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Posted: Sunday, 10 January 2021 23:44

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Progressive Excise Policy for 2021-22 in UP

Jan 10: The BJP-run Uttar Pradesh government headed by the Chief Minister Yogi Adityanath announced last night a progressive Excise Policy for 2021-22, which will bring down the prices of wine, beer and liquor, encourage responsible alcohol drinking and still have revenues increase of Rs 6,000 Cr, writes Subhash Arora who feels that the dictum of lower taxes encourage higher revenues and lower smuggling will be in play in 2021-22

The state cabinet took the decision last night at a cabinet meeting headed by CM Yogi Adityanath. The revenue for 2020-21 is expected to be Rs 28,340 crore in 2020-21, while the expected revenue for 2021-22 will be higher by around Rs. 6,000 Cr to Rs 34,500 Cr.

Wine Retail sale will be allowed to vintners. (This implies that the Indian wine producers will be able to open their dedicated retail counters). Wine Tavern shall also be allowed in these premises, according to Economic Times. The sale of Low Alcoholic Beverages (LAB) shall be allowed in foreign liquor retail shops, model shops and premium retail vends in addition to beer shops.

Premium retail vends shall be permitted at airports. Wine tasting facility and sale of drinking accessories shall be allowed at premium retail vends.

Also read: Reforms expected in Delhi Excise Policy for 2021-22

Due to Covid-19, the period April-June 2020 shall be excluded in determining the renewal criteria, according to the new policy, which has been a sore point for distributors and wholesalers in most other states.

The prices of wine, LAB and foreign liquor are expected to fall with the government reducing the Covid cess imposed on liquor vends in May last year.

Fruit Wine Promotion

Although ‘wine’ explicitly means that it is made from grapes (wine shops selling liquor notwithstanding, even though the consumer and the government is waking up gradually to the British Folly), there is a huge scope for fruit wine made from local fruits in India with every state specialising in growing fruits a big chunk of which goes waste.

It is heartening to note that the policy encourages the ‘Atmanirbhar Bharat’ concept by exempting wine produced within the state from excise duty for a period of 5 years. With UP having abundance of fruits like Mangoes and Lychees, this will encourage many entrepreneurs to set up fruit wine production units, thus complementing Indian wines. It is implicit that if wine grapes can be grown, these wines will also be exempt from duties.

Also read: U.P. gets first Modern Wine and Liquor Store Madira in Lucknow today

This follows the example of Maharashtra where the duty on fruit wine was reduced in 2019 to Re.1 a liter, if only to keep the industry in check. Sooner or later, the U.P. government will also find a way to control the fruit wine industry. It is not clear whether the new units will be entitled to the capital subsidy of 25% as granted by the Ministry of Food Processing Industries.

Use of Technology

The new policy encompasses the total digitalisation of the excise department in 2021-22. Efforts will be made to computerise all the processes and procedures of the department under the Integrated Excise Supply Chain Management System.

At present, the strength of alcohol is being measured by manual hydrometers. The use of certified digital alcohol meters will be mandatory in laboratories of the department and in distilleries. The sugar mills and distilleries in the state shall install mandated modern electronic devices before December 31, 2021.

The system of sale of liquor in retail shops using Point-of-Sale (PoS) machines shall be implemented in 2021-22.

Liberalised packaging

Sale of imported liquor (BIO) and Indian made foreign liquor (IMFL) in whiskey category, with an MRP of over Rs 2,000 will be allowed in mono-cartons.

To provide good quality liquor at economic prices, UP- made Liquor (in Tetra-pack and up to 42.8 per cent abv) made from Grain ENA shall be sold at an MRP of Rs 85 through country liquor shops.  

The current provision of no liquor shop within 5 kms of the border of another district, will be done away with. This is in sharp contrast with the recommended Policy in Delhi where the Excise department has recommended 3 vends in each district to have evenly spread vends.

Also read: Jail for carrying more than a Bottle of Alcohol across Border to UP

Anti-alcohol Awareness Campaign  

A special campaign is being launched to create public awareness on the adverse social and medical impact of drinking. Responsible Drinking will be encouraged with focus on under- age drinking (less than 21 years) and drunken driving. However, Re. one crore will be earmarked- a pittance considering an increase of revenue of Rs. 6000 Cr is expected. Hopefully, the government will pump up the resources in future, further encouraging lower alcohol products like wine, beer and hard Seltzer.

To promote ease of doing business, brand registration, label approval, bar and micro-brewery licences will have the option of renewal for up to 3 years instead of annual approvals.

Advance storage of foreign liquor, beer and wine for the year 2021-22 will be allowed from February 15. To ensure availability of liquor during the beginning of the year on April 1, there will be no roll over fee for carrying forward of these stocks.

Conclusion

Prima-facie, this seems to be quite a progressive excise policy and the government deserves kudos-specially to encourage low alcohol beverages like wine. One hopes that in future, it will consider reduction in duties in wine- it being a healthy, lifestyle, food product.

Subhash Arora

 

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