The ripple effect of the tremors caused by Maharashtra government increasing excise duty to 200% is about to reach Delhi if one believes the grapevine. The cost of annual L1- F excise license which allows the wholesaling of imported wines, spirits and beer is expected to be increased by 250 % to Rs. 5.0 lakhs ($13k) for the next fiscal year, starting April 1, writes Subhash Arora.

Reliable sources inform delWine that the existing license fee of Rs. 2 lakhs will be increased to Rs. 5.0 lakhs a year. This is not all. The excise duty is being increased from the current Rs. 150 a bottle to ad valorem, in three slabs. Although, the top slab is expected to be below the 200% uniform excise duty applied by Maharashtra, it is expected to be substantial enough to make foreign wines more expensive in Delhi.

DelWine has expressed fears many times in the recent past, after the draconian increase was announced by Maharashtra in November last year that the other states might follow suit, making imported wines expensive and unaffordable..

Goa had already increased the registration charges a couple of months ago. Karnataka, which has had reasonable tax structure, has been reportedly considering imposing additional duties for out-of- state wines as a reaction to Maharashtra's policy they feel is unfair to wines produced in Karnataka.

Delhi 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. However, it might do well to also consider imbibing the progressive policy of Maharashtra, allowing the sale of wine through department store and supermarkets, which will yield handsome dividends, making wine accessible more easily to consumers in the process.

It must also consider that the neighbouring Haryana has a very attractive excise policy. With supermarkets getting selling license at a nominal charge, the sale and availability of wine is getting better and better. The No-excise-duty regime makes the sales price more attractive in Gurgaon, even though the fixed annual L-2 license charges are not insignificant. A retail shop in the popular shopping center, Galleria in Gurgaon has an asking price of Rs. 18 million. One also needs a stroke of luck to find one's name in the lucky draw of lots.

Undoubtedly, there will be a significant movement of wine cases from Haryana to Delhi. With the NH-8 toll way in action, it may make the inter-state checking rather difficult too.

One hopes the Delhi government has the vision to showcase itself as a truly cosmopolitan city, worthy of being a Host for the Commonwealth Games in 2010, only a couple of million wine cases away.

Subhash Arora
February 28, 2008