According to traders, the permission to offer discounts will likely give an increase to the liquor industry in the capital because it will significantly lower the price difference to Haryana.
After receiving a 25% government rebate, liquor stores in Delhi began offering discounts on Saturday.
After a rush of buyers caused chaos and overcrowding in retail outlets, the Delhi government disallowed promotional offers and discounts on February 28. This was in violation of Covid guidelines.
“The government has reconsidered the decision and directed that discounts/rebates/concessions up to 25% of MRP (maximum retail price) shall be allowed on the sale of liquor in the jurisdiction of the NCT (national capital territory) of Delhi with strict compliance of Rule 20 of the Delhi Excise Rules, 2010,” excise commissioner Arava Gopi Krishna said in the Friday order. Rule 20 limits the amount of liquor that can be sold to an individual to nine liters.
At a time when Delhi was expected to hold municipal elections in April, the discounts were ended. The Lok Sabha has passed a law to merge three of the capital’s municipal corporations. This will result in a redrawing the municipal wards, from the 272 to 250. The polls have been delayed by at least one year.
The Bharatiya Janata Party currently governs three municipal corporations and has been fighting against the new Delhi excise policy that allows for steep discounts.
One liquor trader who owns multiple liquor stores in South Delhi said that he is offering flat 25% off all brands of liquor as well as imported and local beers in his stores.
“We have printed posters and graphics and placed them for promotions. The trader said that all discounts offered are in accordance with the excise department’s new order. A trader stated that he plans to offer “buy three, get 4 bottles of beer” because beer demand is high during summer. He declined to be named.
Vinod Giri (director general of Confederation of Indian Alcoholic Beverage Companies), a lobby group, said that the permission to offer discounts will likely give a boost for the liquor industry in the capital. It will reduce Haryana’s price differential, which could result in increased sales and revenue for Delhi.
It will also make liquor in Delhi cheaper than it is in Noida or Ghaziabad.
Under the new excise policies that came into effect in November last year, the government allowed discounts for liquor prices for the first times in February. Local residents complained about the steep discounts at liquor vends that caused a rush to buy.
According to an affidavit filed by the Delhi government at the high court, the February discounts resulted in sales of 24.50 millions litres of liquor capital. This is almost twice the average monthly sale in 2019-20 of 13.2million litres.
Sales fell after the discount was discontinued. The Delhi high court heard a number of appeals from liquor vendors challenging the government’s decision to end the discounts. Petitioners claimed that sales had declined due to the decision, and that people were flocking to neighbouring cities to purchase cheaper liquor.
The new excise policy has led to Delhi government exiting the capital’s liquor business and has given the liquor business over to private parties. Open tenders have divided the city into 32 zones.
Officials said that the Delhi government is currently preparing a Delhi Excise Policy 2022-22-23 within the next two month. In the meantime, the excise department has extended all liquor trade licenses to private vends until May 31.
“The Delhi excise policies explicitly allow for free market and discounting. Giri stated that it was also a material assumption upon which retailers had base their bid amounts. “Hence, the willingness to accept discounts up to 25% is a welcome step towards normalcy. This would allow retailers to make any discount they wish. Discounts not only benefit Delhi consumers but also lower price arbitrage vis-a-vis Haryana and help stop Delhi sales and revenue leakage.