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Posted: Thursday, 19 July 2018 11:19

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New Delhi Excise Policy to hit Imported Wine Business

July 19: The excise policy for 2018-2019 released today is depressing for the importers as well as foreign producers since the cost of license has been increased, practically by Rs. 50,000 per brand , with the additional Label Registration charges remaining unchanged, hitting directly the smaller and newer importers and choking the variety for the consumer, writes Subhash Arora who feels the policy for wine is an indirect insult to our Constitutional forefathers who get a lip service in the name of Prohibition but in fact the policymakers want to extract from what they feel is the Cash Cow

The wholesale license L1-F keeps the basic price same as last year at Rs. 700,000 (7 lakhs) but instead of keeping the labels unlimited, only 10 labels are included in the license fee (keeping the cost per label at least Rs. 70,000) but additionally Rs. 50,000 have to be shelled out per label. Importers carry around 50-200 labels, including those for other importers who do not market directly but through a licensed distributors. The number of labels is thus going to go down drastically, choking the number of varietals further, rather than expanding the number of labels which is the cry of the day.

Label Registration Charges remain the same as last year, at Rs. 10,000 a label. If an importer had a 100 labels registered,, he would have paid Rs. 700,000+100*10,000=17 lakhs (Rs. 1.7 million) has to suddenly cough up Rs. 700,000+ 90*50,000= Rs. 52 lakhs before applying for the renewal of the license which in any case is effectively for 8 months –from August 1 to March 31. The excise policy in Delhi is rarely announced on time, i.e. before April 1 like the neighbouring Haryana does.  

This will result in slight increase in the prices of wines at all levels and cutting down of the available labels. But a section of the importers feel it may not be possible to increase the prices which are perceived already high by the market. The chain including importers, distributors and retailers who have been charging as high as 30% with hardly any investment, will have to bear the increase. This would be possible for only those who survive the shock.

Brand identity

There is some confusion about the definition of branding vis-a viz excise department. In common parlance a logo and a Brand is what differentiates a product from a competitor.  Brand identity is  the single most important factor for increasing sales and ensuring growth since the dawn of capitalism. Thus Gucci, Omega, Mercedes, Jacobs Creek and Johnny Walker are brands that identify the manufacturer and millions are spent to improve the brand image through various channels or techniques in case of wines as advertisement in liquor is strictly prohibited in India.

It has not been clarified in the policy but the general impression of the trade is that they are synonymous with labels. Thus Hardys may be a wine brand but in the excise parlance, Hardys Cab-Merlot, Hardys Riesling- Gewuerztraminer and Hardys Cab-Shiraz are all different brands-as also the labels (confusion, confusion!).

Hopefully, a clarification would be coming soon from the excise department but right now, most of the importers, once they get over the initial shock, have to start running around to collect the additional millions for registration which can be applied anytime from now –with the similar conditions as last year, but applicable from August 1, in any case. Usually, the new license takes 2-4 weeks and one can expect the availability from September 1 only.

Of course, the policymakers obeisance to our forefathers responsible for making the Constitution and make a mention of section 147 which promotes prohibition and for that purpose gave powers of States to form the policies that are conducive to prohibition- just like the foreign dignitaries making a visit to the Samadhi of late Mahatma Gandhi and go back to conduct normal business, perhaps oblivious of his philosophy.

Clause 13 a of the order says, ‘  in pursuance of the Directive Principles of the State Policy relating to prohibition, contained in Article 47 of the Constitution of India, the Government of the National Capital Territory of Delhi may issue orders and directions from time to time and such orders and directions shall be binding on the licensee and no compensation shall be payable on that account. Clause 13 b talks of the measures like mandatory mentioning outside the premises, ‘Drinking of Liquor is injurious to health". Of course, you and I as wine consumers might feel that wine is not liquor so why should they have to worry about this clause. Then you see a mention of wine in Clause 2.2 that mentions wine as mild liquor and wonder which world  we are living in.

Domestic Wines   

By and large there are no changes in the policy for domestic wines and they continue to require a payment of Rs. 2 lakhs per label as License fee for L-1 license subject to a maximum of Rs. 14 lakhs as earlier years.

Some people feel that the policy might boost the sale of Indian wines because of the price difference and less availability of imported wine labels. Only time will tell..

Subhash Arora

Delhi Excise Policy 2018-19 for L1-F

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 Comments:

 
 

Ram Bharati Says:

 

Good information. our company: MASSEY AGRO FOODS AND BEVERAGES P. LTD., would like to enter in import of wine and beer trade. we are a startup in foods and beverages sector Licence cost is too much high for the new entrepreneurs and startups. Govt should make some special policy /frameworks for the startups to enter in this trade . In the initial stage it is very difficult to invest high amount alone, we are looking for partners, investors for the same. Regards, Ram Bharati Massey agro foods and beverages p. ltd. 9717654115

Posted @ July 23, 2019 12:05

 
       
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