TROUBLE BREWS

Mumbai, Nov. 20: Imported wines will cost more in Maharashtra but the prices of premium whisky will head lower.

That is the upshot of the latest rate tweak by the Maharashtra government, which has raised the duty on wines from 150 per cent to 200 per cent.

But that is not all: the state government has said the duty on wines will either be 200 per cent of the assessable value or Rs 200 per bulk litre, whichever is higher. “The minimum duty of Rs 200 per litre will effectively stop the import of cheap table wines into the state,” said an industry source.

“This is the first time that something so drastic is happening with wines. We just have to wait and see how the connoisseurs of wine react,” said Viveka Rawal of SV Distributors, a prominent wine importer.

Back in May, the Centre had scrapped the 150 per cent additional customs duty on wines and spirits after the European Union (EU) hauled India to the WTO dispute settlement body for violating the ground rules of world trade.

The EU action was prompted by a cacophony of protests by wine makers and scotch whisky manufacturers who were furious over India’s practice of slapping a basic customs duty of 100 per cent on wines and 150 per cent on spirits, and topping it with an additional duty on bottled spirits of up to 150 per cent and on bottled wines of 20 to 75 per cent.

When the Centre scrapped the additional customs duty, states such as Maharashtra virtually nullifed the benefit by raising their own duty rates on wines and spirits. At that time, Maharashtra had imposed a 200 per cent duty on spirits and 150 per cent on wines.

After persistent lobbying by liquor industry, Maharashtra has now replaced the flat 200 per cent duty on spirits with a four-slab structure.

In the first slab, duty will be levied at 200 per cent or Rs 300 per bulk litre, whichever is higher, on spirits with an assessable value of Rs 1,000 per case of 9 bulk litres.

The other slabs are 150 per cent (for spirits with an assessable value of Rs 1,000 to Rs 2,000 per case), 100 per cent (Rs 2,000 to Rs 5,000) and 75 per cent (for those valued at above Rs 5,000).

“The prices of spirits will go down. But the prices of premium and mid-priced wines will shoot,” said Satyam Sabla of Juben Wines, a prominent liquor store in Juhu.

“It’s sad to see the Maharashtra government behaving the way it has. There are just too many lobbies at work. A duty change in four months is uncalled for,” said Sabla.

Rawal said the luxury hotels in the city would have to rearrange their wine lists because premium wines would become unaffordable. “I see a situation where the hotels will cut down their wine lists,” she added.

Mumbai accounts for 40 per cent of India’s wine consumption.

A top-end wine that costs Rs 10,000 a bottle will now cost Rs 30,000 with the 200 per cent duty. “It will be completely unaffordable. We have to wait and see how the customers react,” she said, adding that it won’t be long before wine importers gather forces and lobby the state government to reduce the duties.