Oct 10: The incomprehensible excise policy 2019-2020 is not only hurting several businesses but also resulting in a dip in excise collection during the current year as there has been practically no sales of wine or liquor by the importers since the fresh current excise policy was declared on August 14 and has made distributors go into a wait mode with nobody applying for a renewal, writes Subhash Arora who feels a continuous dialogue between the department and stakeholders is necessary with all the stakeholders to remove the current impasse, especially for the spirits industry
It has become a routine for the excise department in Delhi to announce the policy 3-5 months late every year. So it was no surprise that this year too it was announced just before the independence day- but with a major difference. The distributors and the manufacturers were asked this time to give an undertaking that the prices in Delhi were the lowest in India, ostensibly to cut smuggling from the neighbouring state Haryana. Gurgaon has lower excise duty and generally lower and negotiable prices resulting in smuggling into Delhi, as was observed in several raids during the last few months.
A veteran wine importer under undisclosed identity opines,’ First-off who are the excise people telling us how to decide the selling prices. Secondly, the costing of each bottle can be different. For example, take a wine bottle costing Rs. 5000. At heavy duties of 150%, an importer might import, say a 100 bottles only for a specific niche market. The cost of label registration alone may be Rs. 500 a bottle!! Also the registration charges are atrociously high. Cost cards have to be different for different products. This fact has been even accepted by the Supreme Court for pharma industry where regulated prices are enforced.’
Getting cost card approved is getting to be a complex issue for importers, hindered by the policy of lowest prices in Delhi. Most in the industry agree that due to higher registration charges and excise duties than other states (certainly, Mumbai, Bangalore and the adjoining Gurgaon), have lower registration charges and duties. To expect the lowest rates in Delhi appears to be confounding. Some have taken the wise route of selling a few labels especially in Delhi while others have decided to sacrifice some markets with lower registered prices and also smaller sales.
Big spirits importers do not have this luxury. They are not prepared for the big hair cut. As on Monday, none of the big corporate had applied for registration and label registration including Pernod Ricard, Moet Hennessy, Diageo, William Grant and Brown Forman.
Meanwhile the stocks of imported alcohol including wine are fast depleting in restaurants and even retail. Many labels are already out of stock, according to a report in TOI today.
According to the Report, “The state is losing revenue and we are losing business but have no answer to give to our customers,” complained Varun Duggal, CEO and executive director of Eastman Colour restaurants. Rahul Singh, CEO of Beer Café, added: “This ‘bits and pieces’ registration of alcohol brands has badly impacted our business.”
Prakul Kumar, secretary general of National Restaurant Association of India understand the concerns of the excise department regarding pilferage and bootlegging but would not want customers and restaurants across the city to suffer. He says, they had flagged the issue and given regular representations to expedite the process. “Our delegations have met the excise commissioner and also deputy CM Manish Sisodia,” he said.
This delay in registration could also bode well for some wine importers. 5-6 people have got their license renewed and labels registered-though less in number and especially for Delhi. But the authorities need to look at the problem pragmatically. Most of the problems generate from smuggling from Gurgaon, a fact that came out shockingly to the fore during the last few months when during raids several such cases came to their knowledge. But heavy fines, regular raids and surveys, can be a better solution to solve the problem. (Of course nothing like reduction inn excise duties to avoid the temptation.)
This is also a time to visit GST regime once again. States wanted to keep alcohol (petrol and electricity too) out of the ambit of GST so they could squeeze the alcohol industry as much as required and all such problems of smuggling would have been avoided with GST inclusion.
Consumers are requested however, this Diwali not to buy smuggled alcohol from Gurgaon, if they can help it and drink wine from the local retail shops. There might be a Diwali gift anyway for them with cheaper wine and alcohol available soon from retail .
New Clause in Excise Policy
Subhash Arora
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