The Hindu Business Line : UB leads industry push to include alcoholic beverages in SAFTA list

THE UB Spirits Division (UBSPD), the world's fourth largest spirits marketer, along with the rest of the Indian Made Foreign Liquor (IMFL) industry, is pushing for the inclusion of alcoholic beverages in the list of tradable commodities under the South Asia Free Trade Agreement (SAFTA), aimed at permitting free flow of goods among South Asian Association for Regional Cooperation (SAARC) countries.

"The list of tradable goods under SAFTA does not include beverage alcohol products. The domestic industry requests that all flavours of alcoholic such as beer, whisky, rum, vodka, gin and wine may be included in the list of tradable commodities among SAARC countries in view of its great potential for growth and also its backward linkages with agriculture," Mr Vijay Rekhi, President of UBSPD, said, while explaining the industry's budget wish list.

UBSPD, comprising McDowell & Co and Herbertsons which account for 38 per cent of the IMFL market, has been planning foray into the neighbouring markets such as Pakistan and Sri Lanka.

UBSPD, as part of the Indian spirits companies, has urged the Centre that the Additional Customs Duty on Bottled- In-Origin (BIO) imports - put in place as a federal countervailing tariff following the removal of Quantitative Restrictions (QRs) in April 2001 - be continued for the rest of the financial year and beyond for at least five years to enable the domestic industry to resolve issues which are stymieing its growth. This is an issue on which the alcoholic beverage industry is vertically split between the domestic companies and the transnational corporations operating in the country.

Under India's GATT Uruguay Round commitments, the Import Tariff on BIO has been reduced in annual instalments, with the latest reduction, to the current rate of 150 per cent in this year's mini-budget. "The State Government subjects the industry to an average increase of 10 per cent in excise duties every year. There is also no indication that Industrial licensing will be made more liberal to enable economies of scale in the near future. There has been no progress made by the Joint Working Group of the Ministry of Food Processing Industries to arrive at a consensus on a uniform excise duty regime in all states across India," Mr Rekhi said, arguing for the continuation of Additional Customs Duty on BIO imports.

"The above-mentioned constraints have been in existence when the Government had decided on the levy of Additional duty and the same situation continues to prevail," Mr Rekhi added. Despite all these handicaps the beverage alcohol industry continues to register growth rates of 8 per cent every year and contributes a staggering Rs 25,000 crore to the Central and state exchequers, he noted.

Mr Rekhi said the liquor industry is looking at duty parity with industrial alcohol companies for importing molasses and ENA from SAARC countries. This will reduce duties from a high 150 per cent to 15 per cent. Since the domestic molasses price has increased five fold - from Rs 1000- per tonne last year to Rs 5000 per tonne, the industry has also submitted that the Central Excise duty of Rs 500 per tonne levied on molasses be waived, the UB chief added.

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