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Indian Liquor Industry’s Prohibited Growth:The Legal

Environment

The case portrays the evolution of the liquor industry in India. Till the late
1990s after liberation liquor consumption was considered bad but suddenly
in 2000 the country witnessed a sea change. Lifestyles of people changed
drastically. Drinking in moderation was no more considered a social taboo.
Introduction
Liquor consumption in India was significantly low (0.6 litres per head per
year) compared to other countries like China and UK. Government of India
possessed strict regulations and taxes. As of 2004, Indian liquor
consumption was significantly low (0.6 litres per head per year) compared to
other countries like China and UK where the consumption was 20 and 100
litres respectively. Due to the Indian government's regulations and taxes,
the growth had been restricted. The government had decided to lower the
taxes in 2004. However, analysts were skeptical over the further growth of
the industry, despite the deregulations, due to the social concerns.
Hurdles For The Beer Industry
Over Regulation and extreme short termism prevented the Indian Beer
Industry from fulfilling its potential to expand to 30-40 times its current size.
The Indian Beer market is one of the most restricted and antiquated in the
world.
Reasons
Beer is taxed as heavily as spirits because state governments generally lack
the capability to see beyond short term tax revenues to the longer term
benefits from the tremendously spillover effects it has on local economic
activity.
Traditional Indian Behavior
During the ancient times, alcohol intake was the privilege of the kings. Over
the decades the habit spread down to the socially and economically
backward levels of the society. But the alcohol intake was class specific. For
the rich people it was a prestige issue.

Changing Behavior of Indians

Karan Sanduja,08bs0004069
Indian Liquor Industry’s Prohibited Growth:The Legal
Environment

India had strong religious reservations about alcohol intake. Eventually, the
perception of the Indian population changed and they started getting free
from religious boundaries. Both Beer and spirits consumption had been
rising after the liberalization of the Indian market. While the beer and the
liquor market continued to grow at an impressive rate, the social dishonor
remained in place, which manifested itself in strict state policies.
Opposing Entities
• Ministry of social justice and empowerment
• Media and youth organizations
• Ministry of health & family welfare
• Various NGOs
• UNDCP
• ILO

Actions Taken
Indian states started implementing ban on liquor since 1990s.
• 1993 – Andhra Pradesh implemented prohibition
• 1995 – Haryana state banned trading and production of liquor
• 1996 – Gujarat, Tamil Nadu, Kerala implemented prohibition

The promotion and marketing of alcohol products has been the subject of a
contentious debate sometimes among governmental agencies, the alcohol
industry, public health advocates, policymakers and the public at large. At
the center of controversy is the adverse effect alcohol promotion may have
on youth, for whom the consumption of alcohol is both illegal and unhealthy.

Alcohol beverage advertising was prohibited in print and electronic media


and on street hoardings. However this law was routinely and regularly
circumvented by alcohol beverage companies with surrogate advertising. In
2000, Central Government encouraged deregulation of alcohol production
and liberal imports of alcoholic beverages.

Change in Regulatory Policies

Karan Sanduja,08bs0004069
Indian Liquor Industry’s Prohibited Growth:The Legal
Environment

Since freedom, successive governments had followed different policies on


alcohol prohibition. Production, distribution and sale of alcoholic beverages
were all licensed under excise rules promulgated by each of the state
governments, not the central government. As a result , their were significant
variations in policies on alcohol from one state to another.

Karan Sanduja,08bs0004069