Taxes account for 67-80% of liquor prices; threatens sector’s future: ISWAI- QHN

High rates of taxation are crippling the alcoholic beverages (alcobev) sector and threatening the future of the liquor industry in the country, the International Spirits & Wines Association of India (ISWAI) said.

ISWAI, the apex body of the premium alcobev industry in the country, said that taxes account for 67 to 80 per cent of the product prices, leaving little for the trade to sustain and manage operations.

The Indian alcobev industry is in deep crisis due to inflation on one hand and high taxation rates. In this context, it is needed to decrease taxes and raise product prices for the sector to sustain,” ISWAI CEO Nita Kapoor said.

Unlike other industries, the liquor industry does not have the freedom to price the products, Kapoor said.

“The liquor trade contributes 25 per cent to 40 per cent of the state governments’ revenues. Despite this, the government chose to tax it at high rates. The rates should be rationalised,” Kapoor said.

According to ISWAI, the Indian alcobev industry employs 1.5 million people with an estimated market size of USD 55 billion.

It said that the gross margins for Indian Made Foreign Liquor (IMFL) were gradually declining due to the rising cost of ingredients.

The West Bengal government had imposed an additional tax of 30 per cent on liquor in April 2020, just before the onset of the pandemic to shore up revenues. But seeing the de-growth in sales due to the levy, the administration reversed it during the later part of the year.

West Bengal has annual sales of 1.6 crore cases of IMFL and 80 lakh cases of beer.

ISWAI’s members include Bacardi, Campari Group, Diageo United Spirits, and Pernod Ricard among others.