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Hindustan Times
8 hours ago
- Business
- Hindustan Times
Proposal to allow 2,160 new liquor shops put on hold after Shiv Sena objects
MUMBAI: In a bid to augment revenue, the state excise department headed by deputy chief minister Ajit Pawar on Tuesday proposed that 2,160 new liquor shops be allowed in Maharashtra. The recommendation was part of the cabinet proposal to increase the excise duty on liquor—the latter was passed on Tuesday, leading to a huge hike in liquor prices. The bid to increase liquor shops in the state, however, was immediately opposed by Shiv Sena ministers, citing the possibility of a backlash from the people and social activists. Ajit then offered to reduce the number to 360 shops but was still opposed by Sena ministers, following which chief minister Devendra Fadnavis put the proposal on hold. The state government committee, set up in January and headed by Valsa Nair, had proposed one licence per district to each of the 60 distilleries in the state. The liquor-manufacturing companies currently get a licence for one liquor shop, and since new licences have not been issued for over five decades, the excise department opted for the indirect route of issuing new licences to liquor-manufacturing units only. When the proposal came up for discussion, tourism minister and Shiv Sena leader Shambhuraj Desai, who was excise minister in the previous government, strongly opposed it. Other Sena ministers joined him, pointing out that a similar proposal brought in by Desai during the Eknath Shinde government's tenure, was opposed by Ajit Pawar's party which cited the possibility of a public backlash. Currently, there are 1,700 liquor licences for Indian Made Foreign Liquor (IMFL) and over 3,500 for country liquor in existence in Maharashtra. Owing to opposition from social activists and citizens, the government has not issued new licences since 1972. 'The excise department has been citing the licence auction system practised in other states, including Uttar Pradesh to back up its proposal,' said a senior minister. 'However, the state government, fearing a public backlash, has been deferring it. This time, therefore, the department suggested issuing licences only to liquor-manufacturing units.' Following the Sena's opposition, Ajit Pawar sought to change the proposal to offering one shop licence for each of the six revenue divisions of the state. This would mean about 360 new liquor shops. Although this was also opposed by Sena ministers, the proposal has not been cancelled but merely put on hold. The Valsa Nair committee has also recommended a slew of other measures to boost the liquor-manufacturing and consumption sector. It has recommended the adoption of several 'ease of doing business' measures such as doing away with stringent provisions such as the mandatory approval of a superintendent-rank officer for beer dispensers installed in permit rooms. It has recommended the promotion of wine, which right now sells a meagre 10 million litres per year in the total annual liquor sales of over 1,110 million litres. The committee has also recommended proper coordination between the excise and goods & services tax departments to plug the evasion of value-added tax (VAT). 'The GST department levies 10% VAT on the sale of liquor in permit rooms,' said an excise department official. 'Our department claims that the sales figures of permit rooms are underdeclared, leading to a VAT loss of 50% or ₹600 crore per year. The committee has recommended better coordination and sharing of the data of sales with the excise department to plug the evasion of VAT by permit rooms.'
Mint
2 days ago
- Business
- Mint
Maharashtra: Country, imported premium liquor prices to soar as cabinet approves excise duty hike on IMFL
On Tuesday, the Maharashtra cabinet approved several revenue-enhancing measures in the excise department, including an increase in liquor duty. The state excise duty on Indian-made foreign liquor (IMFL) soared by more than 50%, leading to a significant rise in retail prices by over 60%. It has also hiked the duty on country liquor and imported premium liquor, which will increase their retail prices by 14% and over 25% respectively, HT reported. However, the excise duty on beer and wine has not risen as the retail price of beer, which has a lesser percentage of alcohol in comparison to hard liquor, is among the highest in the country, officials said. When it comes to wine, the state follows a policy of promotion, as Maharashtra is home to a large portion of the country's wineries and a significant number of grape-supplying farmers are based in the region, the report stated. The government anticipates that the substantial hike will boost its revenue to ₹ 57,000 crore, an increase of ₹ 14,000 crore from the ₹ 43,620 crore collected in FY 2024-25. It expects this to contribute 10% of the projected ₹ 5.60 lakh crore in total revenue receipts for the 2025-26 financial year. In an effort to generate revenue to support the strained exchequer and fund populist schemes like Ladki Bahin, along with benefits for farmers and other communities, the Mahayuti government formed a committee in January, led by then Additional Chief Secretary Valsa Nair, to suggest ways to boost liquor revenue. The committee submitted its report in April, and the state cabinet approved its recommendations on Tuesday, the report added. Following the committee's recommendations, IMFL will now be subject to an excise duty that is 4.5 times the manufacturing cost, up from the current rate of three times. An IMFL official told HT, 'This will vary based on the manufacturing price but could lead to a huge hike of over 60% in retail prices.' Currently priced between ₹ 120 and ₹ 150 for 180 ml, the cost of IMFL will now rise to a minimum of ₹ 205. Premium brands, which currently range from ₹ 210 to ₹ 330 for 180 ml, will now start at ₹ 360. Meanwhile, the price of a 180-ml bottle of country liquor has increased from ₹ 70 to ₹ 80. The government has introduced a new category called Maharashtra-made liquor (MML), which will be exempt from the duty hike. Made from grains, MML will be priced at a minimum of ₹ 148 for 180 ml, a rate deliberately set within the current IMFL price range to help MML compete with and capture a share of the IMFL market. The excise duty hike on IMFL brands is the first in 14 years. Officials noted that, despite the increase, the duty remains lower than in neighbouring states such as Madhya Pradesh and Telangana. Another official pointed out that the duty increase on country liquor was kept minimal to prevent a shift towards illicit alcohol, as a sharper rise in price could drive such consumption. "It is also because the last hike was done in 2022,' he stated. "Maharashtra was the most highly taxed state in the country in terms of this industry. The new decision is likely to make the situation worse. High prices in a particular state leads to the smuggling of alcohol from less taxed states or from neighbouring states. At the look of it, I think this decision is far from ground reality and not a good decision,' Indian Express quoted Pramod Krishna, former Director General, Confederation of Indian Alcoholic Beverage, as saying.
