The much awaited Incentive Grant of 16% towards VAT was announced last Friday, allaying the fears of the Maharashtra producers that it might not be allowed now because of the impending state assembly elections in mid-October, but the order has an unfavourable rider, writes Subhash Arora.
When I talked to Yatin Patil, the owner of Vintage Wines, a small Nashik producer focussing on quality wines, on Wednesday, he was not aware of any notification. In fact, he was apprehensive that the incentive might not materialise as the state elections are forthcoming and there is political uncertainty in the state.
Yatin is feeling the pinch of recession like other small producers. However, there is good news for all of them. The state government issued the awaited circular last Friday, which he also confirmed to me. The circular dated August 31 but released a couple of weeks later, can be viewed here.
With effect from 1st August, 2009 the wine producers of state were required to pay the VAT at 25%. The announcement had brought the producers together, who lobbied hard, not only to get it down to 20%, but were promised a grant of 16%, bringing it to 4%, the amount that existed around the time when the pro-active state excise policy was brought out in 2001- now extended till 2010.
Unfortunately, the policy would not aid the winemakers of the growers right away as they have to pay the VAT at 20% now and would get refund only after March 31, 2010-by which many producers may not be able to survive, says Rajeev Samant, owner and CEO of Sula Vineyards, who has been an important part of the lobby. He adds, in all fairness the refund ought to be made on a monthly basis.
The Wine Industry Incentive Grant comes with the rider that the Eligible wine producers have to submit their claims for the first year, for 1st August 2009 to 31st March, 2010. After that 2 Nos. half yearly claims for each financial year (1st April to 30th September and 1st October to 31st March) are to be made to the Directorate of Industries.
While monthly re-imbursements may not be practical, it makes practical sense to grant them on a quarterly basis-starting with the July-Sept 2009 quarter, even though this would be for 2 months only. The producers are in dire straight and need the money now and cannot wait for another 6-8 months.
One now awaits the similar gazetted notification for making wine retailing by the supermarkets official, by the Delhi government. DelWine has learnt that an extensive pressure is being put on the finance ministry of the local government from the obvious lobby in an effort to put the final spoke in the wheel, for their own selfish interests.
One hopes the Delhi government considers the interests of the state, consumer and the tourism and opens up the policy by issuing the official notification. They might be under pressure to reduce the excise duties on imported wines to the original level of Rs. 150 a bottle but that decision would perhaps take some time.