Key Points:
- The government has ordered 4,000 army shops in the country to stop buying imported goods, Reuters.
- India’s defence canteens sell liquor, electronics and other goods at discounted prices to soldiers, ex-servicemen and their families.
- Industry sources said they believed imported liquor could be on the list.
- Internal order from Defence Ministry – “procurement of direct imported items shall not be undertaken,” Reuters.
The Indian Government has asked to put a ban on ‘Direct Goods’ at the Army Canteens. The Canteen Stores Department (CSD), which functions canteens for the defence forces across the country, is in accordance with the government. The step will immensely impact the Liquor and FMCG businesses. The Canteen Stores Department, sells goods to army families and earns about $2 billion making it one of the Largest Retail Chain in India.
According to Reuters, the internal order that was issued on October 19 states that in the near future, the October 19 internal order states that in future, the acquisition of Direct Imported Items shall be avoided. The issue was pre-discussed with the Army, Air Force and the Navy in the month of May and June. This is a step in support of the Indian Prime Minister Narendra Modi’s campaign that promotes “Made in India” and “Vocal for Local” under ‘Aatmanirbhar Bharat,’ the report said.
What are Direct Imports?
- Finished Goods.
- These are imported from other countries.
- They come at a low price but are sold in a higher prize in the country.
- For Eg. Scotch whiskey which is imported from Scotland in the UK, will no longer be available at the CSD shelves.
- Liquor with foreign ingredients that is bottled in India will still be available.
The report in the form of an order did not specify the goods that won’t be sold but, Foreign Made Liquor ‘maybe’ on the list of the banned goods. This could send an unwelcome signal to foreign liquor firms such as Diageo and Pernod Ricard.
In a research by the Institute for Defence Studies and Analyses (IDSA), imports make up around 6-7% of total sales value in the defence shops.
Chinese products such as diapers, vacuum cleaners, handbags and laptops, are the reason behind the sales, it said.
After the Galwan Valley incident, India has put an imaginary Red Cross over China and is making it visible in parts, by banning Made In China products and avoiding any Chinese businesses and investments in the country.
