India authority orders New Delhi to reconsider Pernod license rejection

New Delhi: An Indian appeals authority ruled that the city of New Delhi must reconsider its refusal of a liquor license request by France's Pernod Ricard, rejecting its justification the company had a criminal background, the order seen by Reuters showed.

India accounts for a tenth of Pernod's group sales, and its business in New Delhi - an urban tourist hub considered a showcase market for premium brands - had previously contributed around 5 per cent of its sales in the country. Retail sales of Pernod's brands, which include Chivas Regal, have been prohibited in the Indian capital since 2022, however, with authorities repeatedly denying it a license citing ongoing investigations into suspected violations of liquor regulations.

The decision by New Delhi's court of the Financial Commissioner, which stated the company could not be penalised before those legal proceedings had been completed, now requires local authorities to reconsider Pernod's application.

"There has to be a conviction beyond doubt by a court of law before any adverse opinion or action can be taken," said order by Financial Commissioner Chetan B. Sanghi.

"It will be in the fitness of things if the Commissioner of Excise revisits."

The 29-page decision dated February 13 is being reported by Reuters for the first time.

In a statement, Pernod told Reuters it welcomed the decision and was committed to working with authorities to "secure our license and resume operations in Delhi at the earliest."

"We now look forward to a timely and favourable resolution," it said.

New Delhi city authorities did not respond to a Reuters for comment. India's federal financial crime fighting agency accuses Pernod of indirectly investing in city retailers, in return for boosting its market share in the key regional market in 2021.

Pernod denies any wrongdoing. The case is ongoing. An internal investigation ordered by Pernod concluded that top executives violated the law by colluding with New Delhi alcohol retailers, even as its representatives denied wrongdoing publicly and in court, Reuters reported in December.

Pernod also faces several other regulatory challenges in India, including two antitrust cases and a tax demand for nearly $250 million for alleged undervaluation of imports.