ThankPad 1 | Delhi’s excise policy- Is it a game changer?

A panel of industry experts converged to deliberate upon on the much talked about Delhi’s excise policy.There was consensus in the panel that Delhi government did come out with a very progressive policy to bring in qualitative change in the capital city’s liquor business.There were voices in the panel which pointed some significant gaps in the policy and some of the apparent dangers of creating new kind of monopoly by big distributors.

The  ThinkPad Session 1 of the 8th edition of Spiritz Achievers’ Awards didhave an esteemed panel which comprised Rahul Singh, Founder – Beer Cafe & Trustee – NRAI (Moderator), Raju Vaziraney, Head Business Development – Amrut Distilleries Ltd., Pradeep Gidwani, Industry Leader & Serial Entrepreneur, Abhinav Jindal, CEO and Founder – Kimaya Himalayan Beverages LLP, Gianander Dua, Director – Hops Marketing, Nishant K Srivastava, Co Founder – Actus Legal and Siddharth Sharma, an advocate. They deliberated on the above-mentioned sensitive topic for the industry at length.

Doing Away with VAT and Excise Duty

As always, Rahul Singh, Founder – Beer Cafe & Trustee – NRAI, set the tone of the discussion very impressively in the opening session as he did an overview of the salient features of the newly implemented Delhi’s excise policy. He is of the view that Delhi’s excise policy is path- breaking. “Whether this path is right or not time will tell,” he quoted. Rahul was involved in the process of drafting the policy and commended Rahul Dhawan, the erstwhile Excise Commissioner, and described him as the father of Delhi’s new excise policy. He pointed out disruptions happening on the ground pertaining to the policy, which according to him “is incurring huge economic losses for industry.”

“Delhi is the first state which has eliminated VAT and excise duty on liquor products sold in Delhi. Delhi made Rs. 9000 crore revenue from bidding of liquor outlets, which is two times more than from the last fiscal’s revenue collection in Delhi from liquor outlets’ bidding,” he elaborated.
He tabled most pertaining aspects of Delhi’s excise policy to debate, deliberate and discuss , ranging from MRP, legal drinking age, retail margin and more.

5 Cs of New Excise Policy

Abhinav Jindal, CEO and Founder – Kimaya Himalayan Beverages LLP, agreed on Rahul’s take on Delhi’s excise policy and highlighted that “This policy covered each and every aspect of Delhi’s liquor business that needs to be covered.”

To substantiate his stand, he evaluated the excise policy on 5 Cs criteria i.e. customers, cost, communication, context and convenience. According to him, the new excise policy well defined the cost of products from producers to consumers and he sounded confident that the excise policy would help alcobev companies. “Newly launched excise policy of Delhi protects the interests of manufacturers in terms of getting better pricing of the products, better reach at lesser logistical cost,” Abhinav emphasised in his articulation in favour of the excise policy.

He spoke about the convenience provided in terms of process and procedure to alcobev trade from retail to on trade and off trade business in the capital city, by the newly launched excise policy.

“Before the arrival of this excise policy communication between liquor manufacturers and retailers with the consumers was banned. Alcoholic beverage companies could not directly communicate with the customers even at the point of sale. Putting a liquor advertisement on shelves was tantamount to a crime which could have been punished with even a FIR,” he asserted while comparing the old excise policies of Delhi with the new policy.

He emphasised that the problem lies in the execution of the policy and “without addressing the gaps in the execution of the policy realisation of the stated objectives would be almost unimaginable.” He urged to open communication with the concerned parties in this regard.

Belligerent Bidding Process

Raju Vaziraney, Head- Business Development – Amrut Distilleries Ltd., was very critical of the way entire bidding process was carried out by the Delhi government under the new excise policy.

“Entire bidding process has been done very aggressively; pre-Covid amounts were the base amounts on which bidding was done and to our dismay lots of people from non-liquor background and from other states came in and mindlessly did bidding, which was 70 to 75 percent higher at an average,” he explained.

However, he commended the entire process of policy formation as it accommodated the thoughts from stakeholders. He further appreciated the open door policy of then Excise Commissioner, Rahul Dhawan to invite suggestions on various aspects of the policy. He stated that the policy had various reforms as suggested by him and the team of CIABC.

He predicted that due to unprecedented pricing model and compulsion to pay excise duty lots of people would be exiting from Delhi’s alcobev business by the end of this year. He urged to avoid such situation by avoiding mindless pricing. Raju cautioned the industry that traders and retailers needed to move carefully. “We are not doing business only for a year. Products should be sold at the right prices,” he advised.