Wine producers sour over move to hike excise duty

If you are a fortified wine consumer, you can expect a steep rise in its price shortly. For, a proposed hike in excise duty by 177 per cent is set to make wine costlier and in some categories, the rate could double, according to industry sources.

Termed by the Excise Department as a policy intervention to support the famed Bangalore Blue grape growers, the move is now being seen as detrimental to wine producers who use the grape variety. The hike will come into effect on July 1.

The Excise Department’s draft notification on June 22, hiking the excise duty by 177 per cent, would mean increase in excise duty on one litre of wine from Rs. 17 to Rs. 47. “We presently sell a litre of fortified wine for Rs. 100. With the new excise duty, it may even go up to Rs. 263 for certain categories,” claimed P.L. Venkata Rama Reddy, president of the Karnataka State Wine Producers’ Association.

“We are producing 60,000 cases of wine a month, which we expect now to come down to 15,000 cases,” Mr. Reddy said.

However, S.R. Umashankar, Excise Commissioner, said the excise duty had been hiked only for extra neutral spirit (ENA) which substitutes 50 per cent of grapes with the ENA from molasses. “The hike in excise duty for fortified wine is done as a policy intervention to encourage fruit wine,” he said, defending the move.

Meanwhile, Narayanaswamy, spokesperson for the Karnataka Grape Growers Association, told

The Hindu that the bulk of Bangalore Blue grapes was now being bought by Maharashtra wine producers and the hike in excise duty, though was detrimental to the sector, would not affect the growers much.

Mr. Umashankar said the objections by both wine producers and grape growers to the draft notification would be looked into before taking a final call.