On March 22, the Aam Aadmi Party (AAP) government in Delhi announced a slew of changes in the excise policy. Apart from lowering the drinking age from 25 to 21, the government has also proposed the establishment of five “super-premium” vends which will offer the best liquor brands and high-end walk-in experiences.
The government has withdrawn from running liquor vends, thus paving the way for the private sector to fully take over liquor retailing in Delhi.
The main aim of the policy, Delhi’s deputy chief Manish Sisodia said, is to rectify liquor trading in Delhi and blunt the liquor mafia, which will mean an increase in government revenues. Delhi chief minister Arvind Kejriwal tweeted:
Excise reforms announced today will act as a major blow to liquor mafia in Del. The mafia will do everything to obstruct these reforms. AAP govt has ended mafia raj in many sectors like education, water, elect, health etc. We r committed to reforming this sector too https://t.co/pbk1NnfhO2
— Arvind Kejriwal (@ArvindKejriwal) March 22, 2021
Here are the expected changes in Delhi’s liquor scene, once the policy is implemented. It is likely in three months:
Lower drinking age, fewer dry days
Apart from lowering the permissible age for drinking to 21 from 25, the policy introduces the international concept of “age gating”, whereby those under the age of 21 will not be allowed to enter places that serve liquor. Those accompanied by parents will be allowed.
In Mumbai, hard liquor is not allowed for those under 25 but anybody above 21 can consume wine and beer. In New York, those above 21 can consume liquor while London has a permissible age limit at 18. The policy, approved by the Arvind Kejriwal cabinet, also recommends to bring the number of dry days on par with Haryana, Punjab and Uttar Pradesh to curtail the current practice of Delhi customers visiting the neighbouring states on dry days. At present, there are around 21 dry days in a year in the national capital. UP has only four and Punjab three.
Exclusive premium vends
Delhi will have at least five 'super premium retail vends', which will be allowed to stock at least 100 imported liquor brands considered premium quality liquor. These outlets will also be allowed to sell beer with a maximum retail price of above Rs 200. Telangana and Karnataka have also permitted such ‘elite liquor vends’ in Hyderabad and Bengaluru. The stores can dedicate 10 percent of their space to sell ancillary products such as cigars, liquor chocolates, high-end art paintings, among others.
READ: Delhi govt prepares new excise policy that will increase liquor prices by 50%
According to a study entitled ‘Exploring perceptions of alcohol use in two Indian states: A qualitative study from Delhi and Haryana, India,’ published in the International Journal of Alcohol and Drug Research, people from the middle- and higher-income groups from places like Delhi and Haryana prefer expensive brands of hard liquor, beer, and wine.
Delhi’s drinking population also consists of a slightly older clientele in comparison to other metros like Mumbai and Bengaluru.
Frequent drinkers in Delhi are excited. “I would splurge on expensive alcohol for big moments in my life like graduations, big career milestones, weddings, etc,” says Deepali Agarwal, a 24-year-old fashion designer who previously resided in Noida.
However, some retailers are not excited since it will be under government control. “As a retailer, I would be open to the government giving us (retailers) opportunities to participate in the establishment of such spaces. Before they venture out to enact such policies, they must also protect us. We also have to support the people working in our stores,” said Aditya Mehrotra, owner of The Liquor Store, Delhi.
Private players to take over government-run vends
The Delhi government would not run any liquor shop. Currently, 60 per cent of Delhi’s liquor vends are run by the government. The policy says that 40 percent of private liquor shops give more revenue than government-owned shops. While the government has decided that no new liquor shop will be allowed in Delhi, the government-run shops will be closed and new contracts will be given out through bidding.
The policy proposes a hike in liquor vend licence fee from Rs 8 lakh to Rs 75 lakh a year. The policy of auto renewal of liquor vends’ licences has been dropped. Vends will now be allotted by lottery, restricting one individual’s maximum allotment to two vends. Delhi currently earns ₹6,574 crore each year through excise revenue. The government, now, plans to increase its annual revenue by ₹1,500-2,000 crore. At present, the government earns excise revenue of ₹46 crore from brand registration, ₹ 4,507 crore from Indian liquor, ₹240 crore from foreign liquor and ₹ 210 crore from country liquor. The state government also earns ₹170 crore from licence free from restaurants and bars servings liquor, ₹300 crore from export and permit fees and ₹ 40 crore from retail licences, among others
Registration of brands
The policy has recommended different registration criteria for different brands of liquor, depending on the pricing and sales figures outside Delhi. For example, in the case of whisky, the policy suggests that brands selling below the retail price of ₹601 per bottle would be registered in Delhi, only if the brand and its variants have sold at least a lakh cases each in minimum five states, excluding Delhi, which have an IMFL industry higher than Delhi and a minimum of 10 lakh cases, including CSD (Canteen Stores Department), in the previous year across India, excluding Delhi. For brands with retail prices of more than ₹601 per bottle, no sales figures will be required.
A ‘welcome’ policy
The liquor industry has welcomed the excise policy, saying it is "progressive" and in line with current times and existing reality. “We welcome the many consumer-friendly measures, including bringing the legal drinking age in Delhi, on par with neighbouring states, the introduction of ''age-gating'' at restaurants and bars, equitable geographic spread of retail outlets in the state and 100 percent private retail," Anand Kripalu, Managing Director and Chief Executive Officer, Diageo India, which owns United Spirits Ltd, told PTI.
The Confederation of Indian Alcoholic Beverage Companies (CIABC), which represents domestic liquor makers, said it "wholeheartedly welcomes" all steps that bring the excise policy in line with current times and existing reality which includes reducing the drinking age.