The Hindu Business Line : Karnataka may continue liquor biz with private IMFL dealers

THE new Karnataka Government is poised to give a fresh lease of life for the 230-odd private wholesale dealers in the Indian Made Foreign Liquor (IMFL) trade.

They were scheduled to exit the business by the month-end as per the decision taken by the previous Government when it had set up the Karnataka State Beverages Corporation to handle wholesale operations.

Informed sources said the new Congress-Janata Dal (S) coalition Government was planning to continue with private wholesalers — at least for another year — and a decision in this regard could be taken when the Deputy Chief Minister, Mr S. Siddaramaiah, who also holds the portfolio of Excise, meets the industry and top officials here on Thursday.

Sources claimed that the move could hurt the functioning of KSBCL, which was floated a year ago to stem the rampant sale of `seconds' — tax evaded — liquor in the State. The Opposition BJP in the State has flayed the move to continue with private wholesalers stating that it would be tantamount to making KSBCL dysfunctional.

It must be mentioned that the liquor industry in the State was split as the previous Government went ahead with the setting up of the corporation. While the biggies like UBSPD comprising McDowell & Co and Herbertsons favoured the entry of corporation, smaller distillers with regionalised operations had attempted to block the same.

With the private wholesalers getting a new lease of life, the flow of `seconds' directly from the distillery to the trade outside the tax net could thrive again. In fact, there are already indications that the `seconds' are becoming more visible in the hinterland markets.

The corporation has netted monthly sales between eight lakh and nine lakh cases and significantly bolstered the excise earnings of the State exchequer. The previous Government had boosted the fledgling corporation with excise duty cuts, as it claimed to take a stance against tax evasion. However, the industry observers said the market held potential for nearly12 lakh cases monthly, and added that the illegal operators could be eyeing at least the remaining space not yet captured by the corporation.