The Indian Government has cut duties on liquor. The Finance Ministry has finally withdrawn all additional customs duties on imported spirit, wine and beer, following ongoing complaints from the EU and US on the high duties levied by India.
A European Commission study had reported that the combination of duties and taxes in some states in India was as high as 550% on imported spirits and 264% on wines. Abhay Kewadkar, Sanjay Menon and Alok Chandra share their opinions.
While the Centre has acted on the additional customs duties, which fall within its domain, the government is expected to empower states to levy duties and allow them to recoup revenue losses.
The big question is, will you and I benefit?
Abhay Kewadkar chief wine maker of United Spirits and director of Four Seasons Wines from United Brewries told us that the less expensive foreign wines that were highly taxed will cost less and this will, prima facie, make a big difference. The cost of the more expensive wines will remain the same. “My reaction at this point,” he said “is very guarded.” “How far the states go and duties change remains to be seen.”
From wine importer Sanjay Menon’s perspective in Mumbai, the outlook does not appear rosy. There are too many variables.
“They have taken away additional duty but have increased basic duty on wine to 150%. Also it’s very likely that the states will bring in additional taxation… ,” he said. “Yes, in some states we may be better off than we are currently, but in the biggest market, Bombay, if additional taxation, in line with what is being charged to domestic ‘imports’ from other states, is introduced, even the duty-free advantage of hotels will be negated.”
In Sanjay’s view, the only way to increase the market for wine, and that includes domestic players, is to completely open up the market.
Meanwhile, Alok Chandra, who has been reporting on taxes for Sommelier India, said, it was difficult to say which way the wind will blow.
“I think that in Maharashtra the local wine lobby will ensure that prices for the cheaper wines do not drop, whereas in places like Delhi and Bangalore this will happen, whereas prices of the most expensive wines should actually increase a bit.”