United Spirits has reportedly been slapped with an over Rs 250 crore fine by Defense Canteen Stores Department for allegedly violating a pricing agreement, according to media reports.
As per reports appearing in media, the CSD has accused the company of breaching the agreement of fair pricing, which included extending matching and promotional offers given to other retailers to it as well.
The alcoholic beverages industry in India is heavily regulated, with excise and other taxes on Indian made foreign liquor a key source of income for state governments. This makes a bottle of spirit nearly 80% cheaper at military canteens which enjoy tax exemptions.
Companies have a written agreement with CSD that their prices have to be the lowest among all trade channels, but USL has alleged to have inflated its original pricing for the department and then reduced it on the pretext of discounts which were also offered to other retail channels.