Mumbai, April 1: With the Supreme Court order banning sale or serving of liquor becoming effective from Saturday, bars and wine shops dotting highways in Maharashtra went ‘dry’ amidst the affected sector predicting huge losses of revenues and jobs and spelling a acatastrophe.’
Thousands of hotels, restaurants, bars and liquor shops dotting the national and state highways across the state stopped sale or serving liquor since midnight, after “polite reminder calls” from the state Excise Department. This will remain in force at least till September 30 when the next hearing is due in the Supreme Court.
According to Hotels and Restaurant Association of Western India (HRAWI), around 35,000 restaurants, bars and liquor shops either face closure or downsizing in the western region along, spelling doom for the industry.
“This could lead to massive job losses, of more than a million, across India in the hoteliering industry since it cannot be run in an environment of flux or state of uncertainty,” said HRAWI President Dilip Datwani.
The axe will fall on around 13,655 bars and liquor shops in Maharashtra, including 290 in Mumbai city, 2,000 in Mumbai Metropolitan Region and another 9,925 across the state, rued ex-President of Federation of Hotels and Restaurants Association of India, Kamlesh Barot.
“The food service industry is valued at Rs 408,000 crore of which Rs 200,000 crore could be lost. Owing to government policies and rules, these restaurants and shops cannot relocate, or diversify in any manner,” he said.
Barot said that if these figures are extrapolated for India, there will be a “catastrophe” for the tourism and hospitality industry in terms of revenue lost of more than 30 percent directly for liquor and another over 20 percent on food, besides guests avoiding to visit or stay at such dry outlets adjacent to highways.
“Excise revenue from alcohol estimated at around Rs 12,000 crores per annum would be slashed to half, the travel and tourism sector which contributes seven percent of India’s GDP with 3.75 crore jobs may be forced to terminate over 10 lakh jobs, as the industry is capital-intensive but works on wafer-thin margins,” Datwani warned.
While imposing the 500 metres ban, the state governments will henceforth not issue new or renew excise licences for such outlets though subsisting licenses can operate till September 30.
Both Datwani and Barot feel that the impact will be harder on highways running through big cities – like Eastern Express Highway and Western Express Highway in Mumbai – which are patronised more by locals than inter-state travelers, and most are likely to shut down permanently.
Former HRAWI President Bharat Malkani said that while licensed outlets will comply, the illegal vendors may still continue their services, and travelers will also find ways and means to procure it.
Datwani pointed out that besides huge losses to the exchequer, tourism industry will be hit, particularly when hotels in India rank among the most highly-taxed in the world.
“Hotels here pay direct and indirect taxes to the tune of 38 percent overall, compared to barely 5-7 percent in Japan and China. The annual licence fees for permit rooms in Mumbai was recently hiked from Rs.366,000 to Rs.600,000 and for beer bars from Rs 95,000 to Rs 150,000. The impact of the ruling is expected to be huge on the revenue collections of states,” Datwani said.
On the moves from certain quarters to “reclassify” highways running through cities as “local roads”, the industry feels it may help, but the procedure could be very long-winded and complicated to achieve this.