India: Liquor players welcome excise duty reduction in Maharashtra

Global alcoholic beverages behemoth Diageo and associations like the International Spirits and Wines Association of India (ISWAI) welcomed Maharashtra government's move to reduce the excise duty on imported liquor by 50 percent, the Business Today reported on November 23.

Diageo, which owns brands like Johnnie Walker, Black & White, Smirnoff and Vat 69, has welcomed the move as it will make liquor brands ‘accessible for consumers in Maharashtra’ in line with Delhi, Haryana, West Bengal and Goa. It also called this a ‘win-win policy for consumers, industry and the Government’.

“We compliment the continued efforts of the Maharashtra Government in bringing progressive policies to the state. Diageo India welcomes the reduction in Excise Duty on imported spirits, which is in line with what we are seeing in other states,” says Abanti Sankaranarayanan, Chief Strategy & Corporate Affairs Officer, Diageo India.

“The reduction in duties will make these brands more accessible for consumers in Maharashtra, in line with states like Delhi, Haryana, West Bengal and Goa and is in sync with the strong consumer trend of premiumization in beverage alcohol. This new policy will correct revenue leakage for the State by curbing counterfeit and stock movement from other parts of the country, making it a win-win policy for consumers, industry and the Government,” says Sankaranarayanan.

ISWAI said that this move will improve tax compliance and significantly curb smuggling of products and illicit and spurious liquor. “These industry-friendly progressive policy changes would improve tax compliance, eliminate the grey market and inter-state product smuggling thereby increase the state’s revenue collection. The consumers can now expect a reduction in prices and legitimate access to better quality,” ISWAI CEO Nita Kapoor underscored.

Domestic Indian-made foreign liquor makers have, however, opposed the move. The Confederation of Indian Beverage Companies (CIABC), which represents the Indian liquor industry, said this move is "fraught with danger" and will dwindle the state government's revenues.

"While we wait for more pricing details, we think that such reduction in excise duty for imported products without consideration for competing Indian products is fraught with danger not only for the Indian industry but also for the government," notes CIABC Director-General Vinod Giri. Giri also mentioned that prices of imported whiskies may go down below that of Indian malt whiskies (Amrut, Paul John) and this may put an end to the vision of creating world-class whiskies.

He further added that this will also impact job creation, sourcing from local farmers and the MSME sector. “Ironically, Maharashtra Government earns more taxes from Indian made products than from comparable imported products hence the substitution of Indian made products wi9th imported products and will actually reduce government revenues.”

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