While the consumption of imported liquor is already rising, the Maharashtra government last week slashed excise duty on imported liquor from 300% to 150% (50%) in a bid to further boost the share of imported liquor in overall consumption while curtailing smuggling and dealing in illicit liquor. The move will further increase imported liquor’s share in overall consumption, according to the International Spirits & Wines Association of India (ISWAI), an apex body of the premium AlcoBev (alcoholic beverages) sector.
State excise officials said that while the government currently earns a revenue of about ₹100 crore from the sale of imported scotch annually, this is expected to increase to ₹250 crore as the sale of imported scotch is expected to go up from 100,000 to 250,000 bottles while also curbing smuggling and bootlegging.
State excise superintendent Santosh Zagade said, “Since Maharashtra state excise was charging three times more excise on foreign liquor, people were buying it in other states like Delhi and Karnataka. Hence, Maharashtra has taken this step to stop this.”
Meanwhile, the ISWAI said that the move will bring price rationalisation and parity with other states, thereby boosting state excise revenues from this segment. It will also significantly curtail the incentive for dealing in spurious/illicit liquor and help curb smuggling of alcohol products from other states while benefitting consumers in Maharashtra in terms of access to genuine products.
Nita Kapoor, chief executive officer, ISWAI, said, “These industry-friendly, progressive, policy changes will improve tax compliance, eliminate the grey market and inter-state product smuggling, thereby increasing the state’s revenue collection. Consumers can now expect a reduction in prices and legitimate access to better quality global brands.”
Emphasising on the growing consumer preference for premium global brands, Kapoor said, “Indian consumers are increasingly opting for ‘bottled in origin’ (BIO) and geographical indication (GI) tagged niche products which carry a stamp of premium quality. The Maharashtra government has taken cognisance of the emerging growth trends of BIO.”
Whereas Shivaji Khandve, president, Pune District Wine Merchants’ Association, said that it will take two months for the new pricing to come into effect though sales of BIO will definitely increase. Thus, it might have an impact on the prices of imported goods by around 15 to 20%. He added that there will be a revision in the MRP formula as well. “Now if companies show higher production costs and book profits, naturally the impact of reduction in excise duty will be less,” he said.