Classic economic wisdom would stimulate demand and investment during recessionary times by reducing taxes and interest rates.
However, state-level policies fly in the face of such conventional practices, as taxes on imported wines have recently been increased steeply in Mumbai, Bangalore and Goa. This, at a time when the economic situation worldwide as well as the Mumbai terror attacks have devastated the hospitality industry in India.
In Mumbai, the excise department has imposed a 200 per cent duty on all wines imported from both overseas as well as from outside the state, besides stipulating that the maximum retail price cannot exceed four times the “cost” (CIF price for imported wines). This has made it uneconomical for most better-quality imported wines to be sold at retail, resulting in these vanishing from retail shelves, and smugglers (once again) having a field day.
In Bangalore, a tax of Rs 300 per litre was imposed on all wines from outside the state, in retaliation to the protectionism in Maharashtra (where the 2001 policy eliminated excise duty on wines produced and sold within the state). To date, this seems to be the only aspect of the new Karnataka wine policy that seems to have been implemented, as there are no signs of either wine taverns or new wineries coming up.
Seeing all these new taxes, Goa, too, increased taxes on wines from outside the state — apart from banning beach parties over the New Year. Goa used to be famous for its liberal rules regarding alcoholic beverages — that’s now changed, and revellers can expect to pay a pretty penny for the privilege of carousing there — particularly for wines.
It’s almost as if the concerned authorities had jointly decided that wines are bad for consumers, that too much wine is being consumed in their respective states, and so restrictions must be placed by increasing costs.
Perhaps it’s the media that is responsible — by constantly saying how much the wine market has grown in India it’s given authorities the impression that this is a golden goose, and that people who drink wine are willing to pay any price for the privilege.
Or perhaps it is just bureaucratic apathy and bloody-mindedness about an industry that caters to a relatively affluent minority — since few people in state governments know anything about wine or how to appreciate it, they may feel that it’s all right to tax this product out of sight.
Whatever the reason, it’s forced me to restrict my own consumption to stuff I had purchased at a bargain price some months back: I’ve been quaffing the Mandala Valley Private Collection Shiraz 2007 (MRP in Mumbai Rs 690, not yet available in Bangalore). It’s deep crimson in colour, has loads of oak and spice aromas and a full-bodied taste with silky tannins and a long, firm finish. Quite yummy, improves with some breathing, should be good for three to five years.
Let’s hope sanity prevails, and that the powers-that-are recognise that wine is a low-alcohol product that is farmer-friendly and good for health — and as such, worth promoting by reducing taxes and costs, rather than treating it like the proverbial Golden Goose.
With best regards to all for a happier 2009.
