Policy Watch- Kerala liquor business calls for reforms

An expert committee appointed by the Kerala government has submitted a set of
recommendations, which is aimed at attracting investments in the state’s distillery business
and addressing issues linked to alcobev export from the states to different countries. Nine-
point recommendations called for streamlining of business operations by eliminating outdated
and unnecessary regulations that impede investment in the sector and also waiving off
various exported related fees.

In its report, the committee mooted nine areas of reform i.e. removal of export label approval
fee, brand registration fee and export pass fee; removal of the requirement of excise guards
escorting liquor consignments, streamlining the procedure for chemical analysis of
ENA/blend samples; removing the requirement of obtaining No Objection Certificates (NOC)
for IMFL export; relaxation of the tie-up manufacturing norms for export purposes;
amendments in the drawing of samples for business development; amendments to the Kerala
Foreign Liquor (Approval of Label) Rules, 2018 to allow labelling as required by the
exporter; recognition of wastages arising in wood maturation and integration of
approvals/permits/ licenses via KSWIFT portal.

In its report, the committee envisaged, “The challenges faced by IMFL exporters in the State
highlight the urgent need for reforms and support. By adopting forward-looking reforms and
initiatives, as recommended by the Expert Committee, the State can enhance its IMFL export
potential manifold, which can be a significant revenue earner to the State Government.”
The genesis of this expert committee came from a meeting of the Minister for Law, Industries
and Coir and the Minister for Local Self Governments and Excise of the Kerala government
with industry representatives and concerned officials where relevant issues faced by
Exporting Units of Indian Made Foreign Liquor (IMFL) in Kerala were discussed.

At the ministerial level meeting, Gautom Menon, the petitioner and the representative of the
IMFL manufacturing industry in the state, made a detailed presentation on the pertinent
issues faced by IMFL exporting units in Kerala such as high fees and duties in the state for
the export of IMFL, lack of export tie-up arrangements, inadequacy of deemed approvals and
single window clearances, lack of marketing support, etc. He also detailed about the specific
policy recommendations so as to place Kerala at the forefront of IMFL exports in India.

“The industry representatives emphasised the need for allowing NRI investors or foreign
entrepreneurs to tie-up with local distilleries in Kerala and be allowed to export alco-
beverages from Kerala. If it happens, it can generate lots of NRI investment in the state.
At the meeting, the need for the constitution of an expert committee was decided upon.
Subsequently, a five-member committee was constituted on 10th October 2023 including
three top ranked excise officials headed by the MD of KSIDC, with a mandate to examine the
issues faced by the exporting units of IMFL in Kerala, including the reforms/amendments
required in the act, rules, regulations, fee structure, licensing and permissions and other issues
linked to the alcobev sector in the state.

The final decision on implementing of these recommendations rests with the state
government, and it will be interesting to observe the potential impact on the distillery
industry in Kerala following the implementation of these recommendations. The Kerala
government will take a final decision on the report prepared by the committee.