How SC's highway liquor ban is hurting states

The Liquor industry has been hit hard by the recent order of the Supreme Court that has imposed prohibition on the sale or serving of alcohol on all national and state highways. The Supreme Court recently reserved its order on a batch of petitions seeking modification of its order banning liquor vendors along national and state highways. A bench of Chief Justice Jagdish Singh Khehar, Justice D.Y. Chandrachud and Justice L. Nageswara Rao said that in the "interest of the public health" the liquor shops were ordered to be removed to a distance of 500 meters from either side of the highways.

In this significant order passed on pleas of various states seeking modification of the court's December 15, 2016 verdict, the bench also made it clear that the judgement banning liquor vends along highways would also be applicable to bars, pubs and restaurants as drunken driving leads to fatal road accidents.     

The court has given some exemptions to Sikkim, Meghalaya and Himachal Pradesh. It also held that areas with a population up to 20,000 may have liquor vends at a distance of 220 metres from the highways.

Impact of liquor sale ban on highways

The SC’s order on liquor sale is likely to affect states' revenue, employment and much more. According to a report in the Economic Times this ban on selling alcohol within 500 metres of national and state highways would force nearly one-third of the more than 65,000 licensed branded liquor outlets in the country to relocate or shut down.

The closure of liquor shops can lead to losses in terms of business and tourism, which will translate into jobs lost as well as huge revenue losses. The uncertainty of India’s business climate will also deter investment in these sectors. Illegal liquor vends are also likely to flourish along highways.

The CEO of Niti Aayog, the highest policy-making body of India, has also come out strongly against the SC order saying that it would kill the tourism industry in India. 

According to an industry body estimate, the collective revenue loss from the ban could around Rs 50,000 crore. States which are dependent on tourism are the worst hit. These include Goa, Rajasthan, and union territories of Daman and Diu.

Maharashtra’s Excise Minister Chandrashekhar Bawankule said the state government will lose Rs 7,000 crore as a result of the ban on liquor sale along the highways.

The ban has also put millions of jobs at risk in the hotel and tourism sector. Cities of Mumbai, Delhi and Gurugram are the worst hit as many pubs and hotels along the highways have gone dry.

State-wise impact of liquor ban


In Delhi, restaurants, liquor vendors and bars, including those in five star hotels, along the six national highways passing through the state stopped serving alcohol. 


At least 200 liquor licences in Gurgaon – including 150 bars and 15 high-end hotels – have been rendered ineffective. Similarly, in a small city like Chandigarh the apex court directive has forced at least 91 bars, pubs and restaurants to go dry.


In Maharashtra, the liquor ban on highways has affected at least 1,000 star hotels. 


Overall in Kerala, one of the highest liquor consuming states, 1,956 liquor bars and toddy shops have been affected.Kerala is looking at revenue losses as well as the tourism industry being affected. 

Tamil Nadu

Tamil Nadu has been hit very badly, with as many as 3,320 outlets run by state-owned sole retailer TASMAC being closed. 


In Goa, some 30 percent of liquor outlets have shut down following the Supreme Court order. 


Nearly 15,699 liqour outlets are shut down in Maharashtra in compliance with the apex court’s order. 

Measures being taken by states to deal with the crackdown

Following the SC order, states are looking at ways to minimise the impact on revenue due to the liquor sale ban. Many states are considering denotifying state highways within cities and towns and turning them into urban roads. States have also approached the Centre to find out if it can convert national highways into city roads to steer clear the Supreme Court order to shut down liquor vends and bars along highways.

According to a report in the Times of India, the state administrations of Rajasthan, Madhya Pradesh and Uttar Pradesh have reportedly begun denotifying state highways to counter the ban.. Around 15,699 establishments are likely to be hit in Maharashtra and the state is looking to denotify state highways around major cities like Mumbai, Pune and Thane.

In Rajasthan, Public Works Department, (PWD) is mulling de-notification of state highways to urban highways to shield from the Supreme Court's direction to ban sale of liquor at national and state highways.

The Goa government is assessing the impact of the Supreme Court order banning liquor vends on national and state highways. The state Excise department has already issued notices to nearly 3,000-odd outlets falling within 500 metres of the national and state highways. 

The liquor traders are hopeful that the order will not have a severe impact on their businesses as the apex court has reduced the area of ban to 220 metres in areas having a population of up to 20,000.

The Kerala government said it will seek time from the Supreme Court to implement its order banning the sale of liquor along highways, taking into account the "special situation" in the state. 

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel