Non-grape wine producers in Maharashtra allege discrimination beneath the revised VAT scheme

Whereas grape winemakers flourish in Maharastra, which accounts for 90 per cent of the alcohol produced within the nation, fruit wine producers and honey mead makers cry discrimination as they declare the revived value-added tax (VAT) scheme doesn’t profit them.

Business gamers allege that whereas grape wineries are favoured within the State, corporations like Hill Zill Wines, identified for producing alcoholic drinks from varied fruits, face challenges. The corporate additionally introduced its choice to close down operations in March 2024.

Coverage Discrepancies

Priyanka Save, the co-founder of Hill Zill Wines, mentioned, “After years of exhausting work, it’s devastating to see companies collapse as a result of insurance policies that favour the grape wine business within the State whereas ignoring the potential and contribution of fruit wines and honey meads. We’ve no alternative however to stop operations and discover alternatives in states supporting innovation and variety in wine manufacturing.”

Between 2009 and 2020, the grape wine business, beneath the wine incentive grant scheme (WIPS), was given an exemption in excise responsibility and 80 per cent VAT. Underneath this scheme, grape wineries weren’t paying the federal government any excise responsibility.

VAT contributions

In accordance with information experiences, Jagdish Holkar, President of the All India Wine Producers Affiliation said that wineries contribute roughly ₹70-80 crore yearly as VAT, with 80 per cent eligibility for a refund. Wineries are topic to a 20 per cent VAT, and beneath the WIPS, a 16 per cent rebate is offered. Earlier this yr, the scheme was revived after it was quickly halted as a result of Covid.

Nevertheless, some business gamers allege that solely grape wineries benefited these privileges. In June 2017, the Maharastra authorities issued an order to legally classify wine comprised of different fruits and honey as wine. It imposed a nominal excise responsibility of ₹1 per litre in 2019 on wine comprised of different fruits, beforehand topic to a 100 per cent excise responsibility.

In 2021, the federal government imposed a uniform excise responsibility on all wines at ₹10 per bulk litre after the excise responsibility waiver interval, resulting in a 300 per cent development by 2023. Consequently, new wine varieties like chickoo from Palghar district, honey from Pune district, mango from Raigad, jambul from Nashik, and strawberry wine from Mahabaleshwar, emerged and gained a considerable market share throughout the nation.

Nevertheless, the State authorities revised the rebate coverage once more in February 2024, granting retrospective VAT rebates solely to grape winemakers, based on some business gamers, who mentioned this lack of equal alternatives is hindering their development.

Coverage setbacks

One other participant, Moonshine Meadery, expressed considerations relating to these latest coverage modifications.

“The abrupt coverage modifications have stifled development and innovation within the non-grape wine sector. The federal government’s choice to offer VAT rebates solely to grape wineries is unfair and undermines your entire spirit of a unified wine coverage. It is a main setback for an business that has the potential to create jobs, help agriculture, and contribute to the State’s financial system,” Nitin Vishwas, Co-founder of Ronin Wines (Moonshine Meadery), mentioned.

Alongside, Rajesh Jadhav, Secretary of the All India Wine Producers Affiliation (AIWPA), has urged the Maharashtra authorities to rethink its insurance policies to help all wine business segments and pave the way in which for an built-in wine coverage within the nation.