The tourism ministry has asked for a Central Bureau of Investigation probe into "irregularities" in the procurement of alcohol by Indian Tourism Development Corporation.
ITDC sells international liquor brands through its chain of duty-free shops at international airports.
The government's decision follows a letter written by some Members of Parliament to Tourism Minister Renuka Chaudhary, alleging ITDC was flouting its own procurement norms to favour certain liquor firms.
The government had earlier this month suspended Amitabh Kant, joint secretary in the tourism ministry, as chairman and managing director of ITDC and the head of its procurement committee. Kant could not be reached for comments despite repeated attempts.
According to government officials, the Prime Minister's Office is also looking into the allegations, and further action will be initiated only after the CBI concludes its investigation.
Chaudhary had, late last year, directed ITDC to withhold payment of Rs 13 crore (Rs 130 million) that was due to Diageo, makers of the best-selling Johnnie Walker Black Label whisky, because of "procurement malpractice".
Meanwhile, the company in question is in the process of replying to the charges. According to company sources, Diageo was not looking for legal recourse and instead was planning to resolve the matter through discussions with the minister.
"There has been no underhand dealings as the minister has alleged. There are invoices for every consignment that has been delivered to ITDC. The charges are the result of differences within the ministry," said the source.
Johnnie Walker Black Label and Red Label whiskies account for more that 60 per cent of the liquor sold through duty-free shops.
Late last year, in an attempt to dismantle the procurement system set up by the previous government, Chaudhary had instructed ITDC to seek her approval for clearing contracts worth more than Rs 1 crore (Rs 10 million).
Diageo: High stakes
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The company is not looking for legal recourse, wants to sort it out with the ministry
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Says there is no underhand dealing; there are invoices for every consignment delivered to ITDC
- Johnnie Walker (Black Label, Red Label) accounts for 60% of the liquor sold through duty-free shops
