Andhra division may set off turmoil in liquor industry.

HYDERABAD: If you are a beer or whisky aficionado and live in Seemandhra, getting a glass of your favorite drink after division may prove a tad too heavy on the pocket. Mismatch in the production capacity and demand of liquor across the new state border may lead to an increase in cost due to additional levies, which in turn may affect the production in Telangana, which accounts for most of the liquor production in state.

Telangana, which produces 62 per cent of the Indian Made Foreign Liquor (IMFL) in the state, accounts for only 40 per cent of sales. Seemandhra accounts for 60 per cent of the consumption even though it has production capacities to the tune of 38 per cent. A similar disparity exists in beer production, with Telangana producing nearly five times the amount of beer that Andhra region produces.

"The consumption of premium liquor in Andhra and Rayalaseema has been higher in the last 10 years, but a substantial percentage of liquor is produced in Telangana," said Niranjan Lal Agarwal, president of Association of Liquor and Beer Suppliers (ALBS). He said breweries are not abundant in the Andhra region owing to the salt content in the water.

Manufactures now apprehend that levy of import and export duty in addition to the central sales tax (CST) on liquor transported from Telangana to Andhra would increase costs by as much as 11 per cent. They fear that if the rise in cost is not absorbed by the market there, they may be forced to slash the supply to Seemandhra, which in turn may lead to increase the production cost and cause loss of jobs in the manufacturing sector.

The worst affected could be those who manufacture and market their own brand.

With these apprehensions, the manufacturers communicated their list of woes to the commissioner of excise and prohibition, asking for relaxation in taxation and duties. In their representation, they argued that additional levies were waived off for a few years in Chhattisgarh when it was carved out of Madhya Pradesh. They added that if the government fails to consider their problems, the difference in MRP in Telangana and Andhra Pradesh would impact revenue besides promoting bootlegging.

"We want a status quo for a minimum of two years. Within these two years, production facilities will be established in Andhra and alternative markets would emerge in Telangana, which would correct the demand and supply mismatch," said Rajeshwar Rao, a distillery owner and vice president of ALBS.

Source : timesofindia.indiatimes.com