Indian states may be individually seeking to introduce a prohibition on alcohol to protect the poor, Vijay Mallya, chair of the UB Group, warned delegates at the World Whiskies Conference.
And the Indian Federal Government has no control over this as prohibition is enshrined in the Constitution of India, Mallya said.
An MP until last week, Mallya was reacting to the Scotch Whisky Association (SWA), threatening to go back to the World Trade Organisation (WTO) to secure fair market access in line with international trade rules if India failed to introduce non-discriminatory tax treatment of domestic and imported products at state level.
Mallya said member states and the way they tackle the sale of alcohol is enshrined in Indian's constitutional law and they endeavour to put in place a prohibition to discourage low income groups from spending all their cash on liquor.
He said the Indian government may fall into line with the WTO but that does not mean states will.
“It will take another 20 years to change,” he said, adding the country still had more or less the same number of off-licences as it did in 1947.
“You cannot put an off-licence within 100 yards of a school, temple or mosque, which are everywhere.
“Be aware it is not a single open and shut case. India is a multi-faceted country” with different rules across states. Think of trading with Europe before the European Union was formed,” he warned.
Heavy handed tactics
Mallya also urged the SWA not to use “heavy handed tactics.
Playing down reports of a rift between himself and the SWA, he said: “Indians do not like confrontation. They become obstinate and then do not see reason. “They will say no for the sake of no and no means no,” he said.
He urged foreign alcohol companies to use diplomacy if they are to make inroads.
“India is full of contradictions and we are used to that,” he said.
India's commitment
Meanwhile, although the SWA has welcomed India's reform of the discriminatory additional customs duty, it is still fighting to reduce a tariff of 150% on Scotch, which is way above the international standard and levels in other emerging markets, according to the association.
Paul Walsh, Diageo chief executive and chair of the SWA told delegates at the conference that during his recent visit to India where he met Kamal Nath, the Indian commerce minister, he was “encouraged” that at the highest level there is a recognition that India needs to continue to open itself up to foreign investment and business, and that international obligations must be met.
“This can only be good news for Indian consumers who want to have the same opportunities to purchase premium spirit drinks as enjoyed by consumers in other emerging markets.
“The EU-India Free Trade Agreement talks will be an early test of India's commitment,” he said.
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