Financial Daily from THE HINDU group of publications
Monday, Feb 25, 2002
Industry & Economy
Government - Taxation
Liquor industry split on duty issue
P.T. Jyothi Datta
NEW DELHI, Feb. 24
THE alcoholic beverages industry is headed for a storm in its goblet, with both the domestic industry and the foreign liquor companies leaving no stone unturned to project themselves as aggrieved. The domestic industry is pleading with the Union Finance Ministry to retain the current tariff structure, vis-a-vis imported liquor.
On the flip side, foreign liquor companies are urging the Centre to bring down the basic duty of 210 per cent steadily to 150 per cent in line with WTO commitments, besides reducing the additional duty, currently ranging between 75 and 150 per cent.
Pouring out its woes in the run-up to the Budget, the All-India Distillers' Association (AIDA) said: "The contention that the duty structure has shut out official imports is not borne out by official statistics of imports maintained by the Director-General of Commercial Intelligence and Statistics (DGCIS)."
In its letter to the Revenue Secretary, Dr S. Narayan, AIDA points out that in the April-July 2001 period, whisky imports have recorded an eight per cent increase in terms of quantity and a 38 per cent increase in value terms over the previous year; brandy and rum registered a 5,000 per cent and 3,000 per cent increase.
Meanwhile, AIDA also urged the Government to free the domestic industry from the moratorium imposed on the expansion of capacities of distilleries and breweries. The domestic industry was the worse off, since it was unable to avail itself of institutional finance, as it was on the negative list, AIDA said.
Mr D.N. Batra, Secretary-General, AIDA, told Business Line that if imported liquor was faced with tariffs between 467 to 710 per cent, the domestic industry had to contend with steeper tax-rates ranging between 888 and 1,000 per cent, thanks to tariffs varying across 28 States. "The DGCIS figures confirm our worst fears - in the last three months cheaper imports have started flowing into the country."
MNCs counter the domestic industry's fears point by point. They claim that the Director-General of Foreign Trade's import figures consists of liquor concentrate also, hence the "increase" in liquor imports.
"The DGFT figures also contain figures for bulk import of liquor concentrate imported by manufacturers in India. The legitimate import of BIO liquor is barely 10,000 cases," says Mr Deepak Roy, President (South Asia, Russia & Baltics), Guiness UDV. Mr Amrit Kiran Singh, Vice-President and Area Director, Brow-Forman Worldwide, observes: "The absurd level of duties (at a time when the peak rate of duty for all other products is 35 per cent) has been the cause of some embarrassment for the Government."
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