Delhi Excise Policy: CAG Report Highlights Monopoly Risks & Brand Pushing

New Delhi, Feb 25 (PTI) The 2021-22 Delhi excise policy created risks of monopolies and brand pushing by an "exclusive arrangement" between a few wholesalers and manufactures, allowing the distributors to dominate the liquor supply chain with just three of them controlling over 71 per cent of total liquor supply chain in the city, according to a CAG report.

The report, tabled in the Delhi assembly on Tuesday, pointed out that out of 367 registered IMFL brands, 25 brands accounted for nearly 70 per cent of total liquor sales in Delhi.

"The policy mandated an exclusive arrangement between a manufacturer and wholesalers, which led to the entire supply of all brands of a particular manufacturer being controlled by only one wholesaler.

"This becomes particularly relevant considering the fact that although 367 IMFL brands were registered in Delhi, very few popular brands formed the bulk of sale volume," the report said.

The CAG report, one of 14 on the previous Aam Aadmi Party government's performance to be tabled by the new Rekha Gupta-led dispensation, said that top 10 brands accounted for the sale of 46.46 per cent of liquor sold in Delhi whereas top 25 brands accounted for 69.50 per cent of the liquor sold.

"Of these 25 top selling brands, Brindco and Mahadev Liquor exclusively supplied seven brands each, followed by Indospirit which exclusively supplied six brands.

Further, of the 367 brands of IMFL supplied by 13 wholesale licensees, the highest number of brands were exclusively supplied by Indospirit (76 brands), followed by Mahadev Liquors (71 brands) and Brindco (45 brands). These three wholesalers also accounted for 71.70 per cent of volume of Liquor sold in Delhi," it stated.

The report on the alleged liquor scam, a hot button issue in the run-up to the elections, flagged that the 2021-22 policy had inherent design issues including the imposed exclusivity arrangement between manufacturers and wholesalers and formation of retail zones with a minimum of 27 wards in each zone.

These issues resulted in limiting the number of total licensees and increasing the risk of monopolisation and cartel formation. It was noticed that wholesale licences for supply of IMFL and FL were granted to 14 business entities, whereas the same were granted to 77 manufacturers of IMFL and 24 suppliers of FL in the old policy (2020-21).

"Similarly, for the purpose of retail vends, Delhi was divided into 32 zones (containing 849 vends) whose licences were granted to 22 entities through tendering, whereas, 377 retail vends were run by four government corporations and 262 retail vends were allotted to private individuals previously," the report said.

According to the CAG report, the Group of Ministers, headed by the then deputy chief minister Manish Sisodia, had mentioned in its report that the entire liquor retail market was apparently controlled by very few people through a fraudulent proxy model.

However, it still recommended distribution of retail licences in zones where one entity/person could get up to 54 vends (two zones).