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New excise policy ushers in fixed licence fee regime
June, 19th 2012

As expected, the state government did away with the auctioning system and liquor licences will be granted through a draw of lots as per the new excise policy announced on Monday.

With the existing licences expiring on June 30, the new policy will be in place on July 1, 2012 and the government has brought in a paradigm shift in the policy by introducing fixed fee licence regime. The fee fixation is based on the population of the area where the shops are proposed and the lowest price would be Rs 32.5 lakh where the population is less than 10,000 and the highest of Rs 1.04 crore in a city like Hyderabad where the population is above 10 lakh.

The dealers can apply for the licence by paying a non-refundable application fee of Rs 25,000. The last date to file the application is June 25, and the draw of lots will be held either on June 26 or 27.

The move to bring in the fixed fee licence method is apparently prompted by MRP violations by the retail outlets due to the huge amounts they paid during auctions in the previous year. The MRP violations and other irregularities have resulted in an ACB investigation monitored by the AP high court. While the new policy envisages strict implementation of MRP, it allows APBCL outlets and the retail shops of distilleries to act as price regulators. However, there would be no increase in the number of liquor shops and it remains at 5,696.

The new policy lays down strict norms to curb belt shops. The retailers had demanded permission to serve liquor for consumption on the premises of the shop, but the government decided against it and stuck to the old norm of allowing permit rooms in non-municipal area where the population is more than 5,000. While retailers welcomed the fixed licence fee method, however, they felt that the licence fee was on the higher side. "The rationale of doing away with the auctioning is to bring down the licence fee. But, it is still on the higher side in areas like Hyderabad city and it would not help in curbing MRP violation," said Rayala Subba Rao, president of AP Wine Dealers Association. He appealed to the government to reduce the fee and also wanted it allow permit rooms even in municipal areas so that the dealers are not forced to resort to irregularities.

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