Karnataka had been liberal so far as the sale of foreign wines is concerned with the excise duties of up to Rs. 70 a bottle including VAT/Sales Tax. This compares favourably with Rs. 150 +VAT in Delhi and 200%+VAT in Maharashtra. However, it had not been as pro-active as Maharashtra for the state produced wines.
The recently announced policy of Rs. 300 per bulk liter would mean an increase in excise duty of Rs.225 a bottle for the imported as well as out-of-state (read Maharashtra) and the customer will have to pay about Rs.280 extra.
There is nothing earth-shaking new in the proposed policy which had been formulated and announced earlier by the government and we have written earlier in delWine. It is simply a case of 'der aaye duroost aaye' (better late than never). Going by the mails we have been receiving, there will certainly be a quickening of pace and many new wineries will be set up in the state during the next 3-5 years.
Karnataka does have the right soil, the climate and the successful experience of vintners like Grover Vineyards to suggest that future is bright for the Indian producers in the region. Liberalising of license and allowing the opening of taverns selling wine is a welcome step in more ways than one.
That the sale of wine will increase is obvious. But what is commendable is that at least some government has realised that wine is not an alcoholic product meant to get the 'current'. Implicitly, some one in the power corridor has recognized that this is a food product, that it is a low alcohol product and that it might be better to encourage people to drink wine.
We commend the Government of Karnataka for taking this step.
But what they have gone wrong on is by falling into the trap of increasing the excise duties on out-of-state wines. Mind you, I beg to differ with most of Karnatakans like my friend Alok Chandra who is a wine consultant and writer who feel upset by Kapil Grover's push to call for additional excise duty for the Maharashtra wines. He says that two wrongs do not make a right. Ditto says Abhay Kewadkar who also pushed for the reforms- but when he was with Grover's did not feel it would be wrong to tax the Maharashtra wines.
The point is why the Grovers of India must be subjected to prejudices of a state- any state. While it is never our inten to bring politics into wine, but it is certainly our humble suggestion to put forth that wine is 'secular'. It should not be restricted by any boundaries whether of the states or the nation.
And that brings me to my next point-that of suggesting higher duties on the imported wines. I think it is patently illegal to do so under the WTO regime and unfair to the consumer. There is already a talk of US and EU going to WTO with the complaint which is related to the unrealistic duties imposed by Maharashtra and Goa. Karnataka would be added to the P.S. in the complaint.
Karnataka has been a progressive state in many ways. The government has had good policies on arack. With the foreign investment and culture taking its roots, it has a great opportunity to wean the Diaspora away from hard liquor. With the recent annual growth of over 40%, it has good potential of increasing its excise revenues from higher sales. It should maintain the status quo on duties- both for imported and out-of- state wines.
Incidentally, it is very interesting to record that during my various conversations with Rajeev Samant of Sula, he has openly opposed Maharashtra's policy of charging the out-of-state wineries these additional 150% duties. Another opponent of this policy is Ranjit Dhuru of Chateau d'Ori, the new kid on the block. Unlike Rajeev, he goes to the extent of adding that the excise duties on the imported wines should also be brought back to the original level. 'Let us compete with the imported wines on the quality front,' he says with confidence.
It looks like a lot more is going to ferment in Karnataka soon. The locals should not feel they would be fed to the monopoly of Grovers. It won't surprise me if the likes of Indage and Sula look southwards (if you look at Italy you would know what I mean!). Don't forget Vijay Mallya is the son of the soil. He brews, he distils and who knows he may also ferment in Karnataka like he does in Maharashtra.
Subhash Arora
And to the Chief Minister of Karnataka, I say with folded hands, 'We, the Indian Wine Academy do object to the increase of duty, Your Honour'. |