Delhi govt all set to exit liquor biz, pave way for reforms
- The new policy was implemented on June 11. Under it, retailers are free to decide the selling prices, rather than an MRP mandated by the state government
After decades of operating around 60% of the city’s retail liquor shops, the Delhi administration will formally exit from the business permanently from Tuesday night, paving the way for new privately owned shops that aim to provide a better buying experience to consumers as a new excise regime kicks in from Wednesday.
Owing to the transition to the new system, under which Delhi has been divided into 32 zones, with 27 liquor shops each owned by one retail licensee per zone, the availability of liquor in the city is likely to take a hit for the first few weeks, people familiar with the transition process said. This is because the government has, so far, issued provisional licenses for retail trade of alcohol to about 350 vends, as against the 850 that are supposed to come up under the new regime.
“Availability of liquor will take a hit briefly, but that is expected in such a major transition. In the wholesale market, over 200 brands have been registered, with around 10 wholesale licensees so far. These licensees have started operations with an initial procurement of 9 lakh litres of liquor of various brands. It will take about 2 months for everything to be stabilised,” a senior excise official said on condition of anonymity.
A major trader in Delhi’s liquor business, who wished not to be named, said out of the 350 shops that have got the provisional license to operate, majority of them are not operational yet. “Most of them either are still getting their interiors designed, or are facing delays in terms of stock delivery. So, it will take a few weeks until the real impact of the new excise policy in terms of customer experience is visible,” he said.
Meanwhile, Tuesday will be the last day for the city’s government run liquor shops.
Until the new excise regime was approved earlier this year, Delhi had 849 liquor vends, of which 60% were government and 40% were private. But most of them were dogged by poor service -- personified by the famous grilles that donned most of the storefronts -- did not offer a walk-in experience, and there were allegations of brand- pushing and excise evasion by the city’s liquor mafia.
The new policy aims to change all this. Under it, the new retail stores in Delhi will get rid of the iron grilles at the front of most liquor vends in the Capital, and allow buyers to browse and purchase the brands of their choice; shops will be spacious, well lit and air-conditioned to allow customers a walk-in experience under camera surveillance; and business hours will be from 10am to 10pm, while those at the airport may open round-the-clock.
The office of Delhi government’s excise department was also teeming on Monday with representatives of the new licensees to get last-minute glitches addressed. Some retail licensees who have their shops ready started placing orders for liquor procurement from November 11.
The excise department had kept a total reserve price for all the 32 zones at around ₹7,041 crore, and managed to earn about ₹8,917.59 crore through bidding. In addition to the bid value for the 32 zones, the excise department will also earn about ₹650 crore from excise duty, import fees, value added tax, and other licence fees, an excise official said on condition of anonymity. Another ₹900 crore to ₹1,000 crore is expected to come from licensing of new brands and distributor licenses.
The average revenue of the city from the liquor business over the past three years stood at around ₹5,500 crore annually, according to government data.
The new policy was implemented on June 11. Under it, retailers are free to decide the selling prices in a competitive environment, rather than an MRP mandated by the government.
The prices may spike a little during the initial stage, but they will stabilise soon, said a senior excise official who asked not to be named.
“Liquor prices may slightly start with higher rates in the initial days but, it could also be the other way round. Eventually, the prices are bound to stabilise and we can safely say that Delhi will be strongly competing with Gurugram in keeping liquor rates low and offering attractive discounts, which until now was not possible in the national Capital,” the official said.