The Union Cabinet chaired by the Prime Minister Shri Narendra Modi, has given its approval to the Amendment in the First Schedule of Industries (Development and Regulation) Act, 1951 to transfer the authority to regulate 'potable alcohol' to States as recommended by the Law Commission in its 158th Report.

 The existing heading "26 Fermentation Industries" in the First Schedule of Industries (Development and Regulation) Act, 1951 shall be substituted with the heading "26 Fermentation Industries (other than potable alcohol)". A Bill to this effect will be introduced in Parliament.

 With this Amendment in the First Schedule of Industries (Development and Regulation) Act, 1951, a long standing confusion about jurisdiction of Central and State - Government on Alcohol - Potable Alcohol and Industrial Alcohol has been resolved. This Amendment will create a balance between the Union and States. It will eliminate the room for abuse of Law and misuse of alcohol. It will ensure that industries engaged in manufacturing alcohol meant for Potable purposes shall be under the total and exclusive control of States in all respects. This should also assign accountability to States for manufacture of Potable alcohol.

Background:

 The Amendment in the First Schedule of Industries (Development and Regulation) Act, 1951 had been necessitated in view of the judgment delivered by the Supreme Court in 1997 in the case pertaining to Bihar Distillery Vs Union of India. The Court had ordered that industries engaged in manufacturing alcohol meant for potable purpose shall be under the control of the State and controls concerning Industrial Alcohol shall be under the jurisdiction of the Central Government. Subsequently the Law Commission in its 158th report having \ taken suo-moto cognizance of the emerging practical problem as a sequel to the decision of the Supreme Court in interpreting the constitutional provisions, recommended to substitute item 26 of the First Schedule of Industries (Development and Regulation) Act, 1951 as uFermentation Industries (not including alcohol)".

 However, keeping in view the present status of licensing requirement and the judgment delivered by the Supreme Court, the Department of Industrial Policy and Promotion after consultations with concerned Ministries/ Departments, including the Department of Legal Affairs and Legislative Department, has amended entry 26 of the first schedule of I(D&R) Act, 1951.

State regulation of potable alcohol: exclusive State control over manufacture and licensing clarifies federal jurisdiction. Amendment to the First Schedule of the Industries (Development and Regulation) Act, 1951 reallocates regulatory authority over potable alcohol to States by substituting the heading for item 26 to exclude potable alcohol; a Bill will be introduced to confer total and exclusive State control over manufacture and licensing of potable alcohol while preserving Central competence over industrial alcohol.