); an effective Enforcement mechanism, and Education by building a culture of Responsible consumption.