Nov 24: Maharashtra has announced a 50% reduction in excise duty for imported spirits like whisky, rum, brandy, vodka and gin from 300% to 150% but beer and wine have not been included in the latest order announced last Thursday, writes Subhash Arora who feels that the action will increase the excise collection as the reduced smuggling from other States would result in increase in legal sales resulting in higher revenues
The State government for example, currently earns revenue of about Rs.100 Cr from the sale of Scotch Whisky annually. This amount is expected to increase to Rs.250 Cr as the sale is expected to increase from the current one lakh to 2.5 lakh bottles. The reduction in duty is expected to reduce smuggling of whisky from other states. The sale of spurious liquor is also expected to go down.
“Reducing excise duty will help in curbing smuggling (of liquor). State is expected to get over double the revenue from it which is currently at Rs.100 Cr annually," the Maharashtra government reportedly said in a statement.
With this Order, the price of a one- Liter bottle of Scotch whisky, which currently ranges from Rs. 5,000 and Rs. 14,000 will drop by over 35%, according to Livemint. However, the excise duty reduction will apply to only imported liquor brands bottled and packed in the country of origin, and not the international brands like 100 Pipers, Teachers etc. that are bottled in India. The reduction also does not apply to Indian Made Foreign Liquor brands.
Maharashtra has among the highest excise duty on imported whisky as compared to its neighbouring states but the prices are expected to become closer to those in Goa. Sources say the smugglers and bootleggers have been active even from places like Delhi and Gurgaon from where they bring it by train or by air. Goa has the lowest liquor tax rate in the country in order to promote tourism.
While the policy is welcome by importers and retailers who will get increased share, it appears to be discriminatory against wine which needs more boost, being the lower alcohol product which is a healthier lifestyle drink.
Global liquor major Diageo and the International Spirits and Wines Association of India (ISWAI) have welcomed the move but the domestic Indian-made foreign liquor (IMFL) manufacturers are opposed to it. The Confederation of Indian Alcoholic Beverage Companies (CIABC), which represents the domestic liquor industry, said it is fraught with danger for the Indian industry and will reduce the state government's revenues.
Retailers are now waiting for clarity on the new pricing. State excise officials claim that the reduction would come into effect from (November 18, the date of notification but retailers are being told that the new MRPs can be applied only from mid-December, according to a Report in the Indian Express.
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