The recent announcement by the Delhi excise department that it is considering a 25% cut in the excise duty and reducing the distributor license fee by an equivalent amount is too small and comes too late, indicating a lack of application of mind on the part of the state government to treat wine really separating it from liquor, writes Subhash Arora .
‘Wine Lovers can all Raise a Toast: Delhi Moves to Cut Prices’ screams the headline of the daily Indian Express, giving the impression to the reader that the wine prices are finally going to become more affordable. The proposed reduction brings duty to nowhere near what is being charged by Maharashtra and the neighbouring state of Haryana.
The Excise has drafted a Cabinet note, which has been sent to Finance for evaluation. Once it is cleared by Finance and Law, it will be placed before the Cabinet for approval. If the proposal is cleared, it will be implemented from April 1, says the report. The government has been known to wait for months even after making such policies public, before the Gazette Notification is issued. Therefore, it is anyone’s bet on what and when the much needed reduction would take place.
Earlier, Delhi used to charge a Rs.150 a bottle excise on all imported wines. Following the then Maharashtra example, it jacked up the duties to 30-20% slab rate on MRP a few years ago; this translates up to 200% of the CIF value of wines before levy of customs duty.
The excise license fee for distribution used to be Rs.200,000 but was jacked up to Rs.500,000 with no differentiation in the distribution for wines and spirits or for wines alone.
According to the announced wine policy it was a conjecture that the excise duties would be levied on the wholesale price rather than the current MRP from the new fiscal year in April 2011, thus bringing them to practically half of the existing duties. The current proposal falls short even of that expectation.
In all fairness to the department, it did take some progressive measures during the last couple of years. Licenses have been given to open shops in the Malls and that is good news for the wine availability-even though the licenses allow sale of liquors too.
Super markets have been allowed to sell wine and beer and that is a good initial step- though the excise department needs to be asked why a well established store- but a new entrant to Delhi –like Nature’s Basket of Mumbai needs to be present in Delhi for one year before getting the license for selling wine. The ambiguity of area for wine storage keeps the doors open for corruption.
The excise department had also allowed the new license- L 4D for restaurants and eateries to serve only beer and wine. This has been the most progressive and laudable step taken. As the report points out, the department has been flooded with applications but so far only eight cases have been cleared. If the department were serious about promotion of wine consumption, it would have cleared all such applications-subject to following the rules and specifications set by it.
What is required is bringing down of the license cost to Rs.200,000 –even for the domestic producers. Excise duty should be brought back to around Rs, 150 a bottle for the low ended wines to protect the Indian industry. Higher priced wines could be levied higher slab rate, like in Maharashtra. The registration charges of Rs.50,000 for the Indian wine labels are too ridiculous even to comment any more. There should be a label registration charge of Rs. 1-2,000 only for both Indian and imported wines to make it possible for several more labels to be available on the shelves-especially for the supermarkets and restaurants in the new category..
Of the Rs 1,668-crore revenue that Delhi Excise earns, only Rs 20 crore is courtesy the sale of wine. "The wine market in Delhi is very limited. There are not many takers. We are hoping that if prices are reduced, sales will increase," an official said according to the report.
It is high time there should be a public debate on the statement made by the official. It will perhaps bring out the fact that the consumption has been choked and constrained by the excise duties, laws and regulations as well. There is a huge latent demand and possibility of conversion from spirits to wine like in China. It is the lack of will that camouflages the problem and wine drinkers are being thrown a few crumbs so they may ‘raise the toast ‘and be grateful to the government for bring the prices down.
Montepulciano, Tuscany, Italy.
February 17, 2011