A few categories of liquor, especially premium whisky brands, sold at units run by the Union defence ministry-run Canteen Stores Department (CSD) are likely to get more expensive in Delhi once the new excise policy is implemented in the Capital, an analysis of the rules shows.
The Delhi Excise (Amendment) Rules, 2021, which were notified on May 31, hikes the percentage of civil duty derived from wholesale prices from 50% to 65%. “Rate of duty for sale through Canteen Stores Department (CSD): For the sale of Indian and foreign liquor through the CSD, the rate of duty shall be 65% of the wholesale price,” the policy says.
Further, all brands of alcohol will have to be registered with the excise department, including those which sold exclusively in the CSD channel. This will result in a higher wholesale price of liquor due to the calculation of excise duty on each brand, stakeholders involved in liquor sale in Delhi explained.
Estimates show that under the new excise regime, the cost of aged scotch such as Teacher’s 50 or 100 Pipers (12 years old) will increase by 33% from ₹1,180 to ₹1,570 per bottle in all Unit Run Canteens (URCs) of Delhi. Similarly, VAT 69, Black and White, Teacher’s and others are likely to cost around ₹1,000 instead of ₹800. Brands such as Signature Rare Aged whiskey, Blenders Pride and Peter Scot will cost around ₹430 instead of ₹390 and so on.
“There is currently no fee of any kind on brands sold exclusively in the CSD channel. In the new proposal, it is expected to be ₹1 lakh per brand, apart from a label registration fee of ₹5,000 per label. These changes in the L-23 license category, which is the liquor permit for sale in CSDs, will work against the ad-valorem (paid by percentage) concept, and result in costlier whiskies. It will also adversely impact sales in the Delhi CSD depot, because our customers will then move to canteens in Gurugram or Noida. This way, the Delhi canteens will also lose out on revenue earned from sales of groceries and other items, because officers and their families purchase household goods and liquor on a monthly basis based on their quota,” said a senior official in the CSD depot.A wholesaler who supplies CSDs said bottles that now cost around ₹400 are likely to get more expensive once the new rules kick in.
Nearly 700,000 cases of CSD liquor, including beer, are sold in Delhi every year. The duty collection through CSD liquor ranges between ₹80-85 crore annually, excise officials said.
“Delhi has the headquarters of all the three military forces, and a lot of retired army officers live here. Contrary to the CSD liquor sales across the country, which are mostly of rum, Delhi has a huge CSD consumer base of whisky and scotch. So this move may impact sales,” said a wholesaler who supplies liquor to Delhi’s CSD depot.
The wholesaler added that the new pricing system will reduce the difference in liquor prices between the CSD and civil markets. “The policy allows retailers and wholesalers in the civil market to offer discounts, as prices have been left to the market forces with only a maximum retail price fixed so that the end consumer is not overcharged. There will be little difference between the cost of alcohol in Delhi’s general retail markets and in the CSD canteen. Overall, it is likely that cheaper variants of liquor will get cheaper, while the expensive ones get pricier,” he said.
The general public, as well as serving and retired defence officers, said they were disappointed with the news of the probable hike.
Rohan Marwah, a consultant at a Delhi-based law firm said he sources all his liquor from these canteens.
“Buying alcohol from a civilian store burns a hole in my pocket. CSD canteens sell alcohol at such cheap rates. I specifically hired a person in my team whose father is in the Army, so that I can source my alcohol through him. It may sound funny, but it is true. I have a large social circle and drink frequently, so end up saving around ₹25,000 a year through CSD liquor. The news of a price raise is heart breaking,” he said.
Col (rtd.) Ashwini Channan said, “If prices are increased, there’s little we can do. As law abiding and tax-paying citizens, we shall adhere to the new rate card. It will lead people to shift to defence canteens in other cities such as Gurugram,” he said.
On March 24, HT first reported that under the new excise policy, people will get to avail discounts for the first time while purchasing alcohol, which has so far been prohibited in the Capital, despite being allowed in neighbouring cities like Gurugram.
The rule imposing excise duty on liquor sold at CSDs has not been implemented yet and is not among the 18 amendments to the excise policy that come into effect from Friday.
Meanwhile, the excise department on Thursday extended or renewed licenses of all retail liquor vends in Delhi for three months till September 30. It stated that all licenses are being renewed as per the existing rules for now because “the government of NCT of Delhi has approved the new Excise Policy 2021-22, which is likely to be implemented in the next three months”.