Delhi’s new excise policy aims to do away with liquor syndicates

Recommendations have been made to raise licence fee of liquor vends and lower legal drinking age

Liquor sales, revenue from liquor, southern states, Lockdown, coronavirus, COVID-19
Almost all states of India stare at a huge loss of excise revenue due to massive evasion of excise duty. Photo: iStock

“Some call it bootlegging. Some call it racketeering. I call it a business,” said the Chicago mafia of the yesteryears, Alphonse Gabriel Capone, famously known as Al Capone.

Gone are the days of the gun-toting mafia in liquor trade which has with the passage of time, transformed into a well organised syndicate, which now works as a well-oiled silent machinery, wielding much of affluence and influence to penetrate deep into the system and corrupt it, for its own gains.

Almost all states of India stare at a huge loss of excise revenue due to massive evasion of excise duty. Cheap brands, manufactured by the syndicates, are being pushed across to hapless consumers over the counters of wine shops, with much ease.

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The National Capital of Delhi, a metropolitan with a population of about 1.9 crore plus a large floating population, is a big liquor market, which has been facing similar problems when it comes to collection of excise duty on sale of alcohol. The porous borders of Delhi also witness rampant smuggling of duty not paid liquor into the capital, which hurts the state exchequer gravely.

The Excise Policy of Delhi of 2009 needs a complete overhaul and the Delhi government plans to unveil a new and efficient one in 2021.

A committee formed under the leadership of Deputy Chief Minister Manish Sisodia, with ministers Kailash Gehlot and Satyendra Jain, has suggested some sweeping changes in the policy and if adopted, the new policy could not only be beneficial for consumers but also be financially more viable for the Delhi government’s exchequer.

Registration of brands

Whiskey: The committee has suggested that brands selling below the retail price of ₹601 per bottle would be registered in Delhi only if the brand and its variants have sold at least a lakh cases each in minimum of five states, excluding Delhi, which have IMFL industry (Indian Made Foreign Liquor) higher than Delhi and a minimum of 10 lakh cases volume including CSD (Canteen Stores Department) in the previous year across India, excluding Delhi. For brands with retail prices of more than ₹601 per bottle, no sales figures will be required for registration.

Rum and Vodka: The committee has suggested that brands selling below the retail price of ₹501 per bottle would be registered in Delhi only if the brand and its variants have sold a minimum of 10,000 cases each in at least five states having IMFL industry (Indian Made Foreign Liquor) higher than Delhi and at least a lakh cases, including CSD, in the previous year all over India, excluding Delhi. For brands with retail prices of over ₹501 per bottle, no sales figures will be required for registration.

Beer: Strong beer, having more than 5% alcohol strength and MRP up to ₹150 per bottle, would be registered in Delhi only if the brand and its variants have sold a minimum 10 lakh cases, including CSD but excluding Delhi, all over India, with registration in at least five states.

Lager beer, having upto 5% alcohol strength and MRP up to ₹150 per bottle, would be registered in Delhi only if the brand and its variants have sold a minimum of 5 lakh cases including CSD but excluding Delhi, all over India, with registration in at least 5 states.

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For all beer brands with retail price over ₹150 per bottle, no sales figures will be required for registration of the brand.

Brandy and Gin: No sales figures shall be required for registration of brandy and gin brands in Delhi.

These recommendations were made in view of the smuggling of cheaper brands into Delhi, manufactured outside the capital by persons already running several liquor vends in the city. The liquor vends’ staff push cheap brands and self-made products to hapless consumers, denying them quality products to earn more profit for the owner of the liquor vends.

Raise in licence fee

The high-powered committee has also proposed a raise in the licence fee from ₹8 lakh to ₹75 lakh per year. But the panel has also devised ways to ensure vends’ owners do not suffer losses due to the steep hike in licence fee.

Till now, liquor vends owners used to earn a profit of ₹50-100 per bottle but the committee has proposed a profit of 8% from the MRP of the product, which will compensate the liquor vends owners for the hike in licence fee.

Vend allocation system to be changed

The committee has recommended the discontinuation of the practise of auto-renewal of licences. Now vends are to be allotted by lottery and no individual would be allotted more than two vends. This has been done to do away with the existing monopoly and cartelisation in the system as at present, there are individuals holding as many as even 20 vends in Delhi.

Delhi to gain more from excise duty

The new excise policy aims to increase the excise duty that the Delhi government receives from the existing ₹5,068.7 crore to ₹7,651 crore per annum.

Other recommendations

  1. The committee has recommended to raise the number of existing 720 liquor vends in Delhi to 916 for its population of 1.90 crore. Compared to other Metros, Mumbai has 1,190 vends against a population of 1.23 crore and Bengaluru has 1794 vends across a population of 1.93 crores.
  2. The panel has recommended lowering the permissible drinking age in Delhi from 25 to 21 years.
  3. Recommendation has also been made to extend the timings of keeping bars and pubs open till 3 am.

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Ever since the panel’s recommendations have come into public glare, the existing liquor syndicates in Delhi have engaged in hectic lobbying to stall the process by hook or by crook. The big question that remains unanswered is whether the Arvind Kejriwal government will buckle under the pressure of the affluent and influent syndicates, or will shatter this nexus to provide a better excise policy to Delhiites.

(The author is the Editor-in-Chief of www.indianpsu.com)

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