The Hindu Business Line : Liquor cos seek ban on arrack sale

The arrack business is confined to the unorganised sector which makes it very difficult for the enforcement agencies to monitor and control this business effectively and in a transparent manner so as to capture its full revenue potential.

Bangalore , May 22

An industry body representing several liquor companies in the country has asked the Karnataka Government to ban the sale of arrack in the State.

The Director-General of Association of Distillers, Brewers & Vintners of India (ADBVI), Mr Sushil Haksar, in a letter to the Karnataka Deputy Chief Minister, Mr B.S. Yediurappa, has said if the manufacture and sale of arrack is discontinued, the entire range of alcoholic products can be distributed through the Karnataka State Beverages Corporation Ltd, which will minimise revenue leakage.

"The arrack business is confined to the unorganised sector which makes it very difficult for the enforcement agencies to monitor and control this business effectively and in a transparent manner so as to capture its full revenue potential," Mr Haksar said. He said the State had taken a decision sometime ago to ban arrack sales and replace arrack with cheap IMFL (Indian made foreign liquor) to be sold at a low price with lesser rate of duties and taxes."This practice has been very successfully followed in Andhra Pradesh, Tamil Nadu and Kerala, where excise revenue have increased manifold after the ban of arrack," he said.

Revenue loss

Unfortunately, the decision to ban arrack was not implemented and Karnataka continues to incur revenue loss from this relatively unregulated segment of the industry, Mr Haksar pointed out.

"Banning of arrack will ensure that the customer gets a better quality product at an affordable price as IMFL is made from high quality extra neutral alcohol," Mr Haksar said in his letter.

The ADB & VI is an industry association consisting of liquor companies in the country. It is headed by Mr Haksar who was part of the core group of the Shaw Wallace Group and later was with the UB Group where he headed Consolidated Distilleries, a subsidiary of McDowell & Company.