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Posted: Saturday, 24 October 2020 23:55

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Import Ban on Wines and Liquor in CSD Army Canteens

Oct 24: Backing up the Atma Nirbhar slogan and with an intent to stop the import of Chinese goods, Central Government of India which controls the Central Stores Department (CSD), the biggest Retail controlling 4000 army shops in the country, has ordered them to stop the import of all imported goods including wine, whiskey and other liquor which sell at specially discounted prices, writes Subhash Arora who feels it will benefit the Indian wine industry to a limited extent.

According to a Report by Reuters on 24 October, the decision came into force immediately w.e.f  19 October when it was announced internally and procurement of direct imported items shall not be undertaken.

There had been rumours earlier in May that the imports would be banned and for about a couple of months no imports were allowed but the current order seals the fate of liquor and wine- the worst affected would be Diageo and Pernod Ricard though firms like Radico Khaitan (Carlo Rossi) would also be affected. Pernod Ricard will be hit in the wine business also as they sell a significant amount of Jacobs Creek.

Indian wineries that are already selling Indian wines including Sula, Fratelli and Grover would be the gainers though the numbers involved are estimated to be under 50,000 cases yearly, according to our sources.

The order asserts that the matter had been discussed with the armed forces including the army, air force, and navy in May and July and was aimed at supporting Prime Minister Narendra Modi’s ‘Vocal for Local’ call and Atmanirbhar Bharat Abhiyan (Self-Reliant India Campaign).

According to an August research column of the government-funded Institute for Defence Studies and Analyses (IDSA), a ban on selling imported items will not affect the interests of consumers in any manner. At present, the foreign-made items sold through the Canteen Stores Department (CSD) constitute about six to seven per cent of the total sales value.

Also Read: Imported Wine Industry facing Disaster in India

More significantly, most of the imported items sold by the CSD are luxury items, the use of most of which is limited to a few, since about 97 per cent of the consumers consist of personnel of other ranks and their family members. Moreover, almost all the imported items could be substituted by items made in India (not wines and liquor, of course). The CSD canteens sell to about 12 million defence personnel including the retired officers. Non-defence personnel are not allowed entry to these canteens.

In any case, those who are rigidly or otherwise attached to a particular foreign brand and cannot change their preference are free to access the outside commercial market to satisfy their needs, says a source in the CSD. These products are available in the canteens at special, low prices and are meant for the use of defence personnel only.

The order applies only to Direct Imported items and would include products that are shipped directly from producers. For instance, Scotch produced in Scotland and exported in bottles would be banned but the Indian bottled ‘Scotch’ imported in bulk-like 100 Pipers and Black Dog would not be affected. Pernod cannot sell Jacobs Creek but would be welcome to sell Indiosa wines if approved or even import Jacobs Creek in bulk and bottle in India.

According to Times of India, only about 420 items out of 5500 items sold are imported. Apart from liquor and wines, a bulk of the items are household items imported from China. It is pertinent to note that the same items are not banned in the regular list of imports and no increase of customs duty has been announced. In that respect, it does seem to be punitive to the defence personnel.

A Report suggests that out of 10 bottles of imported whisky 4 bottles are bought by the Defence personnel for their friends and relatives. There are often reports of some people indulging in the sale to outsides at a premium, a practice frowned upon but no direct action is taken against the errant personnel.

Although a senior person from the CSD has said that imports would soon be stopped, the end of these premium products like liquor and wine is near; same for the high-ended smartphones and consumer durables.

While the move is ostensibly to support the Prime Minister’s Atma Nirbhar scheme, it must be pointed out that there is no equivalence of Indian wines with foreign-produced wines and a similar stand can be taken by the Scotch producers.

Also Read: Imported Wine Industry facing Disaster in India

The foreign producers and importers are obviously disappointed and are disillusioned with the government's approach. Says Puneet Ralhan, Director of Agnetta International, who had worked hard to gain an entry into the CSD system. He says, 'the truth of the matter is that we buy imported planes- Rafale jets for the defence security but we ban imported food and wines, beers and spirits for defence personnel. Is it not amazing that the Air India One, the Boeing 777 bought for the use of the PM Narendra Modi is also not made in India but the US?’

Perhaps the PMO knew the criticism would be coming and to be fair, PM Modi made sure that the plane was in the Indian hangers before the directive was given. That could be a reason why they postponed the order in May and July, awaiting the arrival so one cannot find fault with the new directive.

Subhash Arora

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