The opposition alleged on Wednesday that the LDF government had entered into a secret deal worth crores with global liquor giants for the sale of foreign-made foreign liquor (FMFL) in the state. This is the second time the UDF has raised the issue during the current Assembly session.
The latest charge, levelled by Congress member Thiruvanchoor Radhakrishnan, is that the LDF government had offered huge reliefs for global liquor giants like Bacardi and Diageo. “Duties and levies on FMFL have been considerably reduced to allow them to have a dizzy run in the state,” Thiruvanchoor said.
If the excise duty on Indian-made foreign liquor is Rs 1600 a case, it is only Rs 594 for a case of FMFL. The warehouse margin for IMFL is 8 per cent, for FMFL it is 5 per cent. The retail margin for IMFL is 20 per cent, which has been brought down to 3 per cent for FMFL. As for sales tax, it is a whopping 210 per cent for IMFL but only 78 per cent for FMFL.
“Why were such benefits extended to global liquor monopolies,” Thiruvanchoor demanded an answer. “However, the more serious thing is the government had given these benefits on the sly. They kept mum about it. This is why we suspect there is a big deal behind this policy,” he added.
Diageo is the world's top beverages company. Johnnie Walker, the world's top selling blended Scotch, comes from its stable. Also Smirnoff, the world's top selling vodka. And Bacardi India Private Limited, the other company allegedly favoured by the LDF, has the world's highest selling rum.
On December 10, when the issue was first raised by the UDF, excise minister T P Ramakrishnan had countered it saying the opposition had not made its dissent known when the issue came up during the discussion on the Finance Bill. Thiruvanchoor Radhakrishnan called it a lie. “Three of us - myself, M Ummer and V D Satheesan - had put down our dissent, and it is in the Assembly records,” Thiruvanchoor said. He said they were opposed to both the entry of foreign brands and also the low encouraging taxation fixed for them.
The opposition's other big charge is that FMFL brands will now be available through all kinds of outlets, from bars to airport lounges to clubs and beer and wine parlours. “The original intent was to sell it only through FL-I outlets, which refers to Bevco outlets,” opposition leader Ramesh Chennithala said. “However, the latest order issued on November 23 states that FMFL brands will be made available through a host of outlets like FL-3, FL-4, FL-4A, and FL-11,” he added. FL-3 refers to bar hotels; FL-4 to sea men's and marine officers' clubs; FL-4A to other club premises; FL-7 to airport lounges; and FL-11 to beer and wine parlours.
The excise minister had clarified that only foreign-made foreign beer and wine will be sold through wine and beer shops. “If so, it has to be specified,” Chennithala said. “Moreover, in earlier orders this was clearly stated without any ambiguity,” he added.
Nonetheless, the decision to allow the sale of FMFL did not come out of the blue. It was first articulated in finance minister T M Thomas Isaac's budget speech on February 2 this year. Isaac has proposed the sale of FMFL to prevent illegal trade. He also fixed the sales tax on FMFL as 78 per cent, which undermines the UDF charge that the rate was fixed on the sly.
Between August 20 and November 30, 36,510 bottles of FMFL were sold in the state for Rs 8.25 crore.