Domestic liquor industry opposes Kerala government’s move to levy extra tax on IMFL

V Sajeev Kumar Kochi | Updated on May 17, 2020

Kerala Chief Minister Pinarayi Vijayan

The Federation of Alcohol Beverage Producers (India) (FABP) has come out against the alleged discrimination against the India-made foreign liquor (IMFL) industry in Kerala, saying that the existing taxes and margins on IMFL are higher vis-à-vis imported liquor.

The taxes and margins on IMFL in the State come up to 240 per cent, compared to 88 per cent for imported liquor, said FABP.

The accusation comes amid the Kerala government’s decision to hike the excise duty on IMFL to mop up more revenues for the State, which is facing a severe financial crisis due to the pandemic.

‘Blatant discrimination’

“We are not aware of any other State or country which so blatantly discriminates against its own products, its own industry, its own farmers and its own workers,” Vinod Giri, Director General, FABP (I), said in a letter to the State government.

The Federation has taken up the matter in several meetings with the government with supporting documents highlighting the tax difference, and the absence of any such discrimination against Indian products in other States, he added. The reason cited for the difference — that consumer prices for imported liquor need to be kept low to prevent smuggling from other States — is totally baseless, as prices in those States are either higher or the same, said the letter.

Though the Kerala government gave an assurance that the concerns of the domestic liquor industry would be duly addressed in Excise Policy of 2020-21, no such provision was made, it added.

Additional sales tax

Now, it has come to the notice of the FABP that the government plans to impose an additional sales tax of 35 per cent on IMFL, and not on imported liquor. With this, the tax difference between the two will go to 189 per cent, it said.

On the one hand, the Prime Minister is appealing to the domestic industry to create world class products, and the armed forces are increasingly looking to purchase only India-made products. On the other hand, the Kerala government is repeatedly introducing policies that actively and decisively work against Indian industry, the letter said.

The FABP has requested the State government to review the excise policy and issue amendments to remove the discrimination in favour of imported products.

Published on May 17, 2020

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