To

The Commissioner,
State Taxes and Excise,
Himachal Pradesh.

Subject- Fruit Wine Industry of the State.

Respected Sir,

We the Vintners Association of Himachal would like to draw your kind attention on
some issues related to our Horticulture based industry of the state and the contribution that
the industry has made over the years, as well as the thought behind promoting the fruit wine
industry in the first place.
We hope our suggestions and proposed amendments will go down well with you and we are
hopeful for a remedy to our situation with your kind assistance in implementing our proposals
in the upcoming Excise Policy for the financial year 2024-25.

1. Industry Classification- Since beginning in the 90’s, the idea of having fruit-based
wineries in the state was coined by the government with a social concern primarily to
help the farmers of the state by utilising their horticultural surpluses, for creating a
value addition model, as well as generate employment locally for the state of
Himachal Pradesh. This was never considered a revenue generating model.
Our fruit-based wine industry plays a vital role in utilising tons of the horticultural
surpluses of culled fruit sourced locally, generating additional revenue/income to the
farmers, creating value added products, and generating employment.
The fruit wine industry is playing a vital role in utilising the non-table variety fruit of
the State and indirectly helping the government in saving on MIS Subsidies to a large
extent.
2. Source of Employment- About 2000 to 2500 people are directly or indirectly
associated with our industry from the procurement and transportation of the fruit,
right till the sale of the product after its final processing at the plants, thus playing a
big role in generating employment. Effectively, the fruit wine industry provides
employment and a source of livelihood to close to 3000 families across the state.
3. Attraction for the tourism- Fruit wine/Ciders of our state are successful in marking
a presence as a special identity of our state and as such has become synonymous with
Himachal, very much akin to the Kulu Cap, with every tourist being aware of fruit
wines as a gifting item to carry back upon his or her visit to Himachal to all across the
country, thus holding its own identity.

Even though this industry has always been supported by the government for the very
reasons mentioned above, of late we feel that this industry has slowly but steadily
been given a step-motherly treatment, and as a result, we are losing the very essence
that we had grown up with.
Now after so many years, the time had come for the industry to spread its wings, and
soar into the sky, but certain policy related issues today are a major deterrent to the
growth and sustenance of this fledgeling industry.

We humbly request your good self to address the troubles faced by this Industry,
proving disastrous for our existence with a request that remedial measures may please
be ordered as an initiative to save us by making an Unfortified Fruit Wines Industry
friendly provision in the upcoming Excise Policy: -

a) Drastic increase in License Fee- The industry is governed by three licenses i.e.
S-1, S-1A and S-1AA. The burden of the License Fee of these Licensees is
increased many-fold by increasing License fee by 5 to 7 times, whereas the sales
have not increased in proportion. Under the situation of Pandemic & Disasters in
the last couple of years, the situation has deteriorated further more as compare to
the planning at the time of setting up manufacturing facilities with large
investments. The increase in the License fee time and again is turning out to be a
demotivating factor for all including all the genuine players of the industry. This is
evident with the reduction of S-1AA licensee too. The drastic increase in the
license fees last year, in 2023-24 resulted in closing down of a number of small
retailers, since it was unviable for a person to make ends meet with the huge
license fee structure. This indirectly resulted in drastic drop in sales for the entire
industry, evident from the annexure of sales figures attached. The license fees may
please be reduced or kept same for the coming few years.

b) Shutting down of Retail Outlets due to non viability: - Over the last one year,
one finds that a number of small and marginal Licensees, who were making ends
meet with marginal sales of locally made wines and ciders have shut shop. This is
primarily because, wines and ciders, being low volume selling products, cannot
suffer heavy license fees, and the stores become non-viable. This is also evident
from the overall drop in sales for all the manufacturers in 2023-24 due to lack of
sufficient outlets.

c) Increasing visibility through Liquor Sale outlets:- The locally produced Cider/
Wine products may also be kept as a part in the Allotted Quota of the liquor
vends/ circles of the state, thus a help to our industry for increasing the market
base. The state of Uttarakhand is boosting the sales of wine products by
incorporating this in their policy.

