Beer lobby wants governments to rationalize tax structure on par with global norms

India’s beer lobby body All India Brewers’ Association (AIBA) wants governments across various states in the country to look at rationalizing the tax structure on beer products on par with global norms and make them far cheaper than spirits.

The beer industry, which suffered muted growth last year from a high growth of 12% earlier, finds the high tax on beer a deterrent to the sector’s growth and wants the tax to be linked to the alcohol content.

After meeting the Telangana excise minister in Hyderabad on Wednesday, the AIBA director general Shobhan Roy said the industry body also sought exclusive licenses for sale of beer. It also sought the government’s support to encourage modern retail trade in urban areas to sell the more socially acceptable beverage.

“We are requesting all the state governments to widen the distribution network by increasing availability of beer through opening up of more exclusive beer outlets in remote areas. We have asked the government to permit low alcohol beer stores, beverage restaurants, beer bars and modern trade shops in the metros and urban areas”, Roy said.

He said the beer industry grew at 12-13% CAGR during 2004-2012 but saw growth rate falling to 3.3% in 2012-13. Owing to significant increase in taxes over the last couple of years, the industry expects muted growth.

Roy said spirits attract higher taxes across the globe compared to beer primarily owing to greater negative consequences of hard liquor for public health. While it is five times higher in France, Germany has six times more taxes on alcohol. In India, beer attracts 1.89 times tax over spirits and differs from state to state ranging from 25% to 65%.

India’s beer industry stood at Rs 24,000 crore in terms of sales during 2013 with some 89 breweries spread across the country.