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Liquor trade raises a toast in Uttar Pradesh



Talk of high-level liquor policy meetings in Uttar Pradesh and the image that comes to your mind maybe that of a group of stodgy politicians, bureaucrats and businessmen. But the fact is it’s a sophisticated, nuanced woman who is at the helm, and she is busy overhauling the system.

Kalpana Awasthi, principal secretary of excise department in UP, has spearheaded a new policy to open up liquor business through a tender process that allowed more than three dozen wholesalers to sell alcohol in the state. This ended the virtual monopoly of slain tycoon Ponty Chadha’s family firms, which controlled nearly 80% of the state’s liquor dealership.

“She is not a typical babu but a reformer and has dynamically changed the situation in an otherwise ‘Bimaru’ state,” said an official of a top liquor firm. “She has a mind of her own and is monitoring the new policy on a daily basis,” the person said.
‘Bimaru’ is an acronym coined in the 1980s to describe the states of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh that were considered economically weaker.

Over the past five months, Awasthi, 53, and her team have been busy implementing a new excise policy that focuses on knocking out liquor cartels and smuggling syndicates through open bidding for dealers and retailers. The new policy has also ended the special excise zone and monopoly in the state’s wholesale trade.

Jai Pratap Singh, minister of excise and prohibition in Uttar Pradesh, said it took almost one year for the team to formulate the policy. “Ms Awasthi has taken up the implementation as a challenge and is doing a great job at it,” he told ET. “The core focus of the policy is to remove syndicate in the business and make it an open and fair market,” Singh said.

Awasti has been meeting liquor companies for feedback and grievances almost every day.

When we briefed her about issues in implementing some of the new processes, she was reasonable and was willing to accept legitimate problems,” said an official of another liquor company. “Her main focus seems to be cleaning the system and be receptive to ideas,” the person said.

From replacing the system of using holograms on bottles with ‘track and trace’ system, to barring cash transactions above Rs 30,000 for picking liquor stock from the wholesale traders, the new policy has brought in a lot of changes to check tax evasion and other irregularities in the trade. Most companies are upbeat about the reforms.

Allied Blenders and Distillers, maker of Officer’s Choice whisky, the country’s largest liquor brand by volume, said it is re-entering Uttar Pradesh after a gap of nearly nine years since the new policy is impartial. “She (Awasthi) and her team are doing an amazing job in setting up compliance in system and also ensuring it remains clean going forward,” said Deepak Roy, vice-chairman at Allied Blenders and Distillers. “While the measures may be inconvenient to manufacturers initially, the intent is fair and right,” he said.

A 1990 batch Uttar Pradesh cadre IAS officer and post-graduate in public policy from Duke University, US, Awasthi was late last year prematurely repatriated to her parent cadre from the department of industrial policy & promotion (DIPP) where she was director general, national productivity council. She was also a director in the PMO when Manmohan Singh was the prime minister.

Awasthi is seen as a tough taskmaster. “She keeps us on the toes and there is no room for a lackadaisical approach in dealing with her and the new policy,” said a senior official of a beer company. “This could reflect in the excise revenue this year which will surge despite no price change of product pricing,” the person said. Awasthi could not be contacted for comments despite several calls to her office. As a market, Uttar Pradesh is the largest in the country, accounting for more than 10% of the overall consumer products industry. But in alcohol beverages, the state accounts for less than 5% of total sales of Indian-made foreign liquor and about 3.5% of beer.
“The attractiveness of the state has increased significantly and it’s almost like we are re-entering the state,” said Ben Verhaert, president – India at AB InBev, which sells Budweiser, Hoegaarden and Corona beer brands in the country. “The state offers a great opportunity from a population point of view, which is now assisted with a reformist policy,” he said.

This, in turn, will attract investments in breweries, distilleries and even restaurants. Beer Cafe, the country’s largest beer chain, said it will invest in opening five outlets in Uttar Pradesh after seeing a positive change in the policy.

“The policy has made a considerable breakthrough in de-cartelising and allowing new entrants by simplifying the supply of liquor through a transparent allotment system,” said Rahul Singh, founder of The Beer Cafe. “This will allow a larger assortment to consumers while optimising the revenue for state,” he said.

Beer Cafe’s Singh said UP’s new policy spearheaded by Awasthi will help “create a legitimate and responsible drinking culture for high quality liquor at affordable pricing for those who want to drink with dignity”. The new policy isn’t without initial hiccups. Three weeks after it has been implemented, the state is still witnessing shortage of several brands as companies are scrambling to replace holograms with barcodes on each bottle and carton to help track and trace products.

“While the intent for a bar-code policy is to curb bootlegging and spurious liquor, we need time to import barcoding machines. Even the process to tag each bottle is tedious and takes time,” an industry official said on condition of anonymity. The government seems to be aware. “This is a temporary issue which happens during any policy change and we are in talks with companies on how best to address it,” excise minister Singh said. “It should be resolved in a few days.”

The timings of liquor shops have been slashed by four hours — they can operate from 12 noon to 10 pm now, while earlier they were allowed to operate from 9 am to 11 pm. Also, while the law of transporting liquor from one state to another is restricted to one bottle in several states including UP, the new policy has enforced stringent measures that includes increased jail term and hefty fine for violation.

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