d) Separate Price range with a higher duty for import of the Wine/Cider/RTD: -
All the RTD/Wines/Ciders imported from outside the state may please be kept at a
much higher duty structure for a distinctive price difference from the local
produce, thus promoting a local produce. Maharashtra has a similar zero excise
policy as well as a VAT refund policy for locally made wines which are using
 the local horticultural produce, this safeguarding the interest of the wineries in
Maharashtra.

e) Distinction between fortified and unfortified wines/Cider: -The distinction

between fortified wines/RTD and unfortified/fermented wines and ciders be
kindly maintained. Fortified beverages in the sweet wine segment today, are
simply proving to be a way around beating the duty structure of the Hard liquor,
but selling the produce which is suffering duties at a miniscule level as compared
to country liquor or IMFL, with the alcohol strength being almost similar, with the
unabashed use of ENA. Not only does this give a bad name to the fruit wine
industry, but it also causes revenue loss to the government.

We request you to kindly ensure a clear distinction between S-1A, S-1C, S-1AA,
and the S-1F Licenses, and also a policy which ensures that the Fruit Wine
Industry is not diluted due to Fortification. We need to ensure, that an S1-F
Licensee can only sell Fortified wines, and not Unfortified wines on the same
outlet, since this will dilute the already suffering fruit wine industry even further,
with no additional revenue to the government. It is a fact that globally, the
government initiative is towards safe and responsible drinking, and higher potent
alcoholic beverages are generally discouraged globally.

f) Export duty- Surprisingly, the export duty of Fortified wines is Rs.0.50 paisa
per bulk litre in the current policy and for Unfortified wines, it is Rs.2.00 per
bulk litre. An UNFORTIFIED product deserves a NIL export duty or at-least a
lower duty as compared to a FORTIFIED product which has much lower cost of
production using ENA, as compared to a minimum thirty-day cycle to produce a
genuine unfortified wine/cider. This affects the MRP of the product at various
other states as well, causing the manufacturers to lose out on competition from
Fortified products/RTD. The Export duty of Unfortified Wines/Cider may kindly
be reduced to minimum.

g) Increase in Duties-There was a big hike in Duties last year, and unfortunately the
natural disaster in our state lead to decline in sales has put much more stress to
wine manufacturing Industry primarily based on tourists for sale so far. The
license fees & duties may please be reduced and kept static for a certain period of
years to come.

h) Policy for Promotion/Wet Sampling:- A transit pass may please be allowed to

the wine/cider manufacturers at the level of District Head, to carry our products to
participate in the various Exhibitions & Events conducted in Himachal & across
India during the year. This may kindly be incorporated in the coming Excise
Policy 2024-25.
 i) Removal of Milk Cess is requested since the margin structures of the retailers are
being afftcted drastically, i.e. by Rs. 120 per carton of wine, causing a lack of
interest of sale towards the same on the part of the retailer

j) Third Party Manufacturing/White Label:-Allow third-party manufacture of all

fermented beverages under the same category rather than sticking to only
fermented beverages made from fruit. e.g. Rhodo wine being categorised as a
wine made from produce other than fruit, and as per FSSAI, having an alcoholic
content to a maximum of 8%. Also rice wine, with alcohol levels up to 10% and
Mahua wines as well as mead.

k) MRP of Beer/s-The MRP of beer may please be kept at a higher rate than Cider
for an instant allurement for the purchasers to try cider as a better, gluten free,
healthier Alcoholic beverage than Beer in many ways. This will help by increase
the government's revenue too, and the Cider will be promoted and protected as a
healthier alternative for an alcoholic beverage.

Hoping for your kind blessings on all the requested reliefs above as a remedy to safeguard
this local industry of the State.

Thanking you.

Sincerely,

FOR HIMACHAL FRUIT WINE ASSOCIATION

President