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Delhi’s New Liquor Policy May Raise Prices Before Festivals
Delhi is preparing a new set of rules for selling alcohol.
The rules may be announced in October, before the festive season.
The government wants to collect more money by raising taxes on liquor.
It may also let shops earn more on each bottle.
This could make liquor more expensive for customers.
The government hopes better earnings will help shops improve and offer more premium brands.
Private companies are not expected to enter the market.
Industry representatives said the price increase should not be unnecessarily large.
The final policy still needs approval from the Delhi Cabinet and the Lieutenant Governor.
Delhi’s new excise policy is likely to be notified in October, ahead of the peak festive season.
The government plans to raise excise duty and retail margins to increase revenue.
Private liquor retailers are unlikely to enter Delhi under the proposed policy.
Higher margins could encourage more premium liquor stores and improve shop offerings.
Industry representatives warned that combined increases in excise duty and margins could have a multiplier effect on prices.
- Who
- The Delhi government, led by Chief Minister Rekha Gupta, is preparing the policy, with input from officials and the Brewers Association of India.
- What
- The government plans to introduce a new excise policy that may increase excise duty and retail margins on liquor.
- Where
- Delhi, with possible effects on customers who currently buy premium liquor in neighbouring Gurugram and Faridabad.
- When
- The policy is likely to be notified in October, ahead of the peak festive season; the final draft is ready but still requires approval.
- Why
- The government aims to raise revenue, improve government-run liquor shops, attract customers and expand premium liquor availability.
Revenue and market improvements
Price and margin concerns
Higher retail margins
Revenue and market improvements
Delhi officials say higher margins could improve government-run shops, encourage upgrades and make premium liquor more available.
Price and margin concerns
The Brewers Association of India said margins of 5% to 15% are generally normal and that substantially higher margins could raise questions.
Higher excise duty
Revenue and market improvements
The Delhi government is considering higher excise duty as a way to increase revenue, and officials said Delhi’s rates are not among the country’s highest.
Price and margin concerns
The industry representative said higher duty would raise liquor prices and could have a multiplier effect because it also increases the base used to calculate retail margins.
Premium liquor availability
Revenue and market improvements
Removing or changing fixed margins could encourage shops to stock expensive imported brands that are currently less available in Delhi.
Price and margin concerns
Customers could face higher prices, potentially reducing the benefit of improved availability.
Key facts
- Expected notification
- October, subject to final approvals
- Current retail system
- More than 700 liquor shops are operated by four government corporations
- Private retailers
- Their entry is unlikely under the proposed policy
- Current retail margins
- A cap of Rs 50 per bottle for Indian Made Foreign Liquor and Rs 100 for foreign liquor
- Current excise duty
- Indian spirits face rates ranging from 30% to 300%, depending on the Wholesale Price slab
- Other taxes cited
- Imported liquor attracts 85% excise duty and beer attracts 150%; Delhi also imposes 25% VAT, according to the industry representative
- Approval process
- The draft is expected to go to the Delhi Cabinet and Lieutenant Governor Taranjit Singh Sandhu after a new excise commissioner is appointed
Quotes
A senior Delhi government official
Delhi government official discussing the proposed excise policy
“This could have a multiplier effect because an increase in excise duty raises the base price, which in turn affects the retail margin calculated on the base/landed price. Therefore, changes in both retail margins and excise duty could have a multiplier effect on retail prices.”
indianexpress.com
“If excise duty is increased, liquor prices will also increase.”
livemint.com
Sources
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