View: Raise the bar for online liquor sale

By Aman Taneja & Anirudh Rastogi

With more than another week of nationwide lockdown to go, and the Indian economy continuing to face unprecedented batterings due to businesses being shut for more than amonth, the prohibition on the sale of liquor has become a contentious issue. Keeping practical issues like social distancing and the genuine threat of a correlated rise in domestic violence, there are no easy answers.

Kerala, Meghalaya, Assam and West Bengal had reportedly taken measures during the lockdown to allow the sale of alcohol, with varying safeguards such as requiring medical prescriptions and limiting the hours that vends could be opened.

However, the home ministry’s April 15 notification extending the lockdown put a spanner in the works, specifying a strict ban on the sale of liquor in all states. Areported 15-30% of the states’ revenues (some Rs 2.48 lakh crore) come from levies on alcoholic beverages.

States having been losing an estimated Rs 700 crore a day due to the liquor ban. With simultaneous losses on the GST front, these lost revenues can’t be easy to accept. The public health argument — with five crore Indians reportedly affected by ‘alcohol dependence’ — suggests people suffering from alcohol withdrawal needing to be hospitalised.

There is also the fear of proliferation of spurious liquor. Keeping all this in mind, a total ban on alcohol sales is counterproductive. Rather, permitting online and offline sales, with safeguards, may be a better option.

Given the relatively inelastic nature of alcohol’s demand, it can be argued that its sale is well-suited to helping economic recovery. Until there was strong pushback from offline retailers, ecommerce companies were set to resume sales of non-essentials from April 20, in a bid to keep the economic machinery moving. Why not reverse GoI’s reversal on April 19 of its earlier decision to allow the sale of nonessentials via ecommerce and allow online alcohol sales as well?

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Over the years, many internet startups have tried to venture into the online sale and delivery of alcohol. However, these efforts were thwarted by state excise departments citing laws that have not caught up to newer business models.

In 2018, there were reports that state governments in Maharashtra and Karnataka were considering permitting online sale and home delivery of alcohol in an effort to combat drunk driving. We are yet to see regulatory changes.

This is partly because brick-and-mortar shops are wary of online competition. They pay large sums for excise licences, and states, too, are reluctant to lose this revenue. These concerns can be assuaged by allowing online delivery aggregation from the brick-and-mortar shops and imposing strict territorial limits. Similar territorial limits have been implemented recently for home delivery of medicines. States can recoup lost licence revenue from corresponding increases in online sale licence fees.

The reluctance to allow the online sale of alcohol also comes from the risk of selling liquor to those who are underage. This can be addressed with online age-gating techniques and mandatory age-checks at the point of delivery. Further, to limit consumption during a lockdown (or even otherwise), the quantity of alcohol home-delivered can be capped.

Allowing liquor to be home-delivered will involve addressing logistical issues. Most states require licences to transport liquor. States will need to either exempt online platforms, and delivery partners will need to be exempt, subject to high eligibility criteria, or expedite licensing. They will need to prescribe strict safety norms for delivery personnel.

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This already month-long lockdown has forced many changes that would have otherwise taken years to achieve. Courts, which had been talking about adopting more technology but have been slow to implement it, have literally been brought into our homes through videoconferencing.

The privileged among us have learnt that there is almost nothing that we cannot have delivered to our doorsteps. States too should reconsider their position on the online sale of alcohol with some Dutch courage.

Taneja & Rastogi are senior associate and managing partner, respectively, Ikigai Law


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