New system sought to safeguard liquor tax revenue; MSP accused of having advantage in new tender

The Excise Department has called for international competitive bids to establish a new Security Features and Security Features Management System (SFSMS) for liquor products.

The move is aimed at safeguarding domestic excise revenue and curbing the trade in counterfeit liquor.

The new system is expected to replace the security sticker and digital marking system operated by Madras Security Printers (MSP) since 2019.

There have been allegations that the sticker introduced by Madras Security Printers (MSP) has failed to deliver the expected results.

The National Audit Office had previously pointed out that irregularities had occurred in awarding the tender to MSP.

It stated that the increase in the price of 1,000 stickers from US$3.19 to US$5.99 could have resulted in a loss of more than Rs. 166 million to the government in the first year alone.

It was also reported that serious concerns had arisen over the reliability of the existing system after counterfeit liquor bearing genuine excise stickers was detected during raids on illicit liquor operations. In some instances, even scanners used by excise officers had failed to properly identify the stickers.

However, the new tender is said to include several new requirements, including the use of AI technology to cross-check data on production, sticker issuance and excise records; multi-layered security features such as holograms, nano-text and DNA/UV inks; and the annual alteration of covert security features.

Meanwhile, experts in the relevant field have pointed out shortcomings in the new tender as well.

Among the key concerns are the absence of mandatory disclosures regarding suppliers’ integrity, corruption or contract terminations, inadequate security measures for the transportation of stickers, and the failure to clearly specify separate pricing for digital and physical stickers.

Criticism has also been raised that MSP could have an advantage in the new tender because it already has equipment installed at liquor manufacturing facilities.

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