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Time of India

Why Delhi's liquor consumers are crossing state borders for getting drunk

Legacy retail model sparks flight of customers Margins cap keeps premium bottles off the shelves Brand‑pushing curbs competition Licence fees favour imported spirits Live Events You Might Also Like: How UP's liquor lottery system helped Yogi govt double revenue to Rs 50,000 crore in six years Few shops, huge gaps Committee drafts new rules What comes next (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Over the past three years, many Delhi residents who enjoy an occasional drink have begun travelling to nearby Gurgaon, Faridabad or Noida for their preferred whiskies, beers and wines. They say the neighbouring states offer lower prices, wider choice and a more comfortable shopping experience than the capital's cramped government‑run outlets. Industry officials warn that the continued exodus is costing Delhi an estimated ₹1,300–1,500 crore in lost tax revenue each year, prompting the administration to draft a fresh excise policy before the current rules lapse on 30 June 2025, a TOI report November 2021, Delhi's liquor trade was split between about 375 private shops and nearly 475 stores run by four state corporations. A short‑lived 2021 excise overhaul briefly privatised the business, but the government withdrew it and reverted to the old framework, handing retail back to the corporations. An industry insider said, 'The govt‑run retail structure reduces competition and limits brand availability. This restricts consumer choice, as retailers promote select products instead of offering a diverse range.'A senior Delhi official acknowledged that the four corporations 'monopolised' store space. A fixed retail margin—₹50 on India‑made foreign liquor (IMFL) and ₹100 on imported labels—encourages shops to stock cheaper bottles priced between ₹400 and ₹600. 'Instead of stocking premium brands that move slowly, the retailers thus keep cheaper brands in a price range of Rs 400–600, which sell faster,' the official excise department's own study shows Delhi's ten top‑selling brands differ markedly from buyers' choices elsewhere. An official noted: 'This also results in the consumer shifting to neighbouring states, leading to suboptimal sales and consequently, revenue loss to the govt. The menace of brand‑pushing not only disregards actual consumer preferences but also undermines fair market competition. It creates an opaque system where certain brands dominate not due to quality or popularity but because of alleged malpractices.'Domestic producers say the fee structure is tilted against them. Anant Iyer, director general of the Confederation of Indian Alcoholic Beverage Companies, pointed out that IMFL whisky brands pay ₹25 lakh each, while importers pay ₹15 lakh for a bundle of five products. 'Some of the prominent single malts are not available in Delhi because the companies decided not to sell here due to discriminatory licence fees. Let there be a level playing field and healthy competition,' Iyer lists 762 licensed outlets, but only 603 operate, giving the city a retail density of 2.7 shops per lakh people—about half the national average. Large unauthorised colonies remain unserved, encouraging smuggling from Haryana and Uttar Pradesh. Rules bar stores from opening in non‑conforming areas, and officials peg the annual revenue loss from this gap at up to ₹1,500 crore.A committee led by the chief secretary is preparing a policy that officials say will 'make sale and distribution of liquor in the city transparent and accountable.' One official added, 'We are in the process of making certain changes in our policy.' Sanjit Padhi, chief executive of the International Spirits and Wines Association of India, welcomed the move: 'We believe that with a progressive retail policy, the state can provide its consumers not only brand choice but also a retail infrastructure that would be comparable to its neighbouring states in terms of buying experience and choice of leading brands. This would also lead to enhanced revenue, as consumers do not have to travel to neighbouring cities for their favourite brands.'The excise department has extended the 2024–25 rules until 30 June 2025. Market players expect the revised framework to tackle licence‑fee disparities, allow private retailers back in and expand store density. Until then, many shoppers are likely to keep crossing state lines for their weekend bottles—along with the taxes that go with them.