| It's
been over three months ago that the government eliminated
ACD on the imported wine and spirits. It has been exactly
a week less that Maharashtra slapped an excise duty
of 150% on the imported beverages, presumably to protect
the producers in the state. Neither the importers, nor
the producers are happy with the decision. Both are
awaiting the decision of the excise commissioner to
charge a fixed amount per bottle.
But is the state excise department listening?
The new levy has made the inexpensive wines cheaper.
But the better quality wines have become a lot more
expensive; the finer the wine the more negative impact
on the price there has been. The government has been
sympathetic to the petitioners. Perhaps they even realise
the harm this arbitrary and unjust policy will cause
the importers, producers and consumers alike.
Hotels in Maharashtra are the worst hit. Compared to
the earlier Rs.150 a bottle, they are being asked to
pay 150% of the assessable value which translates into
a massive increase for wines costing over $2.50 (at
which level the excise duty remains the same whether
at 150% or Rs.150 a bottle.
Surprisingly, they are keeping totally quiet. Says
Sanjay Menon, owner of Sonarys, Mumbai. 'It's the hotels
that are affected very badly because they can't take
a call on buying the better wines as they will become
hugely more expensive. But they are doing nothing about
it. They should be going by now to the CM's door and
breaking it down.'
Sanjay is a very disheartened person today. His passion
and knowledge of wines is unparalleled in the world
of importers. He is more of a connoisseur than a businessman
and a passionate promoter of fine wines. Many years
ago, at a wine dinner in Maurya Sheraton, Delhi where
a second and third growth from Bordeaux were featured,
he was seen going from table to table finishing the
left-over wines at the end of the dinner. ' I cannot
stand the sight of good wine being left in the glass,'
he said with disgust, chiding people who did not appreciate
fine wines from these Chateaux from Medoc.
Sonarys is the biggest in Maharashtra in marketing imported wines. His sales are suffering the most, naturally. 'We don't have any clout with the government but we can only hope the government will understand our viewpoint and makes the excise more sensible.' In fact, he and other importers have the full and active support of domestic producers like Rajiv Samant of Sula as it hurts him and other domestic producers as well.
Whatever may be the motivation of the Maharashtra government,
the apathy towards the problem is not going to help
the case of India in the ongoing dispute at the WTO
where the case has been going on with the US; the EU
had first suspended and then withdrawn their case. US
is quite adamant, fearing that states like Maharashtra
will neutralise the effects of eliminating the Additional
Customs duty on July 3 this year.
US has to submit some more papers to WTO during the
second week of October. From all accounts, it seems
unlikely that it will change its stand, especially with
the rigid stand taken by the Maharashtra government.
10th October will mark the completion of 3 months
of the new policy. Many foreign producers have been
already disappointed and discouraged by this policy.
In fact, many have written to me if it is wise to write
about such negative developments. We of course, have
to tell the story as it develops. We are quite optimistic
about the long term prospects for wine.
The ironic part is that the new policy is supposed
to protect the farmers of Maharashtra and it is hurting
them the most. Reason is simple. Wines costing less
than $2.50 a bottle are now cheaper due the 150% policy.
It does not need an expert to figure out that there
are thousands of labels available between $1.50- 2.50
around the world, which offer better quality wines than
the majority of Indian wines. In effect, the new policy
will hurt these producers.
The parlays between the industry, importers and the
government have been taking place since the very beginning.
A month and a half ago, the excise department had appeared
to agree with the joint plea of Rs. 300 a liter-translating
to Rs. 225 a bottle-an increase of 50% from the existing
excise duties.
One newspaper even went to the extent of reporting
that the excise duties have been made applicable at
Rs.300 a liter. But the decision still rests with the
department. There is an impasse in the meantime, no
sales are taking place and the uncertainty is hurting
all concerned.
Whether Maharashtra has been acting like an anti-hero
or villain would depend upon whose point of view one
is looking at. But the state government surely will
get a hero's welcome from consumers if the policy of
Rs.225 a bottle as excise duty is announced without
any further delay.
Subhash Arora
October 8, 2007
|
