CIABC recommendations to out the industry back on track

By Bhavya Desai

With the country in the midst of an unprecedented crisis due to the ongoing Covid-19 virus pandemic, States/cities, private offices and commercial establishments are under complete lockdown. Like most businesses the alcobev industry is also witnessing a challenging scenario. With the companies unable to operate and wholesale and retail trade coming to a standstill, most company wholesalers and dealers are sitting on high amount of unsold stock from the alcobev industry.

To make matters worse the lockdown came right in the middle of the financial year end , which means that companies haven’t been able to complete their statutory requirements that ought to be met to keep the continuity of operations.

It is a known fact that the alcobev industry is one of the largest contributors to the economy. It approximately contributes Rs. 200,000 crores by way of various taxes and also sustains livelihood of nearly 40 lakh farmers employing nearly 20 lakh people directly and indirectly. The industry contributes anywhere between 20-40% to the States Revenue of tax receipts.

But the lockdown has not only brought the alcohol sales at a grinding halt, creating a financial impact on the companies. There are several other pending challenges that have added to the current scenario. The rise in price of ENA, its key raw material, denial of price increases by some states and delays in payment by some others. The concern for most of the players in the industry is that a prolonged shut down of industry will not only have a huge economic cost on companies, it may also force the farmers and workers in to joblessness as a result of that.

Not to mention that the prolonged unavailability of legal alcohol has already witnessed growing sale of illicit liquor in just 2 weeks.

CIABC has made several recommendations to the Commerce and Industry Ministry to get the industry back on track with some immediate curative measures for mitigation of problems arising out of lock down, systemic changes in regulation required in light of possibility of prolonged COVID19 threat and the phased opening of the alcoholic beverage industry.

CIABC Recommendations

As part of the Curative Measure, CIABC recommended that the Excise year ended on 31st March, which was in the middle of the lock down phase, companies/distributors/retailers have not been able to clear stocks or statutory requirements. Hence, a blanket order extending the current excise year with all its permissions and approvals be done until 30th June 2020.

This should be done without imposing any fees for the period of 1st April to 30th June as companies have been out of operation so far and even under best circumstances will be only partially functional during this time.

Systemic Changes in The Way Industry Operates

While most practices under this remain constant like other industries, there are several important recommendations that include the continuity of operations with all efforts be made to ensure that the business restarts and continues with minimum necessary disruption.

One of the important changes that CIABC is asking for is the shift to Online Processing of Permissions, Approval, Licensing, Registration, Permits, EVCs etc. With most of these still physical in nature and needing human interaction this possibly could be the best time to use technology and shift those processes online. Also this might act as a step into to the future where such operational requirements can be shifted online as part of ease of operations.

Phase Wise Opening of The Sector

With this being a unique time in order for the sector to start functioning appropriately the committee has recommended that the licenses and permissions for Distilleries/Bottling Plants including industry, excise, pollution etc., that lapsed on 31st March 2020 should be extended until June 30th, 2020 without any additional charges. Also that the companies should be allowed to apply for renewal of these licenses online on any time prior to 30th June and those not seeking any modification to licenses may automatically be granted renewal. Those seeking modifications may be allowed to apply online with supporting documents and a decision on application may be conveyed online.

Existing inventory of packaging materials that became outdated on closure of the Excise Year may be allowed to be used until 30th June. All distilleries / bottling plants not falling within hotspot zone (as identified by the Government) should be allowed to start operations. Naturally the factories are expected to operate at 50% strength and the salaries of the employees should be paid in usual manner without deduction for forced absence.

But on-site physical verification of production and shipping of alcoholic beverage by excise should be discontinued until June 15th. A daily self-declaration by the Head of the plant along with production and shipping details may be accepted at this time.

Indenting/Transit/Stock Movement

In terms of indenting/transit and stock movement export permits, import permits, and transit permits issued in year 2019-20 should be allowed to be used until May 15th. Companies should be allowed to apply online for new permits and the approval should be given online with excise authorities introducing barcodes on permits.

Wholesaling/Distribution/ Warehousing

When it comes to this aspect CIABC states that all licenses related to distribution should be extended until June 30th without any extra fees. The renewal, auction or lottery allotment of licenses should be done online to minimise people interaction at any time prior to June 30th. Also, all stocks produced, shipped or received at distribution warehouse until 31st March 2020 should be allowed to be sold in 2020-21 without any fees or penalty. All other necessary permissions like TPs and so on can also be done online.

CIABC also recommend that no demurrage should be charged for stock lying in Government warehouse until 31st May.

Retail Shops

With all retail operations closed the industry has recommended that retail licenses granted for year 2019-20 which expired on 31st March 2020 should be extended until June 30th, 2020. Shops outside identified COVID19 hotspots should be allowed to open from 9 am to 11 pm From April 15th to May 15th and from 11 am to 11 pm between May 15th to June 15th with regular operations resuming from June 15th.

Retail Shops should be permitted to sell stock purchased or ordered in 2019-20 till stocks last with no retail shop manned by more than two salesmen. No shop should permit more than two customers if it’s a walk-in shop or one customer if it’s single window shop.

Pubs, Bars and Restaurants

The committee recommends that all licenses granted by Excise, Pollution, Fire and local authorities for year 2019-20 which expired on 31st March 2020 should be extended until June 15th 2020 without any charges. On-trade establishments that are outside the identified hotspots should be allowed to operate in a phased manner in order to prevent crowding.

For instance, only takeaways of alcohol and food be allowed from April 15th to April 30th and from May 1st to June 15th premises may be allowed to operate at 50% of its seating capacity.

Home Deliveries

One of the key recommendations that CIABC is making is for allowing home deliveries of alcohol subject to necessary checks and diligence. With most food delivery companies already working they could also be enrolled to delivery alcohol. Also, shops should be asked to enrol for home delivery through online applications.

And in order to further the cause the Government may charge a fee, this being an addition to license. Customers can place an order online or over phone, along with an ID proof establishing age and the delivery limit of the amount of liquor delivered or frequency of delivery can be defined.