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The new policy for 2007-08 comes into effect and no
change has been announced and it is business as usual-for the time being.
Last month, the cabinet had approved a levy of 25% excise
duty on the MRP (Maximum Retail Price) of imported wines. There was a
strong lobby against it and many importers and restaurateurs, most notable
being Ritu Dalmia, chef partner of well known Italian cuisine restaurant,
Diva, had even met the Chief Minister, Mrs. Sheila Dixit on more than
one occasion. She had given a patient hearing with positive vibrations,
according to Ritu.
The decision to postpone any increase has been a pleasant
surprise for importers and wine lovers alike. Hoteliers, already under
pressure from the government to reduce prices and pass on the benefits
of duty free imports to the customer get a reprieve too.
Whisky and other hard liquors which would have been
affected too, have also been spared. Citing the local elections later
this year as a major factor, David Williamson, public affairs manager
of the Scotch Whisky Association, said: "The Delhi government has
decided to defer any change to its tax treatment of imported spirit drinks,
pending further discussions with the industry and state elections later
this year."
One significant reason for the postponement is also
the availability and accessibility of cheaper wine in the neighbouring
Gurgaon in Haryana and Noida in UP. Haryana has practically no excise
duty and with Delhi netizens having daily access to the city, has already
shown a marked increase in wine sales last year. The proposed action would
have been a big blow to the tax revenues of Delhi.
With the Commonwealth games at its doorstep, in 2010,
the government has rightly realised the significance of not increasing
duties.
The Indian Wine Academy had been strongly against any
duty increase and had been quite vocal about it. In an analysis done by
delwine and published Et
Tu Delhi? , it had calculated that the increase in the proposed
excise duty would have been more than 140% on the imported CIF price.
Getting close to the 200% excise duty prevalent in Mumbai, it would have
been quite unreasonably high and punitive to the average wine lover. With
lower alcohol and the known health benefits of moderate wine drinking,
this would surely have been a regressive step.
Delhi had already announced an increase in the license
fee from Rs.200,000 ($5,000) to Rs.500,000 making it very difficult for
the smaller, newer importers to survive. It is extremely important for
the government to delink wine from hard liquor and keep the license fee
for wine to a low amount , like Rs.50,000. The hotels, retail and the
consumer would benefit and it would also help tourism, not to mention
the increase in excise and VAT revenues .
Goa and Karnataka have already announced increases which
are significant but not palate-breaking. Mumbai continues to follow the
dogmatic policy of 200% excise duty on the assessable import price; the
rationale being known only to the policy makers.
Delhi's retreat marks the only victory for the imported
wine industry and would be a step to stop the move initiated by Maharashtra.
Now if only the Delhi government would take out the
file announcing the selling of wines freely in the supermarkets , gathering
dust in some steel cupboard!!!!
Subhash Arora
Verona, Italy
April 6, 2008
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