If an alcoholic beverage manufacturer produces five products which he wants to sell in 10 states, he has to first register each brand in all the states (50 brand registration processes), and then register a different label for each of the brands in all the states (50 label registration processes), a report on Ease of Doing Business by Pahle India Foundation has found.
"Some states also mandate independent label registration for different size
bottles. This means, if a company has, for argument sake, 10 brands, and each brand has three standard bottle sizes, then the company has to register 30 labels in one state in one year," the report said.
The process of getting a label registered may take anywhere between 30-60 days, if the process goes smoothly. There are no documented timelines and the process varies from state to state, the report stated.
The report says that the process of label registration for alcoholic beverages across all states in India is riddled with several challenges and that there is scope for standardisation and simplification in this area.
The report also said that the procedures of label registration are not time-bound and this directly impacts doing business for the manufacturer in the subsequent excise cycle, because unless the labels are registered in time for the following year, sales cannot take place.
"There is no rationale behind the fees charged by states and it is a huge cost for the manufacturers. For instance, a manufacturer spends not less than Rs 1 crore per brand per year to register labels pan-India. Apart from excise duties and other taxes, brand registration fees are another huge source of revenue to the state," the report said.
The report said that though the industry welcomed Excise Adhesive Labels (EALs), additional measure taken by state excise departments in order to curb illegal and spurious alcohol, there are issues in the system.
"The cost of EALs is borne entirely by the manufacturing company. They are different in all states and are of bad quality (are easily torn or damaged), and in some states, not even self adhesive," the report said.
Usually, EALs are stuck manually on each bottle and automation is not possible because of how the EALs are designed, making the process slow, the report said.
"If the EAL gets torn while sticking it to a bottle, the manufacturer is liable to pay double duty on that bottle because the sequence of EALs cannot be broken. At the time of loading final goods, each carton is manually checked and then punched at the time of permit generation on the portal, thereby, increasing the risk of manual errors," the report said.
