THIRUVANANTHAPURAM : In a move to boost the export of Indian-made foreign liquor (IMFL), an expert committee appointed by the government has put forth recommendations aimed at attracting investment in the distillery sector in the state. A key suggestion has been the streamlining of business operations by eliminating outdated and unnecessary regulations that impede investment in the industry.
The recommendations are aimed at empowering investors, including brand owners and non-resident Keralites, to collaborate with local distilleries, manufacture liquor brands, and subsequently export them.
The state government will take a final decision on the report prepared by the committee, headed by KSIDC managing director S Harikishore. The panel also includes three top officials of the excise department.
The recommendations have come at a crucial juncture, when the state is facing challenges in meeting export demands for ‘Made in Kerala’ IMFL, despite significant market interest. In fiscal 2021-22, while the country exported 7,100 shipments of IMFL, Kerala managed just 19, with West Asia being the primary market and Malayalis playing a substantial role as consumers.
Kerala’s IMFL exports, at around 20,000 cases, lagged far behind Uttar Pradesh, which exported 15 lakh cases over the same period. Nearly 55% of production capacity in the state remains under utilised. The committee noted that the primary reason for the underperformance are the restrictive rules and policies in force.
According to industry experts, the recommendations would help alter the export scenario.
“It is a huge opportunity in terms of attracting investment, generating invaluable forex and job opportunities, and boosting the PR image of Kerala, apart from creating quintessential brands from Kerala,” said Gautom Menon, senior advisor to Palakkad-based SDF Distilleries and the petitioner for export reforms.
“Not just new investors but even experienced national MNCs that have been shying away from investing in Kerala would be eager to invest and export from the state. All the risks and accountability of production is vested with the local licensee only as the present status quo in case of tie-ups with companies from outside the state. Each distillery that’s open to tie-ups will likely get a few crores in investment, which can be used for upgrading machinery and improving production infrastructure to manufacture craft and premium spirits,” Gautom said.
“States such as Goa and Karnataka are welcoming investors with open hands. But if we create conducive rules and regulations, the proud Malayali investor would prefer to create brands in Kerala. The brands made famous by Malayalis, such as Maharani Gin from Ireland and Mandakini from Canada, would perhaps have production facilities in Kerala had the ecosystem been favourable,” he added.
Mapping IMFL value
Total IMFL export value: Rs 3,000 crore
Kerala’s share of total: Rs 10 crore
Shipments from India, amounting to 90 lakh cases: 7,100
Shipments from Kerala, amounting to less than 20,000 cases: 19
State’s contribution to IMFL exports: 0.3%
Major markets: UAE, Oman, Bahrain, US, Canada, UK, Thailand
No. of exporters in state: 4
No. of distilleries in Kerala, of which 15 are in private sector and two under government: 17
No. of companies eligible for exports, of which 17 are local, 20 are tie-ups: 37
State’s sanctioned monthly capacity: 36L cases
Kerala State Beverages Corporation’s monthly sales; 16-19L cases
Unutilised capacity in state : 55%
*Fiscal 2021-22 data
LACKING THE FIZZ
Streamlining of business ops by eliminating outdated rules among recommendations aimed at attracting investment in distillery sector
Distillers exporting from KeralaSDF Industries Ltd: Clients in 45 countries
Devicolam Distilleries Ltd: Oman, UAE, Nigeria
KS Distillery: Oman & UAE
Polson Ltd: Nigeria
Amendments sought to:
Kerala Liquor Transit Rules, 1975
Distillery and Warehouse Rules, 1968
Kerala Foreign Liquor (Approval of Label) Rules, 2018
Kerala Foreign Liquor (Compounding, Blending and Bottling) Rules, 1975
Abkari ActForeign Liquor (Registration of Brand) Rules, 1995
Key recommendations of panel
Relaxation of tie-up manufacturing norms for exports
Single-window clearance using K-Swift
Removal of export labs approval fee, brand registration fee, export pass fee
Easing norms for labelling
Relaxation to wastage in maturation
Removal of requirement of excise guards escorting liquor consignment
More ENA testing facilities
- Limiting requirement of chemical analysis
Removing requirement of obtaining NOC for IMFL exports
Allowing more samples for business development