Defence Canteens to Ban Import of Finished Goods

In a major blow to companies ranging from FMCG and liquor to consumer durables and footwear, the government-controlled Canteen Stores Department (CSD), which operates canteens for the defence forces, is set to ban all ‘direct imported’ items.

‘Direct imported’ items would include those that are shipped from other countries in finished form. In the liquor segment, for instance, Scotch brands that are bottled in Scotland will be banned but those that have imported ingredients, but bottled in India, will continue to occupy the shelves.

Out of the 5,500 items sold by the CSD, around 420 are imported, according to the Manohar Parrikar Institute for Defence Studies and Analyses. Among all the countries, China accounts for a bulk of the imported items such as toilet brushes, electric kettles, sandwich toasters, laptops and ladies’ handbags.

The move is part of an effort to support PM Narendra Modi’s Atmanirbhar Bharat Abhiyan that has been launched to promote domestic manufacturing, industry experts said. Order instructs army canteens to stop procurement of directly imported items. “We have received the order and are working out the formalities,” a senior official said. “It will take some time to implement.”

The hardest hit will be companies that sell premium products such as imported liquor, high-end smartphones and consumer durables. “Imported liquor has very high margins,” said a senior industry executive.

“Out of 10 bottles sold at army canteens, four are usually for people who don’t work in the armed forces such as friends and family. Companies that have a high exposure of imported items at army canteens will be the most affected.” CSD, which is one of the largest retail chains, caters to 12 million customers.