MNCs may drink to licence-free liquor

NEW DELHI: Liquor companies may soon raise a toast. The government is planning to do away with the licence requirement for manufacture of potable alcohol. At present, companies need licence from state governments for manufacturing potable alcohol whereas there is no such requirement for industrial alcohol.

The department of industrial policy & promotion (Dipp) has won support from states like Rajasthan, Maharashtra, Andhra Pradesh and Haryana for its proposal to delicence the potable alcohol industry. The states have given in-principle approval to scrap the mandatory licensing requirement, and other states are expected to follow suit.

Dipp has formed a committee comprising officials from the central government and states to usher in a more liberal regime for the alcohol industry. The committee is also looking into issues like rationalisation of excise duties.

Scrapping the licensing requirement would boost manufacture of beer, wine, whisky, rum, brandy and other alcoholic beverages. In case of foreign liquor companies, the government permits 100% FDI in manufacture of potable alcohol, but licences have to be issued by the state government under the Industrial (Development & Regulation) Act, 1951.

���Foreign companies face delays after getting approval from the Centre, as states take a long time to issue licences,��� a senior government official told ET.

The government is of the view that by putting an end to the licence regime, it would end ad-hocism among states and attract new investors. The move would also result in more revenues in the form of taxes and duties levied on the industry, the official said.

Many states, with a view to encourage investment in the sector, have started allowing companies to set up distilleries if they commit to invest a certain amount. The investment limit is lower for companies in the business of industrial alcohol.

���The states have been easing policies to attract investments. The next best step is a licence-free environment,��� a Haryana government official said. The Centre stopped issuing licences for potable alcohol after a Supreme Court ruling said that licensing was the domain of state governments.