Hindustan Times
2 days ago
- Business
- Hindustan Times
Excise duty on liquor goes up by over 50%, retail prices to rise from 14% to 60%
MUMBAI: The cash-strapped Maharashtra government on Tuesday increased the state excise duty on Indian-made foreign liquor (IMFL) by over 50%, which will lead to a significant increase in retail prices by over 60%. It has also increased the duty on country liquor and imported premium liquor, which will hike their retail prices by 14% and over 25% respectively. The excise duty on beer and wine has not been increased. The government expects the whopping hike to increase its revenue to ₹57,000 crore, up ₹14,000 crore from the ₹43,620 crore collected in FY 2024-25. It expects 10% of the estimated revenue receipts of ₹5.60 lakh crore for the financial year 2025-26 to come from this. While tapping sources of revenue that would enable the drained exchequer to bear the burden of populist schemes like Ladki Bahin and sops for farmers and other communities, the Mahayuti government in January constituted a committee headed by then additional chief secretary Valsa Nair to recommend steps to increase revenue from liquor sales. The committee submitted its report in April this year, and the state cabinet gave its assent to this on Tuesday. Based on the recommendations of the committee, IMFL will now attract four and a half times excise duty on the manufacturing cost instead of the existing three times. 'This will vary based on the manufacturing price but could lead to a huge hike of over 60% in retail prices,' said an excise department official. The cost of IMFL currently ranges between ₹120 and ₹150 for 180 ml, which will now go up to a minimum of ₹205. Premium brands will cost a minimum of ₹360 for 180 ml as against their current rate ranging between ₹210 and ₹330. The price of 180-ml bottles of country liquor has gone up to ₹80 from the current price of ₹70. Beer and wine have been exempted from the excise duty hike. Officials said the retail price of beer, which has a lesser percentage of alcohol compared to hard liquor, is among the highest in the country and was thus exempted. In the case of wine, it is the policy of the state to promote wine since a significant chunk of the country's wineries are in Maharashtra and a significant number of farmers who supply grapes for these wineries are also based here. The government has also introduced a new category called Maharashtra-made liquor (MML), which will also be exempted from the hike. MML brands, made from grains, will cost a minimum of ₹148 for 180 ml, a price that has been strategically kept in the existing price range of IMFL to help MML capture the IMFL market. An official from the excise department said that the new category had been introduced to revive the 70 manufacturing units that manufacture IMFL from molasses and grains. 'Currently 22 of the 70 licenced units are entirely defunct while 16 do no manufacturing and renew their licence only for permission to sell liquor through their shops,' he said. 'The remaining 32 are actually manufacturing the liquor, and 10 of these produce 70% of the IMFL manufactured in the state.' The official added that distilleries using molasses would have to shift to making grain-based liquor in order to get the benefit of the exemption. The reason for this, he alleged, was that most of the grain-based manufacturing units are owned by politicians and the decision was taken to benefit them. The duty hike on IMFL brands has come after 14 years. According to officials, the excise duty levied is still lower than other neighbouring states like Madhya Pradesh and Telangana. 'The committee's recommendations were based on the study of the rates in other states,' said an officer. Another officer said that the hike in duty on country liquor brands was minimal since a greater increase and higher price would lead to the consumption of illicit liquor. 'It is also because the last hike was done in 2022,' he said. The cabinet has also allowed owners of bars to rent out permit room licences for alcohol by paying 10% of the licence fee.
