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Blog: Retailers Rejoice 24/7 but Wines Will Wait

Posted: Saturday, 02 July 2016 11:57

 

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Blog: Retailers Rejoice 24/7 but Wines Will Wait

July 02: The recently announced Model Shops and Establishment Law, allowing shops to remain open 24x7, will be a boon for consumers as well as businesses that can become more flexible in their hours, does not mean that malls, shops, restaurants or cinemas need to open at all odd hours but wine and alcohol retail may have to wait in line behind restaurants since they are both controlled through local excise laws which are expected to be eventually realigned to allow extended hours for restaurants and retail store timings but no change may be forthcoming in the short term

Definitely progressive by international standards, this step will prove convenient to consumers many of whom are now in the 24×7 working mode due to internationalisation of jobs through IT. With extended hours, many consumers would be attracted afresh to the malls, shopping centers, restaurants and cinemas as a part of family outings. The Model Shops and Establishment (regulation of employment and condition of services) law has been welcome by businesses across India as it is expected to result in extra revenues of over 10%. The impact would naturally be more in the businesses around IT hubs and in restaurant clusters where night life is expected to see a big change. Businesses around railway stations and airports will be benefited too.

The new law is subject to being adopted by individual States and might not mean a uniform change but will be subject to the feasibility for each business and locality. One is reminded of Singapore and the ‘Indian’ department store, Mustafa Centre in Little India. It has been open daily for 24 hours, for over a couple of decades now with several restaurants adjusting their hours accordingly. But most malls still close at 10 pm. Same with restaurants which in various Quays are allowed to function till the wee hours in the morning. Ditto for Dubai and a few other countries-but only a few!

The new law will also boost tourism and will help offline businesses compete better against the onslaught of e-businesses during the last few years. Restaurants will be very upbeat as they currently feel throttled due to the strict closing hours and the policing which might become a constraint initially as extra police cover will be needed. With an existing shortage of police in most States, this may not be easy. There would also be the need for extra infrastructure and the risk of worse law and order situation which even now is of inadequate quality and would be a significant impediment to contend with.

The biggest advantage will be the ability to extend the hours during the peak days or the festival seasons; a flexibility not available currently. Extra jobs will also be created to cater to the extra hours, generating fresh employment.

Wines must Wait

It may be a while before the law becomes a reality. It may even be taken up on pilot project basis by some States. However, wine and alcohol retail extension would have to wait, if at all allowed eventually.

It is important to understand that wine and alcohol are State-controlled subjects. Constitutionally, the sales policies for alcoholic products are within the purview of the States. The Model law clearly says that each State may decide the individual policy within this liberalised framework. However, the excise laws are additional parameters to be considered by each State independently.

The Excise department controls the policies and laws including hours and days of operation. They could be viewed as hypocrites but in fact there is an intrinsic conflict of interest. On one hand they must appear to be pro-prohibition to be politically correct and have policies to discourage alcohol consumption but on the other hand excise on alcohol is a big revenue earner and they even have collection targets set up by the state finance ministry, which are increased every year. Excise taxes on alcohol are a substantial portion of total taxes collected by each State and the Constitution has indirectly been a big help in mopping up taxes to run the state.

Beer and Bangalore

As an example, one can go to a CNN News 18 report yesterday, according to which beer seems to have vanished from the Bangalore restaurants. The owners are hapless and have been pushed to promote Indian Made Foreign Liquor (IMFL) instead. According to the President of the local chapter of National Restaurant Association of India (NRAI), who appeared on the TV channel to say that the excise department had verbally issued instructions to restaurants not to sell beer (and tell customers it is out of stock) but IMFL instead, as it yields higher revenues. Verbal instructions from the excise department are the equivalent of a diktat for the restaurant owners. Ironical as it is, the excise department appears to be encouraging consumption of liquor and hence alcoholism in the State.

In all fairness, the Excise Commissioner S.R. Umashankar did appear on the Channel giving his viewpoint. He said there was no such policy dictated by the department but if some inspectors are ‘enforcing’ such a policy it is their individual decision and should be reported to him. (It would be interesting to know who bells the cat).

In order to keep balance like in fine wine, the excise departments may not budge in the initial stages. They will go through the song-and-dance routine about the government being pro-prohibition. If they did not oppose the move, they would be branded anti prohibition. There will be a hue and cry by the prohibitionists who will lobby hard against the pro-alcohol step.

This will also result in counter-protests from the shopkeepers and the business community dealing in food and alcohol, who would want their share of the increased pie. The restaurants would be first in line to open for longer hours. But first the excise license would be needed for increased hours for serving alcohol. If past history is a guideline, the extension might be granted for each increased hour but with additional license fee. Logically, it would extend the hours based on a graded excise license fee increasing for every hour.

Increasing the wine or liquor hours at night might create a law and order problem. Again, it may be feasible to extend the hours in the Malls since the crowd that shops in the Malls is usually of upper strata. Madhulika Bhattacharya who runs a modern wine and liquor store La Cave in Select City Mall says, ‘our current store hours are 10 am-10 pm-uniform in Delhi. But even ladies often walk in at 930 pm to buy wine as they feel safe and it’s quite respectful to come to our store. We would be happy to keep our store open a couple of hours longer if it means extra revenues and the excise department allows it. As it is, we run two shifts due to the timings. Therefore, we will have no manpower issues.’ The view was endorsed by a couple of other retailers who wanted to remain anonymous but added it might be tricky for the excise department to allow the additional hours to the malls and not the stand-alone shops.

There would be yet another minor hiccup. The Model law is applicable to the non-manufacturing establishments with over 10 employees. Not all stores in this segment would fulfill the requirement and the retailers may have to add more staff which may or may not be feasible for them. They hope to cross that bridge when they come to it.

The bottom line is that we may be moving like a tortoise in the race to be a leading wine nation but this is a marathon where India should be a winner in the long run. Promotion, patience, perseverance and a positive attitude hold the key.

Subhash Arora

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Tags: Model Shops and Establishment Law, National Restaurant Association of India (NRAI), S.R. Umashankar

 

 
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