BackWest Bengal govt’s entry into wholesale liquor trade rattles distributors
Around 17,000 people employed in the wholesale liquor sector face the risk of losing jobs, according to West Bengal Liquor Manufacturers Wholesalers and Bonders Association
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Kolkata: The West Bengal government’s decision to start wholesale distribution of Indian-made foreign liquor (IMFL) has rattled the whole liquor supply chain in the state.
Though the government hasn’t said it would establish a monopoly, distributors fear their yearly licences may not be renewed after the proposed West Bengal State Beverages Corp. Ltd is launched. Around 17,000 people directly and indirectly employed in the sector face the risk of losing jobs, according to West Bengal Liquor Manufacturers Wholesalers and Bonders Association .
If the government establishes a monopoly, consumers, including retailers, will be at the risk of being over-charged by unscrupulous officials, a key official in lobby group for state’s liquor sellers, All Bengal Licensee Association, said. “That’s the experience in any state where liquor distribution and retailing is controlled by state-owned enterprises," this person said, asking not to be identified.
To be sure, the state hasn’t yet said anything about getting into retailing; it has only floated tenders to secure at least 30 warehouses on lease across West Bengal for wholesale distribution.
A key excise department official said West Bengal is currently studying the model of IMFL distribution by state-owned corporations in 11 states. “The idea is to learn the best practices to implement a transparent model of distribution," this person said, asking not to be named.
Describing the current distribution network as an “oligopoly", the excise department official said having a government corporation will “eliminate inefficiencies and maximize revenue for the state exchequer".
Members of the West Bengal Liquor Manufacturers Wholesalers and Bonders Association claim there are at least 102 players in the business, and the model is an evolved one.
Over 5,000 retailers, which include bars and restaurants, will have to find a new way of doing business, said Pradyut Saha, general secretary of All Bengal Licensee Association, another lobby group. If the state comes in as the sole distributor, retailers will be starved of trade credit, and those short on working capital will be badly hit, Saha said.
“How long will they survive against bigger sharks?" asked Saha, adding that the move will lead to consolidation among retailers and consequent job losses.
That’s what happened in neighbouring Odisha within only three years of the state launching its own liquor distribution company, said Hiranmoy Gon, secretary of the West Bengal Foreign Liquor Manufacturers Wholesalers and Bonders Association.
Wholesale IMFL distribution has thin margins, so it isn’t as lucrative as the government thinks it is, said Gon, whose lobby group has written to chief minister Mamata Banerjee to rethink the plan in the light of the potential job losses that it could lead to.
For the state, it’s a choice between biting the bullet to augment revenues or “play safe" so that it is not seen as stealing people’s jobs, said a finance department official, who too asked not to be identified.
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