Food Processing Ministry Miffed At Special Treatment Accorded To

The ministry of food processing industries has taken the Foreign Investment Promotion Board and the ministry of chemicals head on for departing from guidelines and granting special exemptions to select foreign liquor companies for joint ventures in the country.

The move highlights the lack of a uniform and a transparent policy for joint ventures in the liquor industry.

The food processing ministry is miffed at the decisions of Foreign Investment Promotion Board and the ministry of chemicals to grant International Distillers (India) and McDonald Muir the permission to manufacture liquor from molasses, while all other companies like Whyte & Mackay and United Distillers have to compulsorily use non-molasses (grain spirit) which is a more expensive raw material in their production process.

 

It may be noted that all applications relating to production of liquor from molasses is sent to the ministry of chemicals while those from non-molasses to the food processing ministry.

The food processing ministry has also remarked that while all foreign liquor companies must necessarily export liquor to offset their imports, an exception has been made in the case of United Distillers, which meets its export obligations by also exporting items such as leather products.

In a confidential letter sent to the department of industrial policy and promotion last week, the food processing ministry has said: ... if the ministry was in favour of having a more liberalised policy of allowing them (foreign liquor companies) to export other products also, they should allow it uniformly in all cases. As of today, United Distillers can offset its imports by exports of other products, whereas other companies similarly placed cannot.

The same inequality exists regarding the mandatory condition for use of only non-molasses raw material with regard to the foreign collaboration approvals given in the potable alcohol sector. As of today, even in this respect, the condition has been removed in the case of some approvals and has been continued in the case of some others, the letter said.

The letter pointed out that the stand of the food processing ministry is that the conditions regarding use of non-molasses based raw material should be imposed in all cases relating to foreign collaboration in this sector.

The Foreign Investment Promotion Board had earlier suggested that the dispute must be referred to the cabinet committee on economic affairs (CCEA) for a solution, but the food processing ministry has said that this is not required.

The ministry however said that for future approvals, a policy decision could be taken at that level.

International Distillers (India) president Deepak Roy had earlier stated that the company was operating within the legal framework and was not guilty of violating any law or clause that was present in the joint venture.

He said that when the approval was given to the company in August 1993, it was based on two conditions.

The first being that we would tie up with a company which had an approved central government capacity and licence. The second condition was that we shall maintain export neutrality. There was no condition at that point of time of either using molasses or grain spirit, he was quoted as saying last year.