Global liquor major Diageo and the International Spirits and Wines Association of India (ISWAI) on Monday welcomed the move of the Maharashtra government to slash the excise duty by 50 per cent on imported liquor.
However, domestic Indian-made foreign liquor (IMFL) manufacturers are opposing the move.
The Confederation of Indian Alcoholic Beverage Companies (CIABC), which represents the domestic liquor industry, said it is "fraught with danger" for the Indian industry and will reduce the state government's revenues.
The Maharashtra government has slashed excise duty on imported scotch whiskey by 50 per cent to bring its price on par with that in other states.
Diageo, which owns global brands such as Johnnie Walker, Black & White, Vat 69, Smirnoff - termed it as 'progressive' policy and compliment the Maharashtra Government.
"Diageo India welcomes the reduction in excise duty on imported spirits, which is in line with what we are seeing in other states. The reduction in duties will make these brands more accessible for consumers in Maharashtra, in line with states like Delhi, Haryana, West Bengal and Goa and is in sync with the strong consumer trend of premiumisation in beverage alcohol," said Diageo India Chief Strategy & Corporate Affairs Officer Abanti Sankaranarayanan.
This new policy will correct revenue leakage for the state by curbing counterfeit and stock movement from other parts of the country, he added.
While ISWAI said the Maharashtra government's move will significantly curtail illicit and spurious liquor and smuggling of products.
"These industry-friendly progressive policy changes would improve tax compliance, eliminate the grey market and inter-state product smuggling thereby increase the state's revenue collection. The consumers can now expect a reduction in prices and legitimate access to better quality global brands," said ISWAI Chief Executive Officer Nita Kapoor.
Emphasising the growing trend of premiumisation and consumer preference for global brands, Kapoor said Indian consumers are increasingly opting for "Bottled in Origin (BIO) and geographical indication (GI) tagged" niche products.
While CIABC Director-General Vinod Giri said: "While we wait for more pricing details, we think that such reduction in excise duty for imported products without consideration for competing Indian products is fraught with danger not only for the Indian industry but also for the government." Prices of imported whiskies are likely to go well below Indian malt whiskies such as Amrut, Paul John etc, which may signal the end of the Indian vision of creating world-class whiskies, he said.
"If prices of imported whiskies become comparable to bottled in India whiskies then the incentive for investing in India goes, impacting jobs and sourcing from local farmers and MSME sector," said Giri adding "Ironically, Maharashtra Government earns more taxes from Indian made products than from comparable imported products hence the substitution of Indian made products with imported products will actually reduce government revenues."