The Spirits Business reported on Jan. 20 that the Indian state of Telangana owes liquor suppliers the equivalent of $466 million. The outlet reports that the Indian state is one of the country’s largest liquor markets. Similar to Canada’s LCBO, Telangana operates through one corporation, Telangana State Beverages Corporations Limited (TGBCL.)
Because the market is so massive, major alcohol companies like the International Spirits and Wines Association of India (ISWAI) still have to keep supplying Telenaga with major brands from Brown-Forman, Moët Hennessy and Diageo.
The outlet reported that the TGBCL operates on a net-45 basis, yet the region’s debt was causing problems not only for Telangana itself, but for other states.
“We sell to the state of Telangana after repaying the excise duty, and they then sell on cash to the retailer [Telangana State Beverages Corporation], who are supposed to pay us in 45 days — as per the contract. They have unlimited power in acting as a monopoly distributor in the state. We have one customer; we have no choice,” said The CEO of the ISWAI Sanjit Padhi according to The Spirits Business.
During the World Economic Forum’s 56th annual meeting at Davos, reps from Telangana attempted to demonstrate that the state was a desirable marketplace for business ventures. Yet per The Spirits Business, the state had to acknowledge that its debts would have to be paid off in order for Telangana to be considered a reputable market for business operations.
Alcohol still constitutes a major portion of the state’s revenue stream, particularly due to excise taxes. The revenue from alcohol alone provides approximately $288 million a month to Telangana’s economy.
Recently, suppliers have asked the government to step in and provide some kind of relief plan for the state to pay off its debts. At the current rate, the outstanding debt is adversely affecting the beverage market throughout the country, according to some suppliers.
“It’s not just spirits, it’s beer and wine too; the whole industry,” said Padhi, according to The Spirits Business. “There doesn’t seem to be any recognition of the pain that we are going through.”
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