Liquor likely to cost more in Delhi from November 17. Here's why

Liquor stores in Delhi have, so far, been dominated by government agencies resulting in a relatively lower price for the product as compared to the neighbouring states.

Amid the festive season, liquor prices in Delhi are likely to go up very soon as private vends open from November 17 under the new excise policy. The Delhi government’s excise department is still in the process of fixing the maximum retail price (MRP) of liquor brands to be registered in Delhi. However, officials noted that the wholesale prices of all types of liquor -- Indian or foreign -- are likely to increase by 8-9 per cent.

Nearly 40 percent of the city-state’s liquor shops, the private vends, have already shut on October 1.(Amal KS/HT Photo)

"The increase in wholesale price will lead to at least 5-10 per cent increase in MRP of liquor, although the actual effect will be realised only after the new retail system as per the excise policy for 2021-22 is in place," a liquor trader told news agency PTI.

All the 849 vends in the national capital will be operated by private entities from November 17.

Under the new Excise Policy 2021-22, the excise duty and VAT have been subsumed in the licence fee. A nominal excise duty and VAT of 1% each on wholesale price (WSP) of the alcoholic beverage will be levied to arrive at the landing price to the retailer, the order read.

The Effect

The order stated that since all vends shall be operated by private business entities in a competitive market environment, they are likely to operate at their maximum efficiency and as a result, the market size in terms of number of casks sold is likely to show a significant increase as compared to 2019-20.

So far, tipplers in Delhi have enjoyed a relatively lower price for their alcoholic beverages when compared with the neighbouring states of Punjab, Haryana and Uttar Pradesh.

Considering the incorporation of factors including central sales tax at 2%, profit margin for the wholesaler, import pass fee and freight and handling charges, as approved in the Excise Policy 2021-22, the impact is 10 per cent to 25 per cent rise for some brands of whisky (Indian manufactured foreign liquor or IMFL), with fluctuation per unit from 8 per cent (Royal Stag Premier) to 25.9 per cent (Blenders Pride Rare), PTI reported.

A similar impact is expected on all other categories of liquor as well.

Moreover, the capping of ₹50 as retail margin on sale of IMFL and ₹100 on sale of foreign liquor has been discontinued and there will be no cap on the retail margin of IMFL, foreign liquor, beer and wine.

The competitive market forces will keep watch over the sale price to the consumer, the order said.

At the same time, discount on MRP has been allowed in the Excise Policy 2021-22 to bring competitive market forces into effect.

The Risk

"It is important that the consumer should not be burdened with price increase. The changes brought about in the new excise policy will need reasonable time to play out in the market,” the order stated.

"In the overall interests of consumers of Delhi, to prevent the interstate smuggling, the MRP for 2021-22 should as far as possible be in the same range as prevailing in Delhi," it said, adding that the impact of increase in wholesale price (if any) also needs to be factored in while fixing the MRP.

The Excise Commissioner will fix MRP for each liquor brand and product after taking into account the input of licensees and the price of the product in the neighbouring states of Haryana, Uttar Pradesh, Punjab and Rajasthan.

Nearly 40% or 260 of the city-state’s liquor shops, the private vends, have already shut on October 1 and will remain closed till November 16.

So far, the majority of retail sales in Delhi was handled by the government's agencies. During the transition period in October, only government-run liquor outlets are open.

(With Agency inputs)