India Gate closed for wine? New taxation frustrates Delhi


delhi_gatewine.jpgIn a move that’s sure to cause a lot of angst within the Indian wine community, the Delhi government has changed its taxation policy from a flat fee of Rs. 150 on imported wine to 30% of the price. A bottle of Louis Roederer champagne will jump from Rs 5,890 to Rs 7,500, while Moet & Chandon, currently priced at Rs 3,950, could be priced over Rs 5,000 at retail, said industry sources. Shiv Singh reports on the latest episode of the Indian wine tax saga.

Aman Dhall, MD of Brindco, one of the largest importers of wines, said in the Economic Times that the latest development will severely undermine the quality and breadth of premium and super-premium offerings in the Delhi market and drag down sales significantly. This taxation change comes just as the city was gearing up for the Commonwealth Games which would have in normal circumstances led to an increase in wine consumption.
The Delhi excise effected changes on imported spirits and wines over the weekend even as it called for industry response to a draft notification released more than a fortnight ago. The draft notification had suggested a slab structure in taxing the imported brands, but changes unveiled only talks of a 30% fee on MRP across price segments, sources added.
We at Sommelier India cannot but help express our disappointment at the change. We absolutely recognize the need for the government to tax liquor – it has and always has been an important and lucrative revenue stream. But to increase the local taxes so significantly and in one swoop will only hurt the industry and the wine culture. Indian wine drinkers in Delhi will be appalled at the prices and will shy away from more expensive wines. What’s more, at a time when hotels and restaurants need the revenue most to offset their losses, they will suffer further. The terrorist attacks in November last year hurt hotel occupancy and the hospitality business is still recovering from that traumatic event. The economic downturn doesn’t help either.
So what does this really mean in a practical sense? Wine at the low end of the spectrum will hardly be affected. But keep in mind that practically no foreign wine is cheap enough not to be affected. As a wine bottle gets more expensive, so too does the tax at 30%. Indian wine producers are sure to benefit as they operate mostly on the cheaper end of the spectrum. So too will duty free shops and embassies that are spared the taxation. Indian wine drinkers will suffer because they will no longer be able to afford a decent wine while dining at restaurants, but will be forced to go for cheaper, lower quality wines.
It is hard to tell how the EU will respond and if they will. Either way, the Indian wine drinker and foreign visitor is going to find Delhi an unfriendly city for wine lovers, while the hospitality business which sorely needs people to wine and dine will feel the pinch too. For prices of wines available in Delhi visit the Wines to Buy section.

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