UKIBC welcomes curb on imported liquor tax in the State of Maharastra and West Bengal

By Shubhi Mishra

Recent years have seen significant UK investment in the domestic spirits sector in India, with British companies supporting innovation, value creation, and driving the globalisation of iconic Indian brands.

The Seventh Schedule to the Indian Constitution grants exclusive powers to State Governments to regulate alcohol, levy excise duty on its production, and the powers to tax the sale of alcohol, resulting in over 30 unique sets of laws governing the production, distribution, and sale of alcohol. To make, move, and sell alcoholic beverages in India, companies must obtain licenses, approvals, and permits at every stage of the process starting from manufacturing, to transport, storing and selling, and the payment of duties and levies.

A recent announcement from States of Maharastra and West Bengal have reduced State taxes for alcoholic beverages making several brands more accessible to the end consumers. Such progressive decisions by the two State Governments will help to ensure the integrity of the marketplace by enhancing the operating conditions for legitimate quality products of the highest standards produced by both domestic and international players.

Maharastra

The State is an economic and industrial powerhouse with a significant premium purchase trend. Yet, although already successful, the State is not resting on its laurels. It is aiming to be a trillion-dollar economy in its own right by 2025. The State’s strategy includes developing better industrial and urban infrastructure, simplifying the regulatory environment, and constructively engaging in a two-way dialogue with business. A recent example of how business to government engagement can go well is the announcement from the Maharastra Government to slash excise duty on imported liquor.

The State Government took this step to curb inter-state smuggling and bring the prices of imported liquor on par with those of other states. State Government officials say the measure was expected to increase the government’s revenue by Rs 150 crore in a year. They stated that excise duty on imported whisky, brandy, rum, and vodka has been brought down from 300 percent to 150 percent of the manufacturing cost. The excise reduction will apply only to imported liquor brands bottled and packed in the country of origin (BIO), and not to those international brands that are bottled in India. It also does not apply to Indian Made Foreign Liquor (IMFL) brands. The new excise rates have come into effect from the date of the notification, on November 18, 2021.

West Bengal

While signing our MOU in September 2020, the UKIBC and the Government of West Bengal were looking for a collaborative partnership to boost business and industrial development in the state by proactively developing the business environment and strengthening collaboration with British businesses in West Bengal. UKIBC welcomes the call of the West Bengal Government to reduce taxes on alcoholic beverages, which lowers down the prices of all liquors as a result.

India-made foreign liquor (IMFL), bottled in origin (BIO), overseas spirits bottled in India (OSBI), and wine are dropping by 20-40 percent. Prices of beer dropped by 5-6 percent. The net effect of the changes has resulted in lower MRP in the state even as a special purpose fee is being charged to promote responsible drinking. The said announcement displays the dynamism and determination of the political and bureaucratic leadership.

Liquor prices in the state had shot up by 40-90 percent across brands in the financial year 2020-21 through a series of tax rate changes as the government scrambled to find ways to shore up revenue to combat the impact of the COVID-19 lockdown. The motive behind this action is to put an end to smuggled, illicit, and spurious liquor products and increment in the state revenue.


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