According to excise and industry data, Gurugram, Noida, Ghaziabad, and Faridabad, which are Delhi’s neighboring markets, saw a 20–25 percent decline in liquor sales in May after the national capital permitted private shops to give significant discounts on the maximum retail price (MRP) of alcohol. Companies and analysts claimed that because of price parity, consumers from Delhi who had previously purchased from these markets, particularly Gurugram, moved purchases to their city. Delhi opened the market toward the end of last year by allowing private retailers to sell alcohol alongside government-owned stores.
“Delhi was always a major customer, but due to a price difference of at least 15-20%, they purchased their goods from adjacent markets. Since there is no longer a price differential between Delhi and Haryana, the capital’s sales have increased significantly “According to Vinod Giri, director general of the Confederation of Indian Alcoholic Beverage Companies (CIABC), a uniform tax system across states would prevent sales from migrating to regions with lower taxes.
The Delhi government opted to leave the liquor vending sector in November and turned it over to private enterprises, which resulted in substantial price reductions and sizable crowds outside of stores. While this led to the government outlawing discounts in March, private liquor stores were once again permitted to provide customers up to a 25% discount off the MRP a month later.
According to VK Beniwal, deputy commissioner of excise and taxation in Gurgaon, “there is an influence on liquor sales in Gurgaon due to the discounting in Delhi, and we are in touch with the state government to ensure it doesn’t become a motivation for smuggling.” But almost a dozen new stores in Delhi have given up their licenses, citing unfair competition from big wholesalers who were giving greater discounts. Companies, though, showed no signs of concern.
“The industry in the state was on a growth trajectory throughout the test months of the new policy, which was centered on price parity. It made room for new competitors to try their luck in both the wholesale and retail markets. The subsequent withdrawal of certain players and worries about a few regulation changes slowed the pace, but consumer demand held steady “According to Amar Sinha, chief operating officer of Radico Khaitan, the volatility will subside and the supply chain will become more efficient in the months to come.
“In May 2021, we sold 10 lakh bottles, but in May 2022, that number fell to 8 lakh. In Noida, 9 lakh bottles of alcohol were sold in June of previous year; as of June 15 of this year, only 3 lakh bottles had been sold. Because of the discount provided by the Delhi government, we will fall short of our revenue goal, said Rakesh Bahadur Singh, the excise officer for Gautam Buddh Nagar. He added that there are discussions taking place at the government level to bring rates into parity so that people won’t shop elsewhere. To prevent smuggling, the excise department also performs arbitrary inspections at the Delhi border.