Posted: Tuesday, July 07 2009. 12:30

Excise Breather for Delhi Hotels

With the Commonwealth Games 2010 to be held in Delhi on 3-14 October 2010 not far off, hotels should not have too much to complain now as the price increase can perhaps be buffered within their existing list price, at least for the low and mid range wines. Even if only the exact increase is passed on to the consumer, as being contemplated by many wine-progressive hotels,  the damage to wine sales and the tourism may be contained within the tolerable limits.

Of course, the natural rider would be that the same label cannot be sold in retail, in which case the MRP would be calculated after the addition of all taxes and profit margins. Stand alone restaurants like Olive and Diva who are buying duty free wines, based on their sales against foreign exchange will equally benefit.

DelWine had already written in the previous edition that hotels would be allowed this benefit. Reportedly, approvals have now been given on this basis and the importers are rushing to file their MRP lists for the duty-free buyers.

This step may help the hotels and some restaurants but will certainly result in less wine labels available for the Retail-at least for the present. Importers like Amfora are completely pulling out of Retail. Ranjit Gupta, owner of Amfora says, ‘with the new policy, it has become extremely difficult to sell imported wines with increased duties. We plan to shift our low-end wines also to the hotels. We plan to focus only on duty-free hotels and restaurants, at least for the moment.’

The Retail Prices on wines of course are expected to go up generally by a minimum of 15% for the wines selling at around Rs.650 and will go up to 50% for wines currently selling for just under Rs.2000 at the present time.

The nearby Haryana where the excise duty is practically nil but the retail license costs are exorbitant (and paid by the bidders in an annual auction!), the retailers have a boom time ahead at the cost of the Delhi government. Although only one bottle can be legally carried across the state border, the traffic and movement between the two cities is seamless and it may not be easy to monitor this movement. No wonder the smugglers and bootleggers are going to be the kings- be it imported wine, whisky or ‘wodka’.

Here are some of the Retail Prices based on the MRPs got approved by the importers or are in the process of submitting to the department. Naturally, the department would accept any MRP declared by the importers as they cannot charge more than MRP and the less MRP may mean lower excise duty collection but even lower margins to the importer:

* Prices as supplied directly by the importers. Some importers are also factoring in the 20% devaluation of rupee against the dollar during the last year.

Does the Delhi government expect wine drinkers to shift to Indian wine or IMFL (Indian Made Foreign Liquor)? Or simply shift their buying from Gurgaon or even Chandigarh. You be the judge.

But if you come across a hotel/restaurant that does not change its prices with this sensible approach of the excise department, or passes only the actually increase to the clients, do let us know. We would like to keep such establishments under radar because we know these are the true wine destinations in the coming future.

Meanwhile, Maharashtra Excise has still not released the notification reducing the excise duty that was expected with effect from yesterday. ‘Any minute now,’ is the refrain from all quarters. The annual union budget was not expected to bring down the customs duties down from 150%, anyway. One did hope the SAD of 4% (nuisance value duty) might have been withdrawn. One has to take a long-term optimistic view, perhaps.

Subhash Arora