Aug 06: Maharashtra Excise Department is working on a policy which will allow sale of wine and beer in department stores at 10% premium on MRP, apparently with no up-front license fee, making even small producers and importers to increase their sales, and will allow opening of wine bars with exclusive sale of wines, writes Subhash Arora who feels the report is sketchy and leaves many questions unanswered including the Status of imported wines but believes all questions will be addressed in the soon-to-be-announced Excise Policy
The policy will introduce a new category- Walk-in Store. The government will define the “walk-in store” category as it covers a wide range of retail outlets, including grocery shops that go beyond the usual over-the-counter sales. “Walk-in retailers such as department stores and supermarkets may stock wine in separate wine racks,” an official reportedly said.
A notification is likely to be announced within the month of August including all the changes. The proposal envisages imposing a nominal excise duty of 10% on wine produced in Maharashtra also. There is already an import duty on wines imported from out of state-from within India or overseas. The government feels the policy will help boost the retail sales of wine.
The government is also implicitly considering non-renewal of the Excise Policy of 2001 which allowed zero excise duty on wine produced within Maharashtra. The 10-year policy was extended for a further period of 10 years and expires in December 2021. The proposed policy appears to suggest that the Policy may not be extended for the third term in its original format.
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The policy also proposes to allow private establishments to open wine bars, where only wine can be sold. Currently, only wineries can open one such retail outlet.
In 2005, the Union agriculture minister Sharad Pawar whose family owns vineyards, had spoken strongly against wine being classified as liquor and called for it to be available at the grocer. (In fact, if my memory serves me right, during this period, I saw Indian wines including Indage being sold in some department stores during my visits to Mumbai-editor). Mr Pawar is a respected and powerful leader of TMC which is a partner with Shiv Sena and the Congress party, currently ruling Maharashtra.
Wine Sales have been dismal during the last year and the current fiscal year so far-especially with on-trade (restaurants, hotels, clubs, catering and banquets being closed) and the industry is on the brink of disaster. The local industry was even given refunds of 16% out of the VAT of 20% charged on domestic wine sold. Still the foundations are rather weak and shaky, especially for the small producers which include many farmers.
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Wine festivals and wine tasting sessions would also get a boost with the new daily licence fee of only Rs. 3,000 being launched. Currently, the organisers have get a temporary one-day licence, costing Rs. 10,000 although it allows liquor as well.
Imposition of Tax In lieu of License
According to the Report says the state government plans to impose a 10% tax on the maximum retail price (MRP) on wine, it is not clear if imported wines would also be included in the policy. There is also a talk of setting aside some part of the funds collected to form a wine board which will work on quality and marketing. Karnataka already has a Wine Board that has been working quite well for the past over a dozen years. Similarly, the central government had also formed a similar Board-but after deliberating for a couple of years they could come up only with Indian Grape Processing Board (IGPB) and today it is languishing with no funds or any support from the government which rues that the grants given by it have been exhausted with no discernible benefits.
Farhad Bhaba is a Director in Vine2Wine, a retail wine and beer store within Food Hall. They have a separate shop license costing Rs. 2.42 lakhs which allows them to sell wine and beer within Food Hall and yet independent and in a corner on the lower Ground Floor, according to specifications of Maharashtra excise.
Similarly, Nature’s Basket has several stores where they stock wine and beer but have subcontracted to La Cave of Brindco. Each store buys a similar annual license separately but in the name of Nature’s Basket, according to Farhad.
Thus anyone can get a license for retail of wine and beer but with an annual fee of Rs. 2.42 lakhs. What would be their status- God only knows (and the excise department). It would be strange to have two different policies within the same city. Of course the clarification will come with the Gazetted notification but till then there is uncertainty all over-once again and this time in Maharashtra.
Sometimes such policies work for the benefit of the importers and customers too. For instance, Wine Park is a wine importer of repute. It had recently acquired a retail license costing around Rs. 3 lakhs (including misc. expenses). Vishal Kadakia, the owner decided to not only keep wines from competitors for retail, he also added a fair selection of Indian wines which are doing well for him but also get showcased. This is ostensibly the objective of the government-to increase retail sales and help consumers find more labels that are registered in the city.
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Latest hurdle for Mumbai Modern Retail
In keeping with the changing times, retailers have been paying attention to the hyper-format stores where the cost of running the operation per bottle or customer can be brought down and the modern format can be implemented too. Retail chains like Moksha, Tonique and La Cave have been planning to open such hyper stores with bigger space, making the shopping experience more pleasurable. Suddenly, a couple of weeks ago, the government announced that no license would be given to stores with an area of 750 sq feet
Interestingly, Delhi government had taken this progressive step many years ago but suspended all licenses because of a few black sheep breaking rules unabashedly and a lack of administration or the will by the government to control the situation from getting out of hand.
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Let us hope the new policy will benefit the consumer and the cosmopolitan, global image of Mumbai. In the meantime, it’s best to have a Wait-and Watch policy for Maharashtra. Delhi has become notorious in India as well as overseas with their irrational policies resulting in the market shifting to the adjoining Gurgaon which is enjoying an unprecedented boom.
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