The mini Exim Policy announced by the Commerce Minister, Mr. Arun Jaitly on 28th January is sure to bring blackberries and chocolate and peaches and flowers to the nose of wine lovers. In one stroke, wine has become financially more approachable and available. Duty-free wine and liquor will now- be allowed also to 1 and 2 star hotels, heritage hotels and stand-alone restaurants to the extent of 5% of the forex earnings during the last three licensing years. They must have had atleast Rs.30 lakhs worth of these earnings through credit cards. Other hotels were already extended this facility seven months ago.
An intelligent move by the government has been to lay a condition that all benefits due to the reduction must be totally passed on to the consumer. This rider was widely anticipated. It had been expected that the hotels getting the sops would pass on a major chunk of the reduction to the consumer and increase their sales. But in their myopic vision and pressures for short-term profits, most of them reduced the prices marginally on the pretext of holding old stocks. True, a few hotels like Sheraton did bring the prices down by 20-30%, but the reductions were not fully passed on and others kept on postponing the decision to drop prices. Government in its collective wisdom took the right step of passing the same facility to these lesser hotels rather than withdrawing the concessions.
The policy is going to be helpful to restaurants like Diva in Delhi and Indigo in Mumbai, which may have expats as their clients. But simple calculations will tell you that Rs.30 lakhs sales would entitle you to a duty-free import of Rs. 1.5 lakhs, which is miniscule compared to their total sales of wine and liquors. . But the hotels will be the definite winners and thanks to the rider, the consumers. It will be interesting to see how the government monitors the ‘rider'.
A step in the right direction, we must agree. The minister deserves applause and a toast (and perhaps, a few extra votes for his government!) But the real McCoy will still be a reduced duty structure making wines cheaper and more approachable.
Cheers! Subhash Arora |
