Maha Cabinet approves grain-based alcohol, hike in excise duty on IMFL

Mumbai, June 10 The Maharashtra Cabinet chaired by Chief Minister Devendra Fadnavis, on Tuesday, gave approval for the launch of a new category of Maharashtra Made Liquor (MML) and also cleared hike in the excise duty on Indian Made Foreign Liquor (IMFL).

This is expected to increase the annual excise tax collection by Rs 14,000 crore.

The prices of IMFL and foreign premium brands in the state are likely to increase by at least 50 per cent due to the hike.

The industry experts have however questioned the move of increasing taxes.

The state government has also cleared the decision to allow running FL 2 (vendor license for foreign liquor) and FL 3 (Licence for sale at restaurant or hotel of imported and IMFL on which Excise Duty has been paid) establishments on lease at 15 per cent and 10 per cent additional cost of annual license fee, respectively.

The hike in excise duty on IMFL from existing three times of manufacturing cost to 4.5 times is set to raise the cost of alcohol in the state by nearly 50 per cent.

This will be applied to those IMFL which have the manufacturing cost at Rs 260 per bulk litre.

The excise of Rs 180 per proof litre of country liquor has also been increased to Rs 205.

The term 'proof litre' refers to a unit of measure that accounts for the alcohol content of a beverage. This will lead to the increase in minimum existing MRP cost of 180 ml bottle.

For country liquor the excise will Rs 80 (current around Rs 60-70); for IMFL Rs 205 (current Rs 115-130) and for foreign premium brand it will be Rs 360 (current Rs 210).

An official said that last time when the state government increased the excise was in 2011 and it has now been done after a gap of 14 years, said the government in a statement.

The introduction of MML creates a new category in currently existing alcohol sections which will be cheaper than IMFL but costlier than the country liquor.

"Maharashtra has a total of 70 licenses for alcohol manufacturers. Out of these, 38 are non-functional as they cannot compete with foreign companies which control 80 per cent of the market. The MML category aims at filling this gap," said a senior official from the State Excise Department.

The MML category will have grain-based alcohol and the brands will have to be registered in Maharashtra. No existing brands from outside can be part of this category. The MML will have a tax structure of country liquor but will be available only in FL II (vendor license for foreign liquor) and FL III (Licence for sale at restaurant or hotel of imported and IMFL on which Excise Duty has been paid).

States like Uttar Pradesh and Rajastan have already created such a category.

"According to our estimate, the present segment is of around 5 to 6 crore litres and it may grow to 10 to 11 crore litres. We expect to earn a revenue of Rs 3,000 crore out of this," said the official.

He added that being grain-based alcohol, the MML category will also ensure better prices for farmers, apart from increase in state revenue.

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