Indian shares shoot up following alcohol ban clarification

Indian alcohol company shares shot up overnight after a clarification by the Supreme Court on the ban it imposed on 1 April on alcohol being sold within 500 metres of a state or national highway.

The ban came into affect on 1 April 2017

The legislation was designed to combat drink driving, with 35% to 40% of all drink outlets in India thought to be within the stipulated 500 metres of state and national highways.

It caused chaos in the distribution chain as producers and retailers sought to restructure. All major producers, including Diageo-controlled United Spirits, said that their results for the first half of this financial year would be hit as the market came to terms with the new law. Because the plan to introduce the sales ban was announced in December 2016 wholesale pipeline was hit by de-stocking.

However, the Supreme Court has this week issued a clarification saying that the ban does not cover outlets within 500 metres of any state or national highway “within a city’s limits”.

Some state governments had been examining the possibility of declassifying state and national highways to get around the ban. The Supreme Court has warned, however, that if they continue to do so, they could lose central government funding for their upkeep.