Govt shouldn't treat liquor entrepreneurs as criminals: The Beer Café CEO

Rahul Singh, founder of The Beer Café mortgaged his house for about Rs 3.5 crore to start an alco-beverage outlet in 2012 in Gurgaon, when he was down to the brink.

Since then, The Beer Cafe has expanded to about 40 outlets. 

Five years in the business Singh tells Moneycontrol how startup entrepreneurs in the liquor beverage business in India are being 'treated as criminals' by the government and never given the same respect as other 'startups'.

He shares that despite all the hullabaloo around Startup India program, things have only become more difficult in last few months for his business, even as US investors such as MayField and RB Investments have invested about USD 10 million in the company.

Excerpts from a candid interview:

On Beer being an agri-product in the West, but liquor in India

"State shall endeavour to bring about prohibition of the consumption of intoxicating drinks," - is what Section 47 the Constitution of India says.

So when you have a Constitution which is endeavoring towards prohibition of Beer - then automatically everybody on the government is already on the backfoot regarding your business.

Entrepreneurs in India or any enterprise in the world will focus on innovation, customer, competition on a daily basis.

Your daily routine in a startup would be around what I do and how do I make my processes easier. But we have the other way around in Beer business. The only thing we do all day is to handle government. 

So in Holland, a beer is an agri-product. It contributes to the GDP of the country. They believe in beer, the best of beer for a country that small.

In Europe, the dairy and beer are considered as agri-products. In India, yes dairy is considered technically an agri-product but beer is not.

Beer is made out of barley, maize and other grains and 95% of it is water. But in India because it is considered as liquor. It basically falls into the category of liquor for human consumption and taxed as such.

'Am not serving polio drops'

The other challenge is that each state has its own laws. Gujarat was born dry.

Then Bihar became a dry state recently where they keep saying that their revenues have gone up after the ban.

Well I don’t think so. You can’t replace it because at the end of the day Beer is in the social fabric of people.

Let’s say it’s an adult beverage, children should not consume it. It is not a contraband.

If it is contraband, I won’t ever deal in it. It is permitted for use.

Regulations are extremely important. There has to be regulation of age, consumption, without regulation in the society how would human being live?

But as an entrepreneur and owner of Beer Café I am not bringing polio drops. I am not telling that you have to have it.

It’s an adult beverage and I am giving you the choice of having it or not having it.

What comes in my food, what comes in my glass, as long as it is not contraband, government should be fine with it. 

Similarly, while I am having a beer or opening such a business, government should not treat people involved in such business as criminals.

'Never feted by Startup India despite paying taxes'

We are treated as criminals. We are treated as we are doing something wrong. 

The way we are taken for a ride, the way people come after us....it’s like people who are running a liquor business are doing something wrong for society.

Liquor was prohibited in earlier years. As a result bootlegging started in many states. Then it was smuggled. All those things have changed now.

Things have changed. But the functionaries at government still treat us as criminals as if I am doing something wrong.

We have never been treated with respect for the amount of taxes we pay.

We have never been feted by Startup India program. We were not even invited for ‘Champions of Change’ event.

So a ‘chaiwala’ can be invited but a ‘Beerwala’ cannot be there! (hinting at tea cafe startups such as Chaayos being invited at Startup India events)

Whereas I have contributed more towards the economy then a ‘chaiwala’ has done.

Last year, we contributed about Rs 40 crore in taxes.

We are contributing to taxes because this tax is important for a state to run schools, hospitals and build roads.

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Filing 500 returns a year just to keep the lights on!

Unfortunately GST is not applied on liquor. It would have allowed us  to make our supply chain more efficient.

Now if you look at me, I have eight states. For each state, I have to file three returns in a month for each cafe.

Every quarter, I have to file fourth return which is called the GST-4.

So I am filing forty returns to a state every year. I have eight states so that makes 320 returns only for GST.

Apart from that for those eight states, I have to file VAT returns for liquor that is once a month.

But if you look at this mathematics you will be surprised we are filing 500 returns a year, just to run our business.

So where is the ease of doing business?

‘Make my business hard, at least keep certainty’

I tell government officials don’t give me ease of business. Make it hard for me.

But at least give me the certainty. I invested my money in building infrastructure and then denotification of alcohol on highways happened.

Then Delhi stopped giving licenses and when we asked them there was no answer by any department. It’s so uncertain.

No new liquor licenses are being given in Delhi for now.

Denotification was anyways wrong and it was meant for the ‘Thekas’ on highways. 

We don’t know why government got involved us into it. (A Beer Cafe in Thane was shut down as a result).

Thankfully now they have corrected that mistake but it took them four months to do so. 

You are risking people’s investment and their hard earned money, and risking their jobs, if you create uncertainty. 

The ambiguity which remained since April 1,,2017, has come to rest with court ruling. We can restore the licenses for our establishments within the municipal limits.

It has come as an early Diwali for the hospitality sector. We thank the honorable bench for restoring lost jobs, tourism and revenues.

MCStartups@nw18.com

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