Uttarakhand becoming an alcobev manufacturing powerhouse

Uttarakhand’s excise policy is a true game-changer, poised to revolutionise the state’s alcobev landscape and set a benchmark for the industry. This transformative initiative emphasises transparent governance, strategic revenue planning, and a strong focus on local production and bottling, driving efficiency and sustainable growth. This aligns with the state’s vision of moving from being merely a consumption-driven economy to a manufacturing hub. By expanding exports to global markets such as the US, Italy, and Africa, Uttarakhand is solidifying its position as a rising leader in the alcohol beverage sector. 

In an exclusive interview, Harish Chandra Semwal, Excise Commissioner, Uttarakhand, shared his vision for the state with Shalini Kumar.

---------------------------

In your opinion, which new excise policy initiatives will be a game changer, and how have stakeholders responded to the new policy rovisions?

Uttarakhand’s excise policy has introduced significant changes to streamline operations and encourage diverse brands to enter the market. For the first time, the policy was developed in collaboration with stakeholders, including alcobev producers, distributors, and retailers. Their suggestions were incorporated to address longstanding challenges and create a more transparent and inclusive system.

One of the standout features of the policy is the revenue collection plan. Targets have been set for districts and manufacturers within the state and for revenue generation from other states and international markets. Such systematic planning ensures a clear roadmap for achieving the state’s financial goals while improving efficiency in the sector

Additionally, the policy emphasises local production and bottling to reduce dependence on external supply chains and curb the influx of unregistered products. By encouraging companies to establish manufacturing and bottling units within the state, the government aims to create jobs, support local businesses, and generate indirect employment opportunities. 

This initiative is also expected to boost exports of Uttarakhand-made products to markets such as the US, Italy, and Africa, further enhancing the state’s global footprint.

The three-month deadline for low EDP IMLF brands to establish bottling facilities has reportedly forced some prominent brands to exit the Uttarakhand market due to the costly and cumbersome extension process. What measures can be introduced to create a level playing field and foster equitable opportunities for all brands?

The policy mandates that companies looking to operate in Uttarakhand must establish bottling or production units. A timeline of three months has been set for this, although extensions are granted upon request to ensure feasibility. This requirement ensures that businesses invest in the state’s economy rather than merely selling products.

An excellent example is the plant in Kashipur, which specialises in using local herbs for production. These products are now being exported to international markets, demonstrating the potential of Uttarakhand’s resources on a global scale.

How has the policy permitting the bottling and registration of foreign liquor in Uttarakhand been received by stakeholders?

The introduction of the FL-2 license is a game changer for foreign liquor distribution. This license allows the procurement of multiple brands under one umbrella, streamlining the process for distributors and retailers. The nominal license fee, ranging from ₹5-15 lakhs, has made it easier for smaller brands to enter the state’s market. 

Previously, companies had to register each brand individually, incurring significant costs. Now, with a single license, multiple brands can be distributed without additional expenses. This shift has increased the availability of foreign brands and created a more competitive market, benefiting consumers and businesses alike.

How does the policy address pricing, particularly for beer?

The pricing of beer and other alcobev products is now benchmarked against neighbouring states like Himachal Pradesh, UP, and Chandigarh. This ensures that manufacturers cannot quote higher prices in Uttarakhand than in other regions. As a result, consumers benefit from competitive pricing, and the state maintains parity with regional markets.

As of November 7, 2024, Uttarakhand had already achieved 60% of its ₹4,440 crore revenue target, demonstrating the success of its pricing and revenue strategies.

What innovations are being implemented in micro-distilleries?

The policy includes provisions for setting up micro-distilleries in hilly areas such as Bageshwar, Champawat, and Kotdwar. These units focus on producing wine and other products using local expertise and resources. By establishing micro-distilleries, the government aims to boost entrepreneurship in remote areas while showcasing Uttarakhand’s unique offerings.

These distilleries are operated by subject matter experts, ensuring quality and consistency. Additionally, they create employment opportunities and promote the use of local fruits and herbs, further integrating the region’s agricultural sector with its alcobev industry.

While Uttarakhand does not offer monetary subsidies, it facilitates permissions and approvals to make the process of establishing plants smoother. By focusing on policy support rather than financial incentives, the government ensures that companies invest meaningfully in the state.

How is the state utilising its natural resources for alcohol production?

The government has made it mandatory for country liquor producers to use at least one local fruit in their products. Fruits like Malta, Lychee, and Kinnow are prioritised, reflecting the state’s commitment to supporting farmers and promoting sustainability.

In addition to liquor production, the state is encouraging ethanol manufacturing. Licenses have been issued for plants in Kashipur, Kichha, and Sitarganj. These facilities use agricultural residue, city waste, and pine leaves as raw materials, aligning with the state’s eco-friendly policies. By utilising waste materials, these plants contribute to waste management and pollution reduction while supporting the ethanol blending mandate set by the central government.

How does this align with Uttarakhand’s ambition to become a premium liquor destination?

Uttarakhand’s natural water sources and high quality agricultural produce provide a strong foundation for premium liquor production. By issuing licenses for small, eco-friendly distilleries, the state ensures that products meet high standards while preserving its biodiversity. These initiatives position Uttarakhand as a destination for high-quality and sustainable alcobev products.

What steps are being taken to improve product availability in hilly regions?

In hilly areas, where space and infrastructure are limited, the government has reduced the minimum area requirements for liquor shops. This move encourages more people to open outlets, improving product availability. Sub-vends have also been introduced in remote areas to prevent the distribution of illicit liquor.

To enhance the consumer experience, imported liquor stores have been opened to cater to tourists. These measures ensure that quality products are accessible across the state, supporting both local consumers and the tourism industry.

