Indian drinks groups slam Kerala liquor ban

Leading drinks producers in India have hit out at plans to enforce prohibition in the state of Kerala – India’s largest consumer of alcohol – claiming such legislation will exacerbate the black market.

It was revealed last week that Kerala’s United Democratic Front (UDF) government plans to phase in total prohibition in the state within 10 years to tackle the state’s supposed widespread drinking problem.

Yesterday, the state’s cabinet partly ratified the proposal in part, disregarding an outright ban on alcohol, but agreeing that 730 bars should close across the region.

However, members of India’s drinks industry have criticised the proposals, citing a recent World Health Organisation (WHO) report showing that 50% of alcohol consumed in India is part of the illegal market.

The organisation therefore said that “blunt” measures such as prohibition could cause a greater number of consumers to turn to illegal trade.

Speaking to The Times of India, Deepak Roy, vice-chairman and chief executive of Allied Blenders and Distillers, India’s third-largest spirits group, said: “We are stepping backwards in a galloping world. It’s a retrograde measure that destroys the livelihood of thousands working in the sector and takes the right of choice away from consumers.”

A number of Indian states enforce a dry policy, however Mizoram ended a 17-year prohibition last month, with more states considering a similar move due to the growing prevalence of the counterfeit alcohol market.

Others have expressed concern over lost taxes that hit governments in dry states.

“For many Indian states, dependence on excise has nearly doubled to 20% of their overall revenue in the last four decades,” Paul John, CMD of John Distilleries, told The Times of India. “If governments are going to dole out sops to voters then they definitely need the money for it.”

International drinks companies seeking to increase their footprint in the Indian market, such as Pernod Ricard and Diageo, which recently acquired a controlling stake in India’s largest drinks group United Spirits, have yet to formally comment on the legislation.