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High taxation is pushing India’s alcohol industry on the brink of a crisis says ISWAI

Special Correspondent
By Special Correspondent

Taxation accounts for 67%-80% of Alco-Bev product prices

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New Delhi:The International Spirits & Wines Association of India (ISWAI), the apex body of the premium Alco-Bev (Alcoholic-Beverage) sector has expressed its concern on the ‘High Taxation of Alco-Bev Industry’ which is threatening the future of the Indian alcoholic beverages market. Taxation accounts for 67%-80% of Alco-Bev product prices, leaving little for suppliers and trade to sustain and manage their operations, states a ISWAI press release issued here on Thursday.

Over the issue of high taxation, Nita Kapoor, CEO, ISWAI, said, “The Indian Alco-Bev industry is in deep crisis due to the inflation on one hand and high taxation on another. Unless swift action is taken to reverse the situation by decreasing taxes or increasing the product prices, India could soon be facing a situation that will be akin to killing the proverbial golden goose.”

Nita Kapoor further said,“Every manufacturer — from automobile to pharmaceuticals– have raised their prices, but the Alco-Bev industry has been crippled because of lack of pricing freedom. The liquor industry has historically contributed 25%-40% of revenues for state governments, but higher taxes without price hikes is pushing the industry into a crisis. While India has a comparative advantage in production because of the ready availability of raw materials like molasses and grains, the country needs to rehaul its policies that will encourage greater production of volumes for exports.”

The Indian Alco-Bev industry employs 1.5 million people and has an estimated market size of USD 52.5 billion (2020), which is the ninth-largest in the world.

Suresh Menon, Secretary-General, ISWAI, said, “Gross margins for makers of Indian Made Foreign Liquor (IMFL) during the quarter ended September were lower compared to the same period a year ago due to higher cost of ingredients. ISWAI estimates that alcoholic ingredients such as Extra Neutral Alcohol (ENA) and Barley are 12% and 46.2% more expensive than last year, while the cost of packaging material such as glass and mono cartons rose by 24.9% and 19% respectively. The paring of taxes at both central government and state government would also go a long way in helping the beleaguered Alco-Bev manufacturers in India.”

The International Spirits and Wines Association of India (ISWAI), is the recognized authoritative voice of the Indian Premium Alcoholic Beverage Industry (IPABI), with a keen insight in government policy, is instrumental in shaping industry perspectives, driving best practices, and promoting the responsible use of alcoholic beverages.

The ISWAI members include Bacardi, Beam Suntory, Brown Forman, Campari Group, Diageo-United Spirits, Moët Hennessy, Pernod Ricard, and William Grant & Sons, global leaders in the spirits and wine industries. 

The ISWAI members, are strong proponents of the ‘Make in India’ ideology, having made substantial investments over the years in different states of the country to embrace indigenisation, and locally manufacturing a wide range of Indian Made Foreign Liquor (IMFL) and Bottled in India (BII) products. 

ISWAI members account for a substantial portion of the tax revenue generated from branded alcoholic spirits and wines across the country, apart from generating employment and business opportunities both directly, and in ancillary industries and services across states. ISWAI is proud to be an active advocate of Responsible Drinking, and promotes the principle of ‘drink less, drink better’.

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