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Delhi Wine Club
 
Proposed Excise cut too late, too small

Posted: Thursday, 17 February 2011 17:54

Proposed Excise cut too late, too small

The recent announcement by the Delhi excise department that it is considering a  25% cut in the excise duty and reducing the distributor license fee by an equivalent amount is too small and comes too late, indicating a lack of application of mind on the part of the state government to treat wine really separating it from liquor, writes Subhash Arora .

‘Wine Lovers can all Raise a Toast: Delhi Moves to Cut Prices’ screams the headline of the daily Indian Express, giving the impression to the reader that the wine prices are finally going to become more affordable. The proposed reduction brings duty to nowhere near what is being charged by Maharashtra and the neighbouring state of Haryana.

The Excise has drafted a Cabinet note, which has been sent to Finance for evaluation. Once it is cleared by Finance and Law, it will be placed before the Cabinet for approval. If the proposal is cleared, it will be implemented from April 1, says the report. The government has been known to wait for months even after making such policies public, before the Gazette Notification is issued. Therefore, it is anyone’s bet on what and when the much needed reduction would take place.

Earlier, Delhi used to charge a Rs.150 a bottle excise on all imported wines. Following the then Maharashtra example, it jacked up the duties to 30-20% slab rate on MRP a few years ago; this translates up to 200% of the CIF value of wines before levy of customs duty.

The excise license fee for distribution used to be Rs.200,000 but was jacked up to Rs.500,000 with no differentiation in the distribution for wines and spirits or for wines alone.

According to the announced wine policy it was a conjecture that the excise duties would be levied on the wholesale price rather than the current MRP from the new fiscal year in April 2011, thus bringing them to practically half of the existing duties. The current proposal falls short even of that expectation.

In all fairness to the department, it did take some progressive measures during the last couple of years. Licenses have been given to open shops in the Malls and that is good news for the wine availability-even though the licenses allow sale of liquors too.

Super markets have been allowed to sell wine and beer and that is a good initial step- though the excise department needs to be asked why a well established store- but a new entrant to Delhi –like Nature’s Basket of Mumbai needs to be present in Delhi for one year before getting the license for selling wine. The ambiguity of area for wine storage keeps the doors open for corruption.

The excise department had also allowed the new license- L 4D for restaurants and eateries to serve only beer and wine. This has been the most progressive and laudable step taken. As the report points out, the department has been flooded with applications but so far only eight cases have been cleared. If the department were serious about promotion of wine consumption, it would have cleared all such applications-subject to following the rules and specifications set by it.

What is required is bringing down of the license cost to Rs.200,000 –even for the domestic producers. Excise duty should be brought back to around Rs, 150 a bottle for the low ended wines to protect the Indian industry. Higher priced wines could be levied higher slab rate, like in Maharashtra. The registration charges of Rs.50,000 for the Indian wine labels are too ridiculous even to comment any more. There should be a label registration charge of Rs. 1-2,000 only for both Indian and imported wines to make it possible for several more labels to be available on the shelves-especially for the supermarkets and restaurants in the new category.. 

Of the Rs 1,668-crore revenue that Delhi Excise earns, only Rs 20 crore is courtesy the sale of wine. "The wine market in Delhi is very limited. There are not many takers. We are hoping that if prices are reduced, sales will increase," an official said according to the report.

It is high time there should be a public debate on the statement made by the official. It will perhaps bring out the fact that the consumption has been choked and constrained by the excise duties, laws and regulations as well. There is a huge latent demand and possibility of conversion from spirits to wine like in China. It is the lack of will that camouflages the problem and wine drinkers are being thrown a few crumbs so they may ‘raise the toast ‘and be grateful to the government for bring the prices down.

Subhash Arora
Montepulciano, Tuscany, Italy.
February 17, 2011

Comments:

 
 

Himadri Bal Says:

I am complitely agreed with Mr.Subhash Arora. Few years ago the excise was Rs. 150 per 750ml Bottle for imported wine & now it is on MRP Basis which is just to finish the imported wine trade, The Govt. of India & also all the state govt. shoul understand that wine is not hard liquor, I am very much surprised, how hard Liquor's (like Whisky)Customs duty same as Wine & also the Excise Dept. should know that wine is not a hard liquor. only God knows who will make this type of duty structure & for Mumbai the situationis worst, the Excise is asking manufacturing cost, how it is possible that a winery (our side India) could declare the manufacturing cost to an Importer, so Excise Dept. force the Importer to informed the fulse thing & on that basis, you all be surprised in many times manufaturing cost goes higher of CIF value (Importer Purchase Price+ Freight+Insurence). Now this is the situation of Indian Customs & Excise Dept. & may only God can save this type of Taxation & now wait for now excise rate of Delhi, may be you are more surprised.

Posted @ June 06, 2011 17:54

 

Sunil kutty Menon Says:

Perfect. The label registration and excise needs to be relooked in. The Maharashtra policy of determination of Mrp on manufactuturing cost of Imported wines irrespective of the fact that the wines have a fob of 1/10 of the cost is highly silly. Perhaps atleast Delhi copuld start the trend and take the country ahead for Imported as well as domectic Wine sellers

Posted @ April 11, 2011 12:53

 

Bahman Marzbani Says:

Totally agree with Mr. Anil Mahtur. It has deterred us, as a NEW entrant, to offer our Resveratrol (anti-oxidant) enhanced wines and Organic...preservative free wines. These wines set the pace for not only being full-bodied but also for a person's health well-being.

Posted @ March 05, 2011 10:20

 

H R Ahuja Says:

Mr Arora, This change, howsoever small is significant because it has been brought about due to your reasoned and persistent campaign. I wish the Delhi Govt takes cognizance of your efforts in making them realise the grave injustice being done to domestic wine companies. You should make efforts and if necessary involve Indian Wine Producers Association to reduce the bond fee, licence fee and label fee for domestic wine producers. Ahuja

Posted @ February 26, 2011 10:23

 

ANIL MATHUR Says:

Unless relief in license fee and label registration fees the availability of consumers choice wine brands in Delhi remains a Dream. What ever reduction in EXCISE DUTY dose not bring new entrant except bringing down the price of brands already available in market. The main DETERRENT factor for new wine brands to come into Delhi is therefore reduction in entry fee by reducing license fee and registration fees. The small company who enter paying current fee once not sustain for next year due to volubility of business. The off take form outlets will remain low due to non availability of varieties in shop or that matter malls. Thus unless addressing to the root problem of license fee and registration fee the reduction in EXCISE DUTY remains a cosmetic relief bringing no change except loss in govt. revenues further. Hope good sense prevails to bring license fee and registration fee down which will increase new entrants and additional volume they bring to increase excise revenue.

Posted @ February 24, 2011 16:00

 
       

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