What steps has the excise department taken to streamline compliance and address industry concerns?

The entire supply chain, from bottling to retail, is now digitised. Retailers can place orders and make payments online, eliminating the need for physical visits to excise offices. The department is also working on a track-and-trace system that will allow stakeholders to trace a bottle’s journey from production to retail. This ensures transparency and accountability throughout the process.

Officers have been assigned to specific districts to regularly interact with industry representatives. Their feedback is recorded and addressed promptly. Additionally, an app is being developed to streamline complaints and suggestions, ensuring swift resolution of grievances.

The department’s collaborative approach fosters trust and cooperation between the government and industry stakeholders, ensuring that policies remain practical and effective.

What are your pending goals and vision for the department?

Looking ahead, the department aims to refine the shop allotment process to create more opportunities for local entrepreneurs. Ensuring the availability of quality brands in all regions, particularly in hilly areas, is a priority. 

The government also plans to expand its ecofriendly initiatives by encouraging ethanol production and promoting the use of natural resources in premium liquor manufacturing. By balancing economic growth with environmental sustainability, Uttarakhand aims to establish itself as a leader in the alcobev industry.

The introduction of a track-and-trace system and enhanced online facilities will further streamline operations, making Uttarakhand’s excise policy a model for other states.

Industry Speak

Abhinav Jindal: Founder & CEO – Kimaya Himalayan Beverages LLP

Uttarakhand offers a highly encouraging investment environment for liquor manufacturing, driven by the government’s strategic initiatives to promote industry growth. Key measures, such as reduced manufacturing duties, lowered license fees, and streamlined processes for exporting alcoholic beverages to other states, have created a robust foundation for the sector.

Additionally, the government’s proactive engagement with local manufacturers, its focus on resolving on-ground challenges, and efforts to promote products in both domestic and export markets have been pivotal in fostering innovation and growth.

A Preferred Manufacturing Destination

Uttarakhand stands out as a prime destination for liquor manufacturing, particularly due to its strategic location in Haridwar and Udham Singh Nagar. These areas offer excellent connectivity to central India and key markets such as Delhi. The state’s industrial policy provides attractive incentives for manufacturers, while its excise policy is well-designed to support business expansion.

Moreover, the state’s industrial infrastructure ranks among the best in the country, offering stable production environments with minimal disruptions. A skilled workforce and a supportive policy framework further enhance manufacturing efficiency. These factors have significantly contributed to Kimaya Himalayan Beverages’ success in achieving operational excellence within the state.

Suggestions for Policy Reforms

To further strengthen the industry, Uttarakhand could draw inspiration from states like Jammu & Kashmir and Himachal Pradesh, where robust support exists for local alcobev manufacturing. For instance, policies mandating a certain percentage of local production for products sold within the state could provide manufacturers the scale and viability needed for growth.

Such initiatives would encourage capacity expansion, generate employment opportunities, and boost the local value chain by driving demand for raw materials, packaging, and other inputs sourced within the region

Samarth Prasad: Co-founder – Himmaleh Spirits

Uttarakhand’s investment climate is very favourable, especially after a businessfriendly policy has been introduced this year. We are seeing more and more liquor industry setups being initiated in the state.

The attractive factor of setting up our business here is the state’s highly diverse and beautiful landscape nestled in the foothills of Himalayas. Also, the accessibility to quality resources, including natural water, barley, botanicals, etc., and the availability of labour were the reasons behind establishing our distillery in Uttarakhand.

Besides, Uttarakhand has relatively lower taxation and faster approval processes as compared to other states. Overall, the state policies are quite supportive of businesses, which work in the larger interest of the growth of state revenue

Recommendations for further growth

A further lowering of taxation for manufacturing will augment the activity in the state, thereby increasing job opportunities for the locals. Also, streamlining the operations of FL-2 license will further help. However, waiving off bottling fee in Uttarakhand will be a visible deterrent for growth. Currently, all in the value chain are quite happy with the 2024-25 policy and seek consistency with some reforms expected for FL-2 and manufacturing.

Vijayant Jaiswal: Director – Bodega Alcobev

This year, a new policy for wholesale business was introduced, and I must commend the smooth licensing process. Thanks to this streamlined approach, we were able to commence operations right from the first day of the year. The digitisation of operations for manufacturers, distributors, and retailers has significantly eased processes for all stakeholders.

Another notable shift is the Excise Department’s proactive stance in addressing challenges faced by industry participants. This marks a significant change in the attitude of excise officials, who have been extremely supportive and responsive in resolving issues.

Moreover, the Commissioner’s office has actively engaged with stakeholders,—including manufacturers, distributors, and retailers-through consultative meetings to gather suggestions and has assured their implementation.

One of the most encouraging developments this year is the department’s commitment to finalising the policy by the first week of January —a refreshing improvement over the previous year

Supporting the local produce

The state has taken significant steps to promote the production of alcohol and wine from local fruits, a practice that leverages Uttarakhand’s rich natural resources. Local fruit-based wineries and distilleries are already operational, and the government actively supports this model.

The policy ensures that local farmers benefit from these initiatives, as producers are encouraged to procure fruits directly from them. For instance, wineries using fruits like Malta, Lychee, and Kinnow not only enhance product diversity but also create a revenue stream for agricultural communities.

The government’s vision is to combine local heritage with modern manufacturing techniques to establish unique products that reflect the region’s identity

State’s commitment to promote responsible drinking

Committees have been formed in collaboration with educational institutions to raise awareness about the harmful effects of addiction. Campaigns focus on encouraging responsible drinking and educating the public about the risks associated with excessive alcohol consumption.