Bill proposes control of potable alcohol under states

A bill, which seeks to ensure that industries engaged in the manufacture of potable alcohol be under the control of states, was introduced in the Lok Sabha today by Commerce and Industry Minister Nirmala Sitharaman.

"... It is proposed to amend the first schedule to the Industries (Development and Regulation) Act, 1951...So that it would be in conformity with the judgement of the Supreme Court and also ensure that the industries engaged in the manufacture of alcohol meant for potable purposes shall be under the total and exclusive control of states in all aspects," proposes the bill.

The central government would continue to be responsible for formulating policy and regulating foreign collaboration (FDI and foreign technology collaboration agreements) for all products of fermentation industries, including industrial and potable alcohol, according to the proposed law.

The Supreme Court in a judgement has held that in the interest of proper delineation of the spheres of the Union and the states, the line of demarcation should be drawn at the stage of clearance or removal of the rectified spirit.

Where the removal or clearance is for industrial purposes (other than the manufacture of potable liquor), the levy of duties of excise and all other control shall be with the Union and where the removal or clearance is for obtaining or manufacturing potable liquors, the levy of duties of excise and all other control shall be with the states.

Against the backdrop of the above judgement of the Supreme Court, the Law Commission had recommended in its 158th report that the heading 26 of the first schedule to the Act be substituted as 'Fermentation Industries but not including Alcohol'.

Further the bill proposes that the authority to regulate 'intoxicating liquors' appears to vest both with the union and the states and "this has resulted in prolonged litigation".