Bangalore: The India arm of Diageo Plc., the world’s largest liquor company, aims to start bottling its locally produced brands such as Smirnoff and Shark Tooth vodka in Tamil Nadu, which forbids sale of liquor made outside its territory.

“ a couple of months we should have our factory there, at least (bottle) Smirnoff," said Santosh Kanekar, director (marketing) of the Mumbai-based Diageo India Pvt. Ltd, which owns brands such as Johnnie Walker whisky and Baileys liqueur.

Liquor licence: Santosh Kanekar, director of marketing at Diageo India, said they would have a factory in Tamil Nadu in a couple of months.

Besides Smirnoff and Shark Tooth, the company also makes Masterstroke whisky through a joint venture with Delhi-based Radico Khaitan Ltd, a spirits firm that makes 8 PM whisky and Magic Moments vodka.

Currently, Diageo has bottling facilities at Aurangabad in Maharashtra, Indore in Madhya Pradesh and Bangalore in Karnataka.

In the past two years, Tamil Nadu has issued three licences for the manufacture of Indian- made foreign liquor (IMFL)—as locally produced liquor such as whisky, rum, vodka and brandy are known—in addition to six existing manufacturers.

While two of the licences were given out in the fiscal year to March, a third was awarded three months ago, a government official familiar with the matter said on condition of anonymity.

United Spirits Ltd, India’s biggest spirits maker by sales, has contract-bottling facilities at four of the existing IMFL units in Tamil Nadu.

“The next step is we are hoping that the BIO (bottled in origin) policy comes in," said Kanekar.

Tamil Nadu currently does not allow retail of liquor made outside the state, which means imported spirits, also known as BIO, cannot be sold there.

On 22 September, the European Commission (EC) raised a fresh dispute at the Geneva-based World Trade Organisation over trade barriers for wines and spirits in Tamil Nadu and states such as Maharashtra and Goa that tax imported liquor heavily. The EC claimed policies in these states were inconsistent with global trade rules.

IMFL sales in India is estimated to be nearly 200 million cases. In 2007-08, Tamil Nadu sold 30.24 million cases of IMFL. Each case of IMFL contains 12 bottles of 750ml each.