Delhi Excise Policy: Whining Times - Lopamudra Ganguly

With the annual policy change, the Delhi government seems to be more rigid this year. Following in the footsteps of Maharashtra, there seems to be no cheer for wine lovers. Imported wines are going to become more expensive and unaffordable. A special report.

The outline of the policy indicates that the existing licence fee of Rs 2 lakhs will be increased to be five lakh a year. The excise duty per bottle is going to increase from Rs 150 a bottle in three slabs. Although the top slab is expected to be below the 200 per cent of uniform excise duty applied by Maharashtra, it is expected to be substantial enough to make foreign wines more expensive in Delhi.

Since Maharashtra had announced to increase last November, Delhi wine consumers had expressed their fear that the other states might follow suit.

The resonance has already reached Goa, Karnataka and now Delhi. Goa has increased the registration charges a few months back. Karnataka so far had a reasonable tax structure but is now considering imposing additional duties for out of state wines as a reaction to Maharashtra's policy.

Subhas Arora, President Indian Wine Academy says, "The ripple effect of the tremors caused due to the Maharashtra government increasing excise duty to 200% is about to reach Delhi if one believes the grapevine.

The cost of annual L1-F excise licence which allows the wholesaling of imported wines, spirits and beer is expected to be increased by 250% to Rs 5.0 lakhs for next fiscal year, starting April 1st.

"Delhi like Maharashtra has no complex problems of protecting local producers as it is only a consuming region. Ostensibly, the planned increase would be to increase the state coffers as well as to allow the sale of wine through departmental stores and supermarkets, which will yield handsome dividends by making wine accessible more easily to consumers in the process.

But over in neighbouring Haryana, with an attractive excise policy and supermarkets getting selling licence at a nominal charge, the sale and availability of wine is getting better. The No excise –duty regime makes the sale price more attractive in Gurgaon.

Being a neighbouring state, there will be a significant movement of wine cases from Haryana to Delhi .With the NH-8 toll way in action; the interstate checking may rather become difficult. Says Mr. Pramod Krishna President, CIBAC: "We had a long wish list to increase government revenue, but only one aspect has been partially met regarding the levy of brand fee which was very disagreeable.

Now the govt has decided to levy the brand fee on the wholesale instead the retail price. Our demand was on ex-distillery price." The excise duty might not change much for wines costing around Rs 120 a bottle, according to the Delhi wine club survey.

But if one compares the duty structure of wine with Maharashtra, the proposed excise would result in an increase of over 140% for Delhi as compared to 200% in Mumbai. The following example with simplified calculation was chalked out by the Delhi wine club.

For premium wine costing say Rs 500 ($12.50), the customs duty would remain the same @150%+SAD @4 % (refundable) The excise duty increase at 25% of MRP, according to the proposed policy works out to Rs 707 which is 141% of the assessable value.

A similar calculation for an inexpensive wine of assessable value Rs 100 would cost Rs 576 in Delhi and Rs 636 in Mumbai but the new excise ruling would make it cheaper by Rs 11 at an MRP of Rs 565. For premium Indian wines, the writing in the wall is bleak with this kind of policy. The fine wines are being put out of the reach of the consumer-while cheaper imported wines are set to have a